JAKARTA. PT Bali Towerindo Tbk (BALI) will use around Rp 120 billion or 15% of the funds obtained from the issuance of its Shelf Registration Bonds I/2020 for its Fiber-to-the-X (FFTX) expansion.
Fitch Ratings, a credit rating agency from the United States, considers the move as a high-risk one, since 80% of BALI's revenue comes from its tower rental business line as of Q3 2019. Meanwhile, FFTX business only contributed 15%.
"The company does not have contracted revenue from its FFTX business, and it also faces higher pressure from stronger, more experienced players," Fitch explained in its official statement.
BALI's decision to fund the expansion of the FFTX business over the next 2 years through debt instruments, is also considered to have a negative impact. The company's free cash flow is even expected to be negative for the next 2 years.
Not only that, the company's net profit margin is also predicted to be corrected further, as the company's EBITDA margin fell from 67% in 2017 to 65% as of Q3 2019. BALI's EBITDA margin is also said to be lower than the EBITDA margins of three biggest tower operator companies in Indonesia.
Nevertheless, PT Indonesia Infrastructure Finance (IIF) has provided a guarantee of 50% or Rp 400 billion, from the principal of BALI bonds of Rp 800 billion. (KR/AR)