Okay. Good afternoon, everyone. My name is Selvie. Welcome, and thank you for joining us in the earnings call of PT Sarana Menara Nusantara. Here we have several directors from Sarana Menara. First of all is Pak Hartono Tanuwidjaja, the Director and Group Investor Relation. Also we have Ibu Monalisa Irawan, the Head of Corporate Secretary, and we also have Pak Ardan, the Head of Sustainability. Welcome. Without further ado, I will hand over the floor to Pak Hartono to start your presentation. Please, Pak, the floor is yours.
Okay. Thank you, Selvie. Happy, can you help me to present the slide? Okay. Today, we try to come up with a slightly different presentation slide from the previous one. Hopefully, it will give us more insight about our company. And of course, welcome if there is any comment and suggestion for us so we can improve further, so we can have a deeper understanding about the company. Okay, next, Happy. Okay. I start with this page. This actually explains who we are. If you can see that we are now a digital infrastructure company with 37,000 towers and close to 183,000 fiber optic cable. We also have a defensive business model, which is the capital is highly predictable, supported with the long term and non-cancelable contract with the bonafide customers.
In number three also, we try to explain that our infra asset actually can be highly utilized through a multi-use ecosystem that creates different revenue stream from the same asset. Again, this will be another slide. In the following slide, we can go through one by one on it. We are strong. We are investment-grade rating. Of course, it will create a very highly competitive with the low cost of fund. Our net debt to EBITDA is less than 4x. Our company actually, the covenant with the bank is using the net debt to EBITDA, and the covenant with the bank now is maximum to 5x, and we are now with around 4x, slightly before 4x. It is quite a comfortable one.
Again, also with this asset and then the business model and the investment grade rating, we can create a sustainable and strong cash generation, which actually at the end can bring the, deliver the shareholders' return through dividend and value creation to the growth of the business. Next, Happy. Now, the second slide is talking about what we are. As you can see, we have quite a scalable asset, with 36,000 towers and 182,000 km fiber. It gives us the benefit for further CapEx expansion and also an efficiency in the CapEx and OpEx because we have enough scalable of the asset. It really give us a room to create that kind of benefit. The second one also, like I said, we have IDR 100 trillion remaining contracted revenue, so it really gives us the highly predictable cash flow and low volatility.
Because it is a recurring business model too. The next one is that we will talk in the following pages about this, which is quite new compared to the previous presentation. We can show actually that the multi-use of our core asset, tower and fiber, to generate different multiple revenue stream on it. The next one, we are investment-grade rating, so our borrowing cost is competitive low and we have financing flexibility. As you can see that our net debt to EBITDA is below 4x and our covenant with the bank is up to 5x. Now also talking about our ecosystem. In the following pages, we can see what is our total ecosystem within the Protelindo Group or TOWR. You can have a deeper understanding what is our competitive compared to the industry. Next, Happy.
Now we are talking about the tower first in here, which I think most of you already familiar. This is our ecosystem, sorry, this is our total ecosystem. If you can see in the right-hand side, we have a tower, we have fiber, and we have also a VSAT. It is a C-band. We have a five transponder, which is a good complement to our fiber business. Later, we can touch base on that. Now we have a managed service. As you know that starting this year, we consolidate our subsidiary called BMG or Bach. They are actually doing to support the managed service for those assets. If you can see from the diagram here, with the same asset like I said, tower, fiber, and VSAT, this is the revenue stream that coming out from those assets.
We have a tower, fiber- to- the- tower, fiber- to- the- home, connectivity solution, and adjacent businesses. The reason we put this kind of picture in here, if you say a connectivity solution, you know that we have to do this connectivity solution, we need, let's say, a POP. Most our POP is located in our tower. This kind of synergy that we want to share moving forward. Next, Happy. This is the tower business model. I think most of you are already familiar with this. It is a build-to-suit model with a non-speculative CapEx because we build on the order from the customer. We have a guaranteed return within the contracted period and then followed by the colocation expansion.
If we have the second tenant, the business model allows us to generate more EBITDA margin because one tower can be occupied by two or three tenants. Our tenant is, of course, the telecom operators, which is highly creditworthy. This tower business model is a 10 years leases with a non-cancelable one. Also want to start to share that some of the questions that come to my desk is about, is there any price escalation? Yes. The lease are comprised of two things, which is the CapEx portion and an OpEx portion. We have the price escalation on the OpEx one. Next, Happy. This one is the new slides that we try to share. If you can see here, the method of this tower fiber business is one cable. One fiber optic cable can generate multiple revenue stream.
