S&P sticks with 'BB-' credit rating on PT Tower Bersama Infrastructure

“We also affirmed our 'BB-' long-term issue rating on the company's guaranteed senior unsecured notes. At the same time, we affirmed our 'axBB+' long-term Asean regional scale rating on the Indonesia-based telecom tower operator,” S&P said.
S&P credit analyst Annabelle Teo said: “We affirmed the rating because we believe TBIG’s resilient operating performance over the next 12 months will cushion the credit impact of the company's high leverage and a slowdown in the telecom tower market in Indonesia.
“We believe 4G network rollout in Indonesia will continue to be limited and restrict growth in the tower industry in the next 12 months at least. This is due to the lack of spectrum availability and uncertainty in network sharing.” 
The analyst said TBIG's close relationship with PT Telekomunikasi Selular (Telkomsel) will support its organic growth and market position. 
“This relationship underpins our expectation that the company should add around 1,000 new tower builds and 500 co-locations in the next year, as Telkomsel continues to upgrade its network for fourth-generation services,” Teo said “Tenancy ratios should remain stable at around 1.62 times.”
TBIG's long-term contracts (with annual inflation-related escalations) with other major Indonesian telecom operators also support its business profile and profitability, the agency said.
“We anticipate that TBIG will maintain high shareholder payouts, such that its debt-to-EBITDA ratio stays around 5.25 times,” Teo said. “However, we expect the company to withstand its higher leverage levels given its solid operational stability and good market position.”