XL Axiata looking to divest telecommunication towers to help ease debt

6 Jan 2016

In a filing to the Jakarta stock exchange, Indonesia’s second largest mobile phone operator by subscribers, XL Axiata, has revealed it plans to pay down part of its sizeable debt burden by selling off 2,000-2,500 of its telecommunication towers through an open auction to be held later this month. XL Axiata CFO Mohamed Adlan bin Ahmad Tajudin declined to disclose how much the company expects to raise from the sale and the prospective buyers, although it is evident that the cellco is already actively striving to lower its liabilities by substituting US dollar (USD) denominated debt with rupiah (IDR) equivalents, and paying down its more expensive loans prior to term maturation.

In December 2015 unconfirmed ‘industry insiders’ suggested that XL Axiata was mulling options to raise up to USD500 million this year as it seeks to trim its debt, which had spiralled to IDR25.7 trillion (USD1.8 billion) by end-September 2015, more than double the IDR12.5 trillion it was carrying in September 2012. With its debt-to-equity ratio standing at 216% – the highest of any listed Indonesian mobile operator – the Malaysian-backed carrier is understood to be reviewing several fund-raising options, including a rights offer to existing investors. XL Axiata, a subsidiary of Kuala Lumpur-based Axiata Group, has said that it will strengthen its balance sheet and look to focus on signing up/retaining more ‘profitable’ subscribers, rather than pursue a policy of simply increasing its user base. Group CEO Dato’ Sri Jamaludin Ibrahim recently commented that: ‘XL has started to reap benefits from the ongoing implementation of its transformation programme’, a project that included the launch of 4G LTE in Jakarta and other cities in November 2015, with around 35 cities thought to be covered by the year end.

Indonesia, XL Axiata