When we deploy a cable, it can contain between 12 to 48 cores inside one fiber optic. This can be used for fiber-to-the-home, fiber-to-the-tower, and also for the connectivity. Let's say, move to the right-hand side, the top one, the fiber-to-the-tower. Again, this is fiber-to-the-tower. The business model is similar to the tower. It is a build-to-suit one. It is a long-term contract, 10- 14 years, non-cancelable. Again, it is a non-speculative one with a predictable IRR. It is a day one return from the beginning. Now if you see from this fiber-to-the-tower, what we use actually only two up to four cores only to generate our return. You can see in the left-hand side, when we deploy, we can deploy 12, 24, 48, even more cores in one single cable roll.
Meaning that after we the CapEx for this can already recovered by this contract for the build-to-suit contract for the fiber-to-the-tower. But we have extra cost or available cost or unused cost that we can generate revenue when utilize it, let's say, for the fiber-to-the-home and for the connectivity too. It gives us a competitive advantage. First, the CapEx. Let's say when we receive a fiber-to-the-home order after we have this cable. We can use the extra cost to the fiber-to-the-home also, if applicable. It gives us the efficiency in CapEx. It is a less CapEx and faster deployment. The same thing also for the connectivity solution. We can use also the cable that we already lay for the fiber-to-the-tower and fiber-to-the-home.
It is a vice versa, not only connectivity can use fiber-to-the-home, but also fiber to tower also can use the connectivity cable route. It is a multi-use fiber cable. That is actually the message that we want to share about our fiber business model. In the following page, we can start talking about each of them. What is the fiber-to-the-tower, fiber-to-the-home, and connectivity. Next page, Happy. Okay. This is a previous slide talking about our ecosystem, and now we are talking about the asset. This is our tower asset. It is from across Indonesia: Java, Sumatera, Kalimantan, Sulawesi, Maluku & Papua. As of June, we have close to 37,000 towers, which is year-on-year is grow 3%. And our tenancy is now around 1.65x tenancy ratio, which has grow 5% year-on-year.
In the bottom side, you can see also the trend from back to 2007 until this year. If you can see, even in the early years of the tower business, we can have five or 10 operator and now become five, four and now three. But you can see despite of that consolidation, we are still growing the tower business healthily. With the 37,000 towers tenancy with 1.65x , it shows that we can handle all the issue whenever there is a merger in the operator. Now the operator become three now. I think we believe the headroom of this tower business already come to the end. Next, Happy. Tower business. This is the split of our fiber network. Java, Sumatera also quite dense. Sulawesi, even Kalimantan now approaching to the 10,000 km now.
This is our fiber network across the main island of Indonesia. And we have 800 POP to support our connectivity business. And we have also submarine cable, which is connecting to the major island Indonesia. Now, the first one is fiber-to-the-tower in the right-hand side. In terms of the billable kilometer or kilometer generating revenue, we now book 234,665 km, which is increasing 6.7% year-on-year compared to last year. And the utilization ratio is 191%, is increasing also from 180% last year. I want to highlight on this utilization ratio. Like I tried to share in the previous page, this 181% actually is not counting the cable that actually lay first for the FTTP, but later on used by connectivity and fiber-to-the-home. The reason we cannot calculate that, because this is a different measurement.
Like in the connectivity is we do not count the kilometer billable, but we start at the megabyte basis. So it is not the same operational metrics. That is why I just want to highlight this. 191% is actually inside the FTTP only, not excluded what the cable that is used for the FTTH and connectivity. Fiber-to-the-tower now reach 345 cities, which is quite dense now, almost across all the big cities and even the second tier and the third tier cities.
Fiber-to-the-home, the second one. We book more than 1.8 million home pass, with the home paid penetration is 20%. Now also I want to share also about this. You know that our fiber-to-the-home, in the following page, we can see the business model. It actually contain the wholesale and then the B2C one. We can walk through in the following page here.
Fiber-to-the-home exists in 120 cities, and the connectivity even to the 347 cities. So actually it is in line with the story that I tried to share before, that connectivity actually can follow the path of the footprint of our fiber that already installed for FTTP or FTTH. If you can see, connectivity solution is really expanded very well. Next page, Happy. Okay. This is also a new page we try to share. This is actually our ecosystem. It is adjacent business here. Start in the top is a project and managed services. This is mostly the Bach company, our subsidiaries. Bach or BMG. In the tower, we have the build to suit and colocation. Fiber, contain a fiber-to-the-tower, fiber-to-the-home.
