MTEL - Acquires 967km of fiber optic

MTEL - Acquires 967km of fiber optic Dayamitra Telekomunikasi has completed an acquisition of fiber optic asset that worth IDR86 bn owned by Power Telecom. The fiber asset stretches over 967 km of length with billable length of 1,147km. This makes up a billable ratio of 1.18x that is located in Java area. The company is planning to earmark IDR7 tn in capex this year to finance organic and inorganic expansions, 58% of which is spent through 9M23. (Source: Investor Daily) Comment: This acquisition marks MTEL's willingness to tap deeper into fiber business that has been enjoying consistent growth of demand from the industry following 4G expansions and recent surge in FTTH services. The company eyes to add 10,000- 13,000 km of fiber this year. Although, fiber contribution to MTEL's total revenue remains small at <5% (VS TOWR's 25-30% of contribution), we expect MTEL will be able to expand its fiber asset more aggressively in coming years, banking on its low leverage and strong balance sheet. On valuation perspective, the acquisition value was at par with TOWR's previous acquisition on Alita at c. IDR72-74mn/ billable length km.