ISAT - Inks sales and leaseback deals with MTEL, Dhost

ISAT - Inks sales and leaseback deals with MTEL, Dhost Indosat Ooredoo Hutchison (ISAT) has inked a deal with Dayamitra Telekomunikasi (MTEL) pertaining of sales of 997 towers valuing IDR1.68tn. As part of the deal, ISAT also agreed to rent 983 towers with a transaction fee of IDR138.6 bn/year for 10 years. In addition, the company has also signed similar agreement with Dhost involving sales of 663 indoor infrastructure that worth IDR480 bn, which also includes lease back of 544 indoor infrastructures valued IDR125.4 bn/ year for 10 years. (Source: IDX, Company, Kontan) Comment: With the sales of towers and indoor infrastructures, it is expected that transaction to impact positively on the company's liquidity given its plan to spend IDR13 tn for capex this year or higher than previous year. The company is intending to accelerate expansion especially to ex-Java provinces and network capability to prop up growth. On the other hand, based on our back of the envelope calculation, the EV/tower of the sales is estimated at IDR1.65 bn, or lower than previous sales to Edge Point in 2021 or other sale and leaseback scheme back in 2019. However, ISAT may gain competitive pricing for lease fee that is estimated at IDR11.7/month or considered less demanding compared to average lease rate around IDR13-14/ month.