A connectivity solution with the media can be used fiber, wireless, satellite, which is the transponder VSAT, and end-to-end, machine to machine. Software as a service also is heavily used by our subsidiary like Varnion in Bali or Nusanet in Medan. They find this is very useful for them to have these Vlepo or Keponet, Megalos, as they are bundling with our connectivity services. So we find that with this bundling, we can increase the stickiness of the customer. Next one is digital infrastructure in the left-hand, below one. We have white label ATM. It is ATMI. The company name is ATMI. We have a joint venture with seven bank, running the ATM business in Indonesia. We have now around 9,000 ATM machine across the Java, Sumatera, mostly in Java, Sumatera.
Now I want to highlight also this white label ATM is not only the infrastructure, the machine, but also the money inside the ATM machine is belong to us also. So it operates like a bank actually. It is a white label ATM, meaning that even you have a card, let us say from BCA or from Bank Mandiri or from BNI, you can do the transaction in this machine. It is like ATM Bersama. Also we have payment gateway, which is iFortepay. The reason we come to this business also, first this is a complement to our connectivity business. So it give our customer is additional method of payment for their bill from us, is iFortepay. And we have energy solution, which is green energy. Now is a rooftop panel, power as a service, and genset solution. Genset solution is managed by Bach, our subsidiary.
We also start enter to the AI type of thing. We have an edge data center, cloud computing solution. We manage to like the H200 GPU in one of our data center to provide the cloud computing solution. IoT also, one of our subsidiary, Integrasia, is heavily involved in the IoT things. They can use different technology here, like mainly LoRa at the moment. So this is actually the business lines within the Protelindo Group or TOWR. So hopefully it can give more understanding about our company. Next. Okay, this is the performance. The revenue is year-on-year grow by 4.8%, now reach to IDR 7.2 trillion for the first half of the year. The EBITDA grew 4.8%. Now, why the revenue is growing 12% and then the EBITDA is growing by 4.8%? Because starting this year, we start consolidating the financial for our Bach or BMG.
BMG has a different business model, which generates the lower EBITDA margin. In term of EBITDA margin, it is quite bringing down the EBITDA margin. But in term of the Indonesian rupiah, it is quite healthier. Net income is grow by 12.4% year-on-year. Again, this is also already taking into account the BMG for six months. Next slide. This page show us actually the growth by each sector or each business line. Tower, as we understand, the revenue reduced by 3.3% from last year, mainly because of the repricing when we do the deal with XL Smart merger. However, I want to highlight also here that with the agreement that we reached with XLSmart, that yes, there is a slightly repricing on the lease price, but the contracted revenue actually reset to 10 years from the beginning.
That is also the reason that our remaining contracted revenue is exceed IDR 100 trillion. Also, there is no churn from the merger of XL and Smart. That is also the key that I want to highlight here. FTTP grows steadily 3% year-on-year, FTTH 2%. The connectivity is grow 33% from last year. This connectivity business is steadily in the last five years, the CAGR growth is around 20%. This is one of the driver also within the total revenue. It contributes meaningfully also. Adjacent business, now IDR 766 billion, mainly coming from Bach Multi Global. That only start to be consolidated early this year. That is why compared to last year, it is significantly down. Next. This is try to share how is our contracted revenue. As I mentioned, it is exceeded IDR 100 trillion, which give us the It is a long-term guaranteed recurring revenue.
It is around nine years of revenue. If you see in the comment in the last paragraph, it is around 2.2 times of the loan as of June this year. Next. Also want to share our loan, the balance sheet. We have a very low financing cost during the first half is our blended borrowing rate. Our net debt to EBITDA is, like I said, slightly below four. Our loan. If we exclude the revolver one, so the fixed rate now comprise of almost half with the floating rate. The fixed rate is 47.5% compared the floating rate of 52.5%. In the loan, most of it is IDR loan. We have around 15% non-IDR loan, but actually it is a fully hedged. So there is no exposure on the FX movement. Next. This explain our rating.
