Indonesian mobile operator PT XL Axiata EXCL.JK -1.61% will sell some of its telecom towers to a tower operator linked to private-equity firm Carlyle Group CG +0.07% for $459 million, in what will be one of the country's biggest asset sales so far this year.
PT Solusi Tunas Pratama, SUPR.JK +16.36% or STP, will buy 3,500 telecom towers in an all-cash deal, with an aim to complete the acquisition by the end of this year, both the companies said Wednesday.
STP, in which Carlyle invested between $100 million to $150 million in October 2012, owns 2,786 telecom towers in Indonesia, making it the country's third largest tower operator.
The sale comes as mobile operators globally are either selling or spinning off their capital-heavy tower investments in emerging markets to cut costs, instead opting to share towers by renting them from other telecommunication firms or tower companies. The acquisition of XL Axiata's towers will help STP strengthen its business in a country that has seen a rapid increase in mobile phone usage and increasing wireless access to data services through computers and smartphones. In August, Samsung Electronics Co. 005930.SE -2.36% said it was considering producing cellphones in Indonesia, home to about 240 million people, half of whom are under the age of 30.
XL Axiata, which is 66.5% owned by Kuala Lumpur based telecom operator Axiata Group 6888.KU +0.14% Bhd., is Indonesia's second-largest mobile phone operator by subscribers. The company started a sale process for its Indonesia tower business three months ago, attracting several bids ranging from Indonesia's largest telecom infrastructure company Tower Bersama Group, to other operators such as Protelindo, a unit of PT Sarana Menara Nusantara, TOWR.JK +2.44% and Retower, a unit of PT Centratama Telekomunikasi Indonesia. XL Axiata had initiated the tower sale to repay some of the debt it took to acquire a smaller rival PT Axis Telecom Indonesia for $865 million earlier this year.
XL Axiata has said its debt was more than twice the size of its equity in the first half of this year.
"The sale unlocks the value of a part of our tower portfolio at an attractive valuation and on competitive terms. XL (Axiata) will be using the transaction proceeds to partially deleverage," XL Chief Executive Axiata Hasnul Suhaimi said in a statement.
XL Axiata isn't alone in looking to unlock value from its tower business. In July, Bharti Airtel Ltd. 532454.BY -0.35% , India's largest cellphone company, said that it has agreed to sell its tower business to Helios Tower African. In May, IHS Holdings Ltd., Africa's largest independent mobile infrastructure provider, completed an acquisition of 1,269 mobile network towers from South African telecom firm MTN Group Ltd. MTN.JO -0.21%
XL Axiata, which has more than 65 million subscribers, owns about 8,000 telecommunications towers in Indonesia that relay radio and telecom signals in the world's fourth most populous country.
J.P. Morgan JPM -0.03% and Standard Chartered Bank advised STP on the deal.
