ISAT - Reported to close deal on FWA asset purchase

ISAT - Reported to close deal on FWA asset purchase Indosat Ooredoo Hutchison (ISAT) is reported to be in communication with MNC Play on plans to acquire parts of the latter's asset as it expands its FTTH business on unfinalized amount of deal. The company is eyeing to expand its FTTH coverage to 1.5 mn home passes from currently 400K home passes through its fixed broadband brand, Indosat HiFi that is present in Indonesia's metropolitan cities. (Source: Bisnis Indonesia) Comment: We view positively that ISAT’s plan for fixed broadband acquisition should lead to accelerated growth on its FWA business. The company eyes to attain 10% of Indonesia’s market share by 2026-2027 which we deem to be achievable especially helped by inorganic expansion. This also puts ISAT to be in FMC competition that has become new norm in the industry. Over the long run, we believe FMC will achieve better customer loyalty, and bolster infrastructure and operational synergies that should result in better cost efficiency as long as it does not trigger another price wars. On the other hand, FMC penetration will also benefit from 5G technology once its rolled out. We retain our BUY call on ISAT with a target price of IDR10,075 per share representing EV/EBITDA ‘23 of 4.1x or lower than 3 year high at 4.4x.