Telecommunication firm PT Dayamitra Telekomunikasi Tbk (MTEL) has allocated IDR 7 trillion (US$ 452.4 million) Capital expenditure (Capex) in 2023 to acquire telecommunication towers.
Founded in 1995, the company, more popular as Mitratel, is a subsidiary of state-owned telecommunication infrastructure provider PT Telkom Indonesia Tbk. Mitratel focuses on the provision and management of telecommunications infrastructure since 2008. The company currently operates more than 28,500 telecommunication towers nationwide. Almost every Indonesian cellular operator has become the company’s tenant by placing their Base Transceiver Station (BTS) device on said towers.
Mitratel targets revenue growth at 11%
The IDR 7 trillion Capex would come from internal funding and bank loans.
Mitratel already completed its acquisition process of about 6,000 telecommunication towers in 2022. Its next projects include the development of organic and inorganic businesses. However, the company will not be as aggressive as in 2022 in acquiring the towers.
“However, we will still acquire towers this year,” Mitratel Director of Investment and Corporate Secretary Hendra Purnama told investor.id on March 9, 2023.
The company is seeking to add revenue growth and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) with 11% growth, respectively. Mitratel also targets another organic development by adding 4,000 more tenants, while its inorganic tenants will increase to 1,500.
Other big projects include expanding its fiber optic to 13,000 kilometers this year. In 2022, the company developed 16,641 km of fiber optics. The company’s total towers reached 35,418 towers while its tenants reached 52,006.
There are several opportunities for the company to support the growing towers this year, such as:
- The need for mobile network operator (MNO) to sites is increasing to support the expansion and growth
- About 35,000 new customers, from build-to-suit and co-location will sprawl in the next 5 years
- 5G penetration is predicted to reach 27% by 2025
- Fiber-to-the-tower (FTT) is a great opportunity for Mitratel to increase its backhaul capacity and support its MNOs.
Risks in telecommunication business
Infrastructure limitations: A lot of areas in Indonesia still has poor access to telecommunication. According to the World Bank, 94 million adults were unable to access the Internet on a mobile device and fewer people had access to fixed broadband internet in 2019. Nearly 80% of those numbers lived in rural areas. Although this condition might provide a lot of untapped opportunities for telecommunications infrastructure, the archipelagic nation nature and its rough land in rural areas provide a challenge towards the development of telecommunication infrastructure.
Indonesia, with its large geographical diverse country, has its downsides. There are many areas that lack the necessary infrastructure in supporting fast and reliable internet connections. That includes fiber optic cable networks, insufficient power supply and limited access to satellite or wireless services.
Fixed broadband service penetration: There are still low amounts of penetration for fixed broadband service. In Indonesia, there is still only a 4% penetration based on World Bank data in 2021.