We are BBB- from S&P and BBB with Fitch, and the national rating is AAA. ESG, later in the following pages, Monalisa will walk us through about our ESG activities and scoring. We also want to highlight that we are part of the LQ45, IDX80, KOMPAS100, and et cetera. Next. This is our profit and loss in detail. I will go through each line by line, but I want to highlight also the revenue is increased by 12.7%, and our gross income 5.8%, mainly because of different cost structure with the BMG, which can start consolidating this year. The operating income still increased by 4.3%. The EBITDA, if you see in the bottom line, the EBITDA is around IDR 5.5 trillion, which is growth year-on-year is 12.7%.
The EBITDA margin, I said, decreasing from 83% to 77%, mainly because of the consolidating of Bach, which has a different cost structure. At last, the net income margin is steadily healthy at above 25%. Next. This is the balance sheet. I touched base already mainly about the loan. Now, this is actually my favorite page. In here, we can see that in the first six months, we generate the free cash flow around close to IDR 5 trillion, and this can be used for three different buckets. One is to maintaining the growth, the new CapEx, to maintain the growth. The second is to service the debt, and the third one is the shareholder return, meaning the dividend payout. We can see that from IDR 5 trillion free cash flow, we spend IDR 2.7 trillion for the CapEx, ground lease extension, and acquisition.
The second bucket for the interest and debt, we can see that we are still be able to decrease the loan by repayment of loan quarter of IDR 255 billion. Then dividend payout is IDR 400 billion. For me personally, this is the most interesting part. We can see what is the free cash flow generating, and then how it being used. Like I said, this is what I mean about the sustainable shareholder return. From time to time, we try to find a good mix about how, which is the CapEx for growth, for the deleveraging, and also for the dividend payout. Next. Okay, now, ESG, Monalisa can help me to walk through this. Monalisa?
Yeah.
Please.
Yes. Thank you, Pak Hartono. Let me briefly highlight SMN sustainability progress and how it supports our long-term business resilience and value creations. For us, sustainability is not about the CSR or environmental initiative that stand alone. It is increasingly linked to our operational efficiency, risk management, and long-term business performance. From the perspective of reporting, it is also important to highlight that now SMN is in tier one for the implementation of SDG One and SDG Two. It is a new reporting framework that will be effective starting from January 1, 2027. I think I will elaborate more on this in the next slide. For this slide, on the environmental slide, I would say energy efficiency and transition to cleaner energy are the key priorities for us. Until December 2025, our subsidiary, iForte Energi, has generated more than 6,000 MWh of green energy.
We also using solar panel as an alternative system to support our infrastructure while progressively deploying lithium batteries as an alternative to conventional diesel base backup power. We also implement the digitalization and IoT-enabled monitoring. In this case, smart lock technologies, which allow us to monitor and manage our infrastructure remotely. I see this initiative, as I mentioned earlier, not only support the transition energy, but also give us more efficient energy management and operational resilience. On the resource efficiency, we also improve the resource efficiency in our infrastructure development through compact tower design. We try to optimize structure and footprint of our tower and use material more efficient. We also promote the reuse and recycle of material from our dismantled tower and fiber optic assets. This to support more circular and, as I mentioned, source efficient approach to the entire business operations. On the next slide. Yes.
On the social side, I think we continue to leverage our core digital capabilities to create more social impact. I would say Protelindo Sky is one of the example, where we think this is the area where our core capability can create direct impact to the digital inclusions. So, people surrounding our tower site can have access to the educations, information, and broader economic opportunities. During 2025, our program reached approximately 14,000 beneficiaries, with a total fund realization of IDR 4.3 billion. These CSR program are structured around four key areas, which is, as you can see, educations, natural conservations, health, and disaster relief and donations. I think that's all for this slide. We can move to other area of the social impact that we introduce around the culture development and community engagement. We call it Pagelaran Sabang Merauke, is one of the key program.
We see this as a program goes beyond the performance themselves, because I think through this program, the Group shows support on the cultural preservations and also promote diversity and inclusions. The program allow participations of young generations, school, universities, cultural communities, and I think multi-stakeholder collaboration throughout the overall performing arts. During 2025, this program has reached more than 20,000 domestic audience and more than 300 internationals. The broader program itself involves more than 14 communities and school, had more than 100 volunteers and local MSME. Also we involve the employees' children to the show. Last slide, Happy, please. This one touch on the governance. I think it's important because we believe the governance is a important foundation for the overall our sustainability commitment. So during this year, we continue strengthening our sustainability governance and disclosure practices.
