Solusi Tunas Pratama (STP) sold a $300 million five-year non-call three bond late Thursday, becoming the second Indonesian tower operator to tap international debt markets in a little over a week.
The company, the third-largest tower leasing company in Indonesia, priced the Reg S-only bond at an all-in yield of 6.25%, which is 25 basis points tighter than its initial price guidance area of 6.5%, according to a term sheet seen by FinanceAsia.
Orderbooks for STP's bond reached over $1 billion from 125 accounts, with 73% of the offering going into Asian accounts and the rest to European investors. Fund managers subscribed to 71% of the notes, followed by private banks 15%, banks 12% and pension funds 2%.
The proceeds of the offering, which is guaranteed irrevocably and unconditionally by STP and its other subsidiaries, will be used to partially refinance its six-month $790 million bridge loan facility that was used to refinance the acquisition of 3,500 towers from XL Axiata for Rp5.6 trillion ($467 million), according to a source familiar with the matter.
Indonesia's three largest telecoms tower companies are set to expand their scale and market share as the country's telecommunications industry continues to consolidate.
"The Indonesian tower industry has developed rapidly amid a supportive regulatory and business environment, and we expect the largest independent tower operators to acquire additional assets from telecom operators," Nidhi Dhruv, an analyst at ratings firm Moody’s, said.
"The organic growth of the tower companies should also remain robust as they continue to receive orders to build towers in response to the efforts of the leading Indonesian telecom companies to strengthen and expand their networks,” he said.
STP is expected to maintain its market position in Indonesia through periodic acquisitions and a moderate buildup of new towers — 300 to 400 towers a year — compared with peers such as Profesional Telekomunikasi Indonesia (Protelindo) and Tower Bersama Infrastructure, which have been adding more than 1,000 towers each year, according to Standard & Poor’s in a note on February 4.
At the end of last year, STP owned 6,651 towers and total tenancies of 10,521. Tower Bersama leads the industry with 15,200 towers followed by Protelindo with 11,200 towers.
The nearest comparables for STP's maiden bond are Tower Bersama's existing 2018 and 2022 notes, which were trading at a cash price of 100.76 and 98.84, respectively, for a yield of 4.361% and 5.451%, according to Bloomberg bond data.
On February 3, Tower Bersama raised sold a $350 million seven-year non-call four, accessing Asia’s debt capital market for the first time in two years.
BNP Paribas, HSBC, ING, JP Morgan and Standard Chartered were the joint bookrunners of the BB- rated transaction.