by Robert Yota
Amid the coronavirus pandemic, publicly listed telecommunication tower operator PT Sarana Menara Nusantara (TOWR) should continue a steady growth this year. According to Bahana Sekuritas recent research, TOWR’s 2020 revenue will be expanding by 8.6% to 8.9% year-on-year. The newly acquired towers will partly drive the growth for at least 37,000 tenants by the end of this year.
Last year, TOWR booked positive growth figures. Its revenue increased by 10% to Rp 6.45 trillion, followed by its net profit, which grew by 6% to Rp 2.34 trillion from the same period in 2018. The company’s revenue boost was mainly attributed to major telecommunication providers renting more of its towers.
At the end of last year, there were a total of 33,346 tenants to the company’s towers, which is a 5,027 increase from 4Q-2018. As a result, its tower revenues grew by 4.6% into Rp 5.58 trillion at the end of 2019 compared to Rp 5.34 trillion in the previous year.
TOWR’s non-tower segment also contributed positively to the company’s revenues, with non-tower revenues increasing by 64% to Rp 871 billion at the end of 2019 from Rp 529 billion in 2018. Its non-tower revenues account for 13.5% of TOWR’s total revenues.
This year, TOWR allocates Rp 3-3.5 trillion in capital expenditures, which will be mainly used to construct the fiber optic cables and to add around 2000-3000 new tenants. “Sarana’s stakes in the non-tower segment are higher as the company aims to have over 40,000 km of its fiber optic cables operational by the end of 2020. For the rest of this year, we expect roll-outs of its capital expenditures from last year to be realized. Most notably, a revenue boost will come once 1,399 out of the 1,723 towers acquired by the company from XL Axiata start becoming operational at the second quarter of 2020,” says Danareksa Sekuritas analyst Niko Margaronis.
Niko adds that the reduction in human mobility due to coronavirus pandemic would be replaced by increasing demand in communication and data. “The free extra data plans for work and study from home offered from telecommunication providers is a potential upside for tower operators such as TOWR, as we expect telecommunication companies to be more motivated in fulfilling their capital expenditure roll-outs.”