Singapore, May 02, 2012 -- Moody's Investors Service has today confirmed the Ba2 Corporate Family
Rating of Tower Bersama Infrastructure Tbk ("TBI") with a
stable outlook.
This action concludes the review for downgrade which commenced on 9 February
2012 following the company's announced acquisition of 2,500
towers from Indosat Tbk (Indosat, Ba1 stable).
The rating confirmation reflects Moody's view that the acquisition
of Indosat's towers can be accommodated within the parameters of
TBI's Ba2 rating.
RATINGS RATIONALE
"The deal will enhance TBI's overall tenant quality and we
estimate that its Tier One revenue contribution -- being revenues
attributable to Indosat, PT Telekomunikasi Indonesia (Baa1 stable),
PT Telekomunikasi Selular (Baa1 stable) and XL Axiata (Ba1 stable) --
will increase to approximately 73% from 69%. The
transaction should also make TBI the largest independent tower provider
in Indonesia (in terms of total telecommunication sites, including
shelters and DAS), a position from which it should benefit,
given the growing number of collocations and increased acceptance of tower
sharing by telecom operators in Indonesia," says Nidhi Dhruv,
a Moody's Analyst and also Lead Analyst for TBI.
"Although the transaction will lead to TBI exceeding the downward
triggers for its rating in 2012, mainly due to timing --
with only six months revenues from the Indosat towers --
the EBITDA-accretive nature of the business will naturally result
in deleveraging over the next year. However, the rating now
has limited tolerance for substantially debt-funded acquisitions
in the near-term," says Dhruv.
In the absence of any further material acquisitions, we expect the
leverage ratio to range over 3.5 -- 4.0x over the next
two years (based on full-year historical adjusted EBITDA rather
than run rate-adjusted EBITDA).
The tower acquisition will be funded predominantly through bank borrowings
under TBI's existing US$2 billion debt program. The
company will utilize the remaining amount of US$145 million under
the existing Series 3 facility, and has signed facility agreements
with its banks for Series 4 and 5 of the debt program for a combined amount
of US$250 million.
"Although the Indosat tower deal is TBI's largest acquisition so
far, its track record of past acquisitions provides some comfort
on its ability to integrate and successfully manage the new assets as
well as grow the tenancy ratio. Indonesia's growing demand
for 3G and data services, as well as the growing acceptance of tower
sharing should also support the growth in TBI's towers and tenancies,"
adds Dhruv.
In April 2012, TBI received shareholder approval for the acquisition.
Given its increased share price, the final cash portion of the acquisition
price may be lower than the US$350 million that Moody's has
factored into its assumptions.
The acquisition awaits the consent from Indosat's creditors,
and we expect the transaction to be completed within Q2 2012.
The outlook on the ratings is stable on the expectation that TBI will
successfully integrate the Indosat tower acquisition, while continuing
to grow and de-leverage in accordance with its business model.
The stable outlook also reflects our expectation that the regulatory environment
remains benign.
Upward rating pressure in the near term is limited, given TBI's
small scale. However, the rating may experience upward pressure
should TBI grow the business in accordance with projections and improve
its fundamental credit profile; in particular Moody's would like
to see adjusted debt/EBITDA fall and remain below 3.0-3.5x
on a consistent basis and for interest cover, as measured by (FFO
+ interest)/interest, to rise above 4.0x.
Downward pressure could arise should competition intensify such that TBI
cannot meet its business plan. Such pressures would be evidenced
in adjusted debt/EBITDA rising above 4.5x and (FFO + interest)/interest
falling below 2.0x on a consistent basis.
In addition, Moody's would be concerned should the proportion of
revenues contributed by its key customer group -- comprising
PT Telekomunikasi Indonesia, PT Telekomunikasi Selular, PT
Indosat Tbk and PT XL Axiata Tbk -- fall below 50-55%.
The principal methodology used in rating PT Tower Bersama Infrastructure
Tbk was the Global Communications Infrastructure Rating Methodology published
in June 2011. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
TBI is the holding company of the Tower Bersama Group ("TBG"), one
of the 2 leading independent tower operators in Indonesia, with
5,100 telecommunication sites serving 7,680 tenants as of
31 March 2012. It leases space on its communications towers to
cellular telecommunications operators on long-term contracts.
REGULATORY DISCLOSURES
The Global Scale Credit Ratings on this press release that are issued
by one of Moody's affiliates outside the EU are endorsed by Moody's
Investors Service Ltd., One Canada Square, Canary Wharf,
London E 14 5FA, UK, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that has issued a particular Credit Rating is available on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
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entity, obligation or credit satisfactory for the purposes of issuing
a rating.
Moody's adopts all necessary measures so that the information it
uses in assigning a rating is of sufficient quality and from sources Moody's
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information received in the rating process.
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Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has
issued the rating.
Nidhi Dhruv
Analyst
Corporate Finance Group
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
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Philipp L. Lotter
Associate Managing Director
Corporate Finance Group
JOURNALISTS: (852) 3758 -1350
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Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308
Moody's confirms Tower Bersama's Ba2 rating; outlook stable
