JAKARTA -- The tower subsidiary of Telekomunikasi Indonesia (Telkom), the country's largest telecommunications company, is aiming to raise up to 24.9 trillion rupiah ($1.76 billion) through its initial public offering.
Dayamitra Telekomunikasi, better known as Mitratel, launched the IPO on Tuesday, offering new shares representing 29.85% of the company at a price range between 775 rupiah and 975 rupiah per share. If priced at the top of the range, Mitratel would rake in 24.9 trillion rupiah, beating the record for the largest IPO at the Indonesia Stock Exchange by local e-commerce unicorn Bukalapak in August.
Mitratel's IPO road show and book building will run through Thursday of next week, after which the company is planning its market debut at the Jakarta bourse on Nov. 22.
Company executives told reporters on Tuesday that 90% of the IPO proceeds will be used to finance expansion -- including for the acquisition of 6,000 telco towers outside the Telkom group.
"Also, we want to grab opportunities, especially in 5G-related sectors -- including fiber optic, [Internet of Things] and other 5G-supporting infrastructure," said Hendra Purnama, investment director at Mitratel.
He named the Abu Dhabi and Singaporean sovereign wealth funds as anchor investors for the IPO.
Mitratel is currently fully owned by the Telkom group, which is majority owned by the government of Indonesia. With the coronavirus pandemic and mobility restrictions causing significant boosts in data usage, Mitratel posted 700.7 billion rupiah in net income in the first half of this year, a more than fourfold increase from the same period in 2020.
Telkom's share price rose 0.5% to 3,800 rupiah on Tuesday following Mitratel's announcement.
Mitratel's IPO follows rival Sarana Menara Nusantara's announcement earlier this month of the completion of its acquisition of a smaller tower company, Solusi Tunas Pratama, for 16.7 trillion rupiah.
Sarana, affiliated with the Djarum group -- Indonesia's largest conglomerate -- now controls 94% of Solusi through its subsidiary Profesional Telekomunikasi Indonesia, also known as Protelindo. The acquisition has made Protelindo the largest telco tower operator in Indonesia with 28,300 towers in its portfolio, beating Mitratel's 28,030 towers.
Indonesia's tower industry is "fast consolidating into an oligopoly with three large tower companies," Fitch Ratings said in a note on Sunday.
Fitch forecasts that by the end of this year, Protelindo will control about 30% of the telecom tower market in Southeast Asia's largest economy, followed by Mitratel at 24-25% and a third tower company, Tower Bersama Infrastructure, at approximately 20%.