JAKARTA – The merger between PT XL Axiata Tbk (EXCL) and PT Smartfren Telecom Tbk (FREN) has sparked negative sentiment in the market, according to a report.

The corporate action is expected to pressure EXCL's financial performance, which has been showing positive growth. As of the first nine months of 2024 (9M), EXCL recorded revenue of IDR 25.36 trillion and net profit of IDR 1.32 trillion. In contrast, FREN has posted continuous losses since the fourth quarter of 2022 (Q4).

According to a report from PT Ina Sekuritas Indonesia, this pressure is likely to affect the performance of telecommunications tower companies.

“Concerns surrounding rent renegotiations and delayed contract renewals have worsened the already neutral outlook for tower companies, with limited short-term catalysts,” stated Ina Sekuritas in its report.

Despite this, tower companies like PT Sarana Menara Nusantara Tbk (TOWR) and PT Dayamitra Telekomunikasi Tbk (MTEL) are still seen as attractive investment opportunities, given their stable fundamentals and promising growth potential.

TOWR recently acquired shares in the telecommunications tower company PT Inti Bangun Sejahtera Tbk (IBST) in 2024. This acquisition is expected to strengthen TOWR's net income.

Meanwhile, MTEL has expanded its presence in Kalimantan by opening over 80 new sites. MTEL has also enhanced its service coverage with Starlink and High-Altitude Platforms (HAPs), potentially boosting its customer base by up to 10%. (KR/ZH)

Check out the full report here.