We enhance stakeholder engagement through materiality assessment and continue align this with the sustainability reporting with GRI standard and global ESG rating framework. We also obtain third-party assurer and also a continued expansion of our reporting scope. As mentioned, as I mentioned, tier one for the SDG One and SDG Two. Therefore, while we continue with our existing sustainability program, we also are strengthening the underlying governance, data, risk management, including metrics and target that can support our readiness for the new sustainability disclosure requirements. I think I will not elaborate on the recognition from the third parties, as you can see on screen. But ultimately, this recognition, we see this as a part of the journey rather than the end goal. Our remain continuously strengthening the more transparency and accountability and compliance around the sustainability management. I think that's all. Pak Hartono, I hand it over to you.
Yeah. Thank you, Monalisa.
Yeah.
I forget something. Happy, can you go back to the slide number six? Maybe I was too fast on that. Yes, this one. I just want to repeat again this one, this fiber business model, which is quite new in the presentation slide. Fiber-to-the-tower, I just want to talk to the what is the fiber-to-the-tower. Fiber-to-the-tower, actually, you know that traditionally, between the tower, between the site, the operator use the microwave to connect each other. Then because of the usage is already quite high, so it is becoming a congested. Then they need to either put a set of the additional microwave, or they completely replace it with the fiber optic. This fiber-to-the-tower, actually, the business that we lease the fiber connecting the tower, replacing the microwave as a backhaul.
That is actually the fiber-to-the-tower need. Of course, the user is the operator that is connecting the tower. The lease is based on the Indonesian rupiah per kilometer per month for two cores or four cores. It is a 10 to 14 years non-cancelable lease. Again, this is, I want to highlight, is a built-to-suit one, which is a non-speculating CapEx for this. Now, the second one, the fiber-to-the-home. I forget to mention about this. There are two type of business model here. From close to 1.9 million home passes, actually close to 1.8 million fall into this wholesale business model. This is a built-to-suit one, which is ordered by the telco operator to us. So they asked to build the home passes for them, exclusively for them. 10 years non-cancelable. Same.
These are built-to-suit again because they order to us to build a specific home passes. So we build for them from the OLT until the ONT inside the customer premises. The telco operator actually the one who sell the product using the infra that is provided by iForte. Again, this is a built-to-suit, and the home pass build is exclusively for them. That is why there is a minimum payment from them.
So you know that the fiber-to-the-home, the business model is the payment is based on the home connect or the activation, right? Number of activation. But since this is a built-to-suit model, still they pay the sum Indonesian rupiah or a certain money as per home connect, but with the guaranteed home connect to us. So there is a minimum payment, and then, let us say 12%, 15%, 20% or 25%. That is the wholesale business model that currently iForte doing.
Out from 1.9 million home pass, 1.8 million actually fall into this wholesale business model. Now, the second one is a built-to-suit model. Now, it is not run by the iForte, but it is run by our subsidiary like Nusanet, Varnion, Remala later on, like that. But their targeting is a C minus and D market, and also in an exclusive area. Connectivity solution is the charging is based on the Mbps, the megabyte per second, with the contract. This is actually a dedicated internet with the corporate client. So it is considered as a B2B. The period is one to five years, but with the auto renewal, meaning that usually like you at home that you lease the Indovision or whatever, the contract is one year. But after one year, you still keep paying the subscription fee.
This is a new slide that, apologies, I have been too fast on this before, and now I come back and then try to walk through about this business model. Fiber-to-the-tower, fiber-to-the-home, and the connectivity solution. Again, the method for this is we can utilize the same fiber optic, can be for the three different revenue stream. fiber-to-the-tower, fiber-to-the-home, and the connectivity. That is why what we mean, and if you see in the left-hand side, it is a high operational leverage with a minimal incremental cost to use the available cores that we have. Okay. I think that is it. Yeah. Okay, Selvie, I think that is it from me.
Okay. Thank you so much, Pak Hartono, and also Ibu Monalisa, for the comprehensive presentation. For all participants who like to ask the question directly, please just press your right-hand button, or you can also type it on the chat box. Before I go to the Q&A for the participants, please allow me to take the first question, yeah, Pak?
Yeah.
About the telco operator, Pak, that just increased the guidance on the CapEx spending after they acquire a new spectrum. Could you give us any color, Pak, or any potential for the new orders for the build-to-suit and also the colocation, Pak, for towers and FTTP?
