MTEL - Leads in capitalizing on MNO shift during tower consolidation

KBVS Update
Friday, 12 July 2024

MTEL - Leads in capitalizing on MNOs’ shift during tower consolidation
(Reiterate BUY - TP: IDR800)

Dominates ex-Java co-location market. MTEL is well-positioned to meet the needs of MNOs expanding their coverage outside Java, thanks to its extensive network of towers in the region. As MNOs look to expand beyond Java, co-location becomes an attractive choice due to its cost-effectiveness and speed compared to B2S.

Benefited from MNOs’ strategic moves during telco-tower consolidation periods. MNOs are divesting non-core assets to become light-asset companies. This likely leads to TowerCo becoming a managed services provider for MNOs, as the latter would no longer manage fiber and equipment. TowerCo can then consolidate these services, creating new revenue streams to offset potential tenant loss from the EXCL-FREN merger.

Margin expansion on moderated CoR growth in FY24. We project a moderation in the rate of increase for MTEL's CoR in FY24. The high rate of MNO co-location deployments (42% in 1Q24) is a contributing factor.

Reiterate BUY with TP of IDR800, based on 9.5x 2024F EV/EBITDA (-2SD 3yrs-historical mean).

Regards,
Steven Gunawan - KBVS Research