Indonesia’s Indosat Nearing Towers Deal With Mitratel, Sources Say

Manuel Baigorri, Fathiya Dahrul and Elffie Chew, Bloomberg News

A 5G cell tower in Orem, Utah, U.S., on Tuesday, Jan. 11, 2022. A long-simmering dispute over promising new wireless technology burst into public view in the past week and threatened to further disrupt U.S. air travel already hobbled by the new omicron Covid variant. Photographer: George Frey/Bloomberg , Bloomberg

(Bloomberg) -- Indosat Ooredoo Hutchison has agreed to sell a portfolio of telecommunications towers to Mitratel for about 1.65 trillion rupiah ($109 million) as part of the Indonesian carrier’s efforts to trim its assets.

PT Indosat and PT Dayamitra Telekomunikasi, as the two companies are formally known, have signed a deal that involves 997 towers, according to a statement to the stock exchange on Wednesday, confirming an earlier Bloomberg News report. Indosat also agreed to rent 983 towers from Mitratel for 138.6 billion rupiah for 10 years.

Separately, Indosat signed a sale-and-leaseback deal with PT dhost Telekomunikasi Nusantara. The Indonesian firm will sell 633 telecom sites to dhost for 480 billion rupiah and rent 544 of those sites for around 125 billion rupiah.

Shares of Indosat rose as much as 3.6% to their highest level since Jan. 4 on an intraday basis on Thursday, while Mitratel gained as much as 2.1%.

Indosat has been exploring a sale of about 1,800 sites amid rising demand for digital infrastructure assets in Southeast Asia, Bloomberg News reported in August. A transaction by Indosat could raise about $250 million, people familiar with the matter said at the time.

A sale follows Indosat’s disposal of more than 4,200 towers to EdgePoint Infrastructure, a firm backed by DigitalBridge Group Inc. and Abu Dhabi Investment Authority, for $750 million back in 2021. Last year, Indosat agreed to form a $300 million joint venture for its data centers with Big Data Exchange, the data-center platform owned by investment firm I Squared.

CK Hutchison Holdings Ltd. and Qatar’s Ooredoo combined their Indonesian telecom businesses in a $6 billion transaction that completed in January last year, as the groups sought to fend off competition in Southeast Asia’s biggest market by subscribers.

Mitratel, the infrastructure services unit of state-owned PT Telkom Indonesia, raised about $1.3 billion in a Jakarta initial public offering in 2021. Its shares have dropped around 11% so far this year, valuing the company at about $3.9 billion.

(Adds the sale-and-leaseback deal with dhost in third paragraph.)