Our telco tower coverage (TOWR, MTEL, and TBIG) showed solid 3Q24 performance, with aggregate revenue reaching IDR 7.4tn (+4.5% QoQ, +9.1% YoY). The growth was primarily driven by TOWR (+6.0% QoQ, +12.0% YoY), which gained revenue boost from its recent acquisition of IBST, and MTEL (+5.5% QoQ, +10.5% YoY), attributed to organic tower and tenant expansion, as well as the addition of approximately 2,000 km of fiber optic lines. Meanwhile, TBIG lagged behind the pack, with flattish revenue growth of +0.2% QoQ and +2.4% YoY. On the bottom line, aggregate net profit slightly declined on YoY basis, totaling IDR 1.7tn (+0.9% QoQ, -2.7% YoY), primarily due to higher interest expenses and margin pressures from IBST on TOWR.

We anticipate 2025 to be a promising year for telco tower industry, mainly due to: 1) tight competition among MNOs, which could help boost tenancy ratios; 2) the transformation of Kominfo to Komdigi (Communication and Digital), signaling the government’s strong commitment to digital advancement and penetration; and 3) opportunities to build more towers in uncovered areas, particularly in Eastern Indonesia, as MNOs seek to develop their subscriber base by expanding coverage. Potential downside risks include higher churn rates and discontinuation of lease contracts following the consolidation of EXCL and FREN.

Our pecking orders are TOWR (BUY, IDR 1,160), MTEL (BUY, IDR 780), and TBIG (HOLD, IDR 1,920).