XL Axiata drives a bargain in US$460mn tower deal with STP
Analysts disagree about pressure on lease rates in Indonesia
XL Axiata has announced the sale of 3,500 towers to PT SOLUSI TUNAS PRATAMA (STP) for US$460mn, with an initial term of ten years, realising a healthy return of US$131.4k per tower. Reports suggest XL’s all-in, fixed price leaseback rate is just IDR10mn per month (a little over US$800), significantly below the market lease rates in Indonesia, which tend to be around US$1,200-1,500 per month. While those familiar with the process agree that XL Axiata drove a hard bargain, could this be indicative of lease price erosion in the maturing Indonesian tower market? And how does this deal enhance STP’s platform?
Prevailing tower industry wisdom runs something like this; MNOs’ core competency is selling minutes and megabytes, their KPIs are all about ARPU and the Customer Experience.