PT Sarana Menara Nusantara Tbk ("SMN"), the owner of Protelindo and iForte, announced completion of the purchase of 100% of shares in KIN in an all-cash transaction. SMN plans to maintain KIN as a separate operating entity under Protelindo. SMN intends to combine several of the operating and support functions of KIN with Protelindo over the course of the year in order to realize operational synergies between Protelindo, IForte and KIN. "We are pleased that the purchase of 100% of KIN shares has been completed and look forward to a smooth transition as we begin to combine and rationalize operations," stated Bapak Aming Santoso, President Director of SMN. "KIN will bring immediate value to SMN and solidifies SMN's position as the leading telecommunications infrastructure company in Indonesia."
SMN Group agreed to purchase KIN shares for approximately IDR 1.4 trillion. Payment for the acquisition was made with internal cash generated from operations. Now that KIN is part of Protelindo, it will immediately benefit from a lower cost of debt due to Protelindo’s investment grade rating. After the KIN purchase, payment of approved 2017 dividends, as well as higher 2018 organic capex, SMN is expected to maintain healthy leverage of less than 2.0x, a slight increase from 1.5x previously. "SMN's strong balance sheet allows the Company to participate in acquisitions and to maintain the dividend payment," commented Bapak Adam Gifari, VP Director of SMN, "Our solid balance sheet gives us the flexibility to acquire assets while continuing to deliver on our Buy Build Return strategy," Pak Adam continued. "With our strong financial position, investment grade rating and lowest cost of debt of any player in our industry, we are in a solid position to continue to invest in our business and pursue new business opportunities as they arise," Pak Adam concluded.
As announced previously, KIN has over 1,400 and over 2,000 total existing towers and tenancies, respectively. Annual run rate revenue at the time of acquisition is estimated at Rp 325 billion with approximately 70% of the revenue coming from Telkomsel, XL Axiata and Indosat. More than 50% of KIN's towers are located outside Java with particular strength in Sumatra. KIN also operates a fiber optic cable network primarily in Surabaya, Batam and Medan.
The combined entity has over 16,400 towers, over 27,000 tenancies and over 5,300 km of fiber optic cable. "The breadth and strength of the combined SMN represents a significant competitive advantage for the Company and provides us with a solid and scalable platform for future growth". Bapak Aming Santoso concluded. "We are in a unique position of being able to provide full service solutions at competitive prices to our telecommunications partners and look forward to continuing our close relationship and growing together with our partners."
SMN is traded under the ticker "TOWR" on the Bursa Efek Indonesia.
SMN hired Redpeak Advisers, ING, Duanne Morris and Makes & Partners as advisers for this transaction.