MTEL- Banking on unique tower portfolio

MTEL- Banking on unique tower portfolio Mitratel (MTEL)'s 9M23 EBITDA was slightly behind ours/consensus by 2-2.3%, as margin declined 154bps qoq on the back of higher core cost on construction and project management as well as G&A. 3Q23 net profit was also dragged by plunging other income and higher finance costs MTEL’s 3Q23 revenue stood at IDR2.14 tn, growing 3.3% qoq, resulting in 9M23 revenue to be at IDR6.28 tn, mainly driven by fiber equal to 6.7% of 3Q23 revenue., MTEL has rolled out a 12,401km of fiber organically, making up total 29,042 km of fiber Tower leasing revenue increased 3.1% qoq in line with strong net addition of 5,314 tenants qoq, combined with +2,040 tower sites. This resulted in 1.5x tenancy ratio with an improvement of average monthly leasing fee/tenant to IDR12.4 mn. Management maintains its guidance of 11% growth for 2023 as it expects to book contract renewals 4Q23. Yet, amid high interest rate environment, this could impact to its bottom-line, as it has been already reflected in 9M23. (Source: Company, KVS Research team) Comment: Reiterate our BUY call with an upgraded target price of IDR908 due to adjustment to our WACC assumption to 10.1% (previously: 9.7%) on our DCF valuation.