by Robert Yota
Publicly-listed telecommunications infrastructure services company PT Tower Bersama Infrastructure (TBIG) performed positively during the first quarter of 2020.TBIG’s revenue experienced 11.57% year-on-year (YoY) growth to Rp 1.26 trillion during the first quarter of this year. The company’s net profit also increased by 4.8% (YoY) to Rp 228.54 billion.
According to TBIG finance director Helmy Yusman Santoso, the revenue increase during the start of this year went in parallel with the growing demand for tower tenancies from telecommunication providers. “There are no tenants who are postponing their use of our towers. Many of the providers are adding tenancies to accommodate the increasing data traffic from its customers,” said Helmy.
PT Hutchison 3 Indonesia was the operator with the most significant growth in tenancy orders in 2020 1Q, with a 61.25% (YoY) growth to Rp 170.77 billion, followed by PT Smartfren Telecom (FREN) with a 36.15% (YoY) growth into Rp 82.76 billion, PT XL Axiata (EXCL) with an 8.36% (YoY) increase to Rp 220.73 billion, PT Indosat (ISAT) with a 7.51% (YoY) growth to Rp 266.53 billion, and PT Telekomunikasi Indonesia (Telkomsel) with a Rp 1.88% (YoY) growth to Rp. 512.1 billion.
Meanwhile, Danareksa Sekuritas analyst Niko Margaronis stated in his recent research that the company should expect a prosperous remainder of 2020 despite the ongoing COVID-19. “Telkomsel has previously stated that it is expediting its capital expenditure rollout from last year’s 4Q to this year’s 3Q, and thus TBIG may potentially be a key beneficiary,” wrote Niko.
The fact that most of TBIG’s first quarter’s new tenancies were collocations leading to its highest tenancy ratio of 1.92x confirms this need. TBIG’s revenue this quarter was also fueled by Hutchison 3, which has also stated its sizable capital expenditure commitments for this year. Furthermore, Indosat’s capital expenditure spending is also expected to pick up in the remainder of this year due to their plans to install more built-to-suit (BTS) equipment in the subsequent quarters, and Smartfren may also continue to spend more significantly.
In contrast, Bahana Sekuritas analyst Giovanni Dustin has stated in his report that there could be potentially slower capital expenditure disbursements from telecommunication providers. “Should the pandemic worsen, we see the possibility of capital expenditure spending to be pushed back to the end of this year. During a recent conference call with Indosat, its management remarked potential fiber disruptions this year, due to the enforcement of large-scale social restrictions (PSBB) in certain regions,” Giovanni stated on his report.
Although Indosat has mentioned its plans to maintain its capital expenditure target for this year, capital expenditure rollout delays remain a critical risk for the tower sector this year. Moreover, he added, carriers are likely to focus on increasing network density this year, which could translate to lower BTS orders for them to maintain network quality amidst the possibility of a surge in data traffic in residential areas due to work from home policies.