Moody's Assigns Ba2 Rating to Tower Bersama

Friday, 14 October 2011 12:41

Written by Ditto Levitt

Tower Bresama, Moody Investor Services

Theindonesiatoday.com - Moody's has assigned a Ba2 Corporate Family Rating to PT Tower Bersama Infrastructure Tbk (TBIG). The outlook on the rating is stable.

"The Ba2 rating reflects TBIG's underlying business model which is supported by the long-term, contractual nature of its revenue base founded on non-cancellable contracts with typical 10-year duration and the crucial service it provides to its tenant base," says Laura Acres, a Moody's Vice President and Senior Credit Officer. Adding, "These strengths enable TBIG to partially offset its small revenue base relative to other rated tower companies outside Indonesia."

"In addition, although TBIG has high customer concentration which is a weakness of the tower sector generally, it's tenant base substantially comprises Indonesia's largest telecommunications operators, including PT Telekomunikasi Indonesia (Baa1/stable), PT Telekomunikasi Selullar (Baa1/stable), PT XL Axiata Tbk (Ba1/stable) and PT Indosat Tbk (Ba1/stable) -- with PT Telekomunikasi Indonesia accounting for a substantial proportion of total tenancies. Together these four operators account for approximately 63% of TBI's revenues and under its loan agreements are to account for no less than 50% of total revenues at any time," adds Acres, also Moody's lead Analyst for TBI.

At the same time, concerns exist regarding emerging market risk and particularly any changes to the regulatory and political environment in Indonesia as well as the potential for the dynamics of the tower industry to change as large telecommunications operators strategically review options for their sizeable tower portfolios.

TBIG shares closed flat at Rp1,980 on IDX this morning. The stock is now 40% below its peak of Rp3,300. (Theindonesiatoday.com)

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