Indonesia Towers Compelling case for consolidation; TOWR to OW on valuation and M&A optionality

Research evidence excerpt

Indonesia Towers Compelling case for consolidation; TOWR to OW on valuation and M&A optionality

J P M O R G A N Asia Pacific Equity Research

09 June 2026

Indonesia Towers

Compelling case for consolidation; TOWR to OW on

valuation and M&A optionality

Over the past three years, Indonesia’s main towercos (MTEL, TOWR, TBIG) have ASEAN TMT

ACunderperformed the JCI by 5-55%. This underperformance has been primarily driven Ranjan Sharma, CFA

by a multiple de-rating, stemming from a declining return on capital amid challenging (65) 6882-1303

industry dynamics following wireless operators consolidation. We believe MTEL and ranjan.x.sharma@jpmorgan.com

TOWR valuations are attractive with the trading multiples implying little to no growth J.P. Morgan Securities Singapore Private Limited

and attractive FCFs. We are upgrading TOWR to OW (from N) on attractive Steven Suntoso

valuations with the stock trading at a 2027E EV/EBITDA of 5.3x and a P/E of 4.6x (622-1) 5291 8090

steven.suntoso@jpmorgan.com

with an FCFE yield of 18%. The compression in ROICs to parity or lower than cost PT J.P. Morgan Sekuritas Indonesia

of capital raises the probability of industry consolidation that can improve the pricing

Sigrid Qiu

power of tower companies and their lease rates, in our view. The attractive valuations (65) 6882-1454

could even bring in capital from global infrastructure and alternative asset managers. sigrid.qiu@jpmorgan.com

MTEL (OW) continues to be our preferred pick in the space. J.P. Morgan Securities Singapore Private Limited

Ankur Rudra, CFA

• Current industry dynamics favor wireless operators. After the Indosat- (65) 6801-3237

Hutch merger in 2022 and the XL-SmartFren merger in 2025, the wireless ankur.rudra@jpmorgan.com

industry is now made up of 3 players.