Alert – Singtel’s associate divests 6000 towers in Indonesia
Subject: <Alert> Singtel’s associate divests 6000 towers in Indonesia
- Singtel’s Indonesia associate, Telkomsel has announced the transfer of 6,000 towers to Mitratel
- The transaction valuation is estimated to be north of 13x EV/EBITDA almost double of Telkomsel’s valuation.
- Singtel’s proportionate stake of the proceeds will be ~S$330 million, maintain BUY on Singtel with unchanged TP of S$3.24 for 23% upside potential and 4% yield.
Singtel’s Indonesia associate, Telkomsel has announced the transfer of 6,000 towers to Mitratel for IDR10.3 trillion (~S$950 million). The transaction was completed on 29 July 2022 and marks a total of 16,050 towers transferred to Mitratel since 2020. Mitratel’s offer is estimated to be north of 13x EV/EBITDA as Singtel has mentioned that it was divested at highest ever valuation in Indonesia. This move is inline with Telkomsel’s strategy to be asset light who has been focused on transforming into a digital telco and tapping into customers’ increasingly digital lifestyles. Telkomsel will contemplate the usage of proceeds, including for special dividends, and will update the market accordingly. Singtel’s proportionate stake of the proceeds will be ~S$330 million. In case of special dividends from Telkomsel, Singtel’s payout ratio could be higher than 75% ratio projected by us.