Okay. Yeah, as we know, there is a new spectrum already distributed to the three players in 700 and 2.6. We see that this is a very good catalyst for the tower business and fiber business. As you know, the purpose of this new spectrum actually to increase the coverage and also to increase the quality of the services from the operators. To be able to achieve that, they need more towers and fiber optics for sure. We see this as a very good catalyst to our company, and I also can elaborate more like this. If you see that we have financing flexibility. Second, we have a long, good relationship with them, and we have proven that we can do the rollout. You know that in the previous, we can build and buy. In this case, it is a build one.
We have proven that we can build if there is any order from them. We are ready to take the order from them. Again, this tower business, fiber-to-the-tower, and then wholesale of the fiber-to-the-home. This is a customer-driven business, meaning that they actually give us the order. We are quite passively waiting for the orders.
But if you can see, in the last previous quarters, you see after the consolidation from five to four to three, you see the ARPU is if you see the report steadily is improving, meaning that they should become healthier. It gives us the operator of the engine to grow in a better situation because the price war, I think is quite manageable now. If we are talking about our outlook, it is a customer-driven business. But if the times comes, we believe that we are capable to do that.
Okay. Thank you, Pak. We already received several questions in the chat box. The first is from Danif Esfandiari. She has two questions. The first one is, can we get updates on XL Smart post-merger sites? How has the site relocation and renew site process progressed so far? And how many sites have been impacted?
Okay. The deal with XL Smart is a combined deal actually, tower and fiber. We managed to close the deal with them, and then we are happy because we believe this is a very win-win for both parties. With the deal with XL Smart is we agree on the no term basis for the tower. Yes, they agree on the slightly repricing on the lease price. But with the reset of the lease becoming 10 years from the execution date. That is from the tower side. Together with the fiber side also, they give us another deal that, again, the same. It slightly decreased on the price on the FTTH one, but at the same time, they give us new order on the FTTP for the fiber-to-the-tower. It is a package deal. We believe this is a very good deal for both parties.
No term, you can see. The relocation, yes, that is slightly different with what we do previously with IOH. In here there is a deal that they can relocate to our existing sites, which is we have 37,000. Yes, there is obligation to build-to-suit, but it is not many. It is like 200 or 300 only. So the rest is the tower. What I am trying to say, the deal is in term of CapEx, we do not spend too much CapEx to maintain the revenue.
Okay. The second question is about FWA, Pak. How many orders have you received so far, and how does the FWA pricing compare to the typical colocation?
Okay. Yeah. FWA, we start engaging with one of them. So far we received around We hope that we receive already around 2,000 to 2,200 orders from them so far. Again, that we do not build for them. This is only for the co-location only, meaning that we do not build the tower specifically for their requirement, but instead we offer them the co-location on our existing tower. The price is pretty close to the one tenant in the traditional tower lease. You know that FWA, there is 360, right? Depending on whether they want to put a cost 360 or they only want to cover 120 degree. But if this is a full stack, which is cover the whole surrounding area, the lease price is the same with the traditional tenant in tower. The same also 10 years non-cancellable contract.
Okay. Thank you, Pak Hartono. We move to the second participant. The questions come from Steven Suntoso. The first question is, with the XL Smart negotiation mostly finalized, Pak, do you expect improvement in the lease rate from this point on? What the lease rate that you are getting for the new tower contracts?
Okay. Yes. I mentioned that in the tower lease rate, the majority deal is the lease is comprised of two, which is the CapEx portion and the OpEx portion. The CapEx portion is flat over the contract period. For the OpEx one, there is a yearly escalation clause, which tied mostly to the inflation index. Moving forward the lease rate, I think should be steady at the current level because the consolidation in the tower provider also have an impact of this.
For the second question, Pak, could you please give some color on the ROIC or return on the invested capital for the FTTP business, Pak?
It is a double- digit. Of course, it is double- digit, but when you see the ROIC, you should see it is not only for the beginning of the contract. So it is a steady one, it is double- digit. We expect a double- digit one.
Okay. The third question, Pak, can you please share your guidance for the number of the tower and also the tenancy, Pak? Tenancy ratio and the CapEx guidance.
The CapEx guidance for this year is combined. There is around IDR 4 trillion-IDR 5 trillion this year. I want to put a note that part of it actually is for the connectivity business, which is the one-time CapEx. I can say that quite a lot, big amount actually to secure the submarine cable, which can be used for 15 years. So it is IDR 4 trillion-IDR 5 trillion this year, including the one-off CapEx for the connectivity.
Okay. Noted, Pak.
Do not forget our CapEx I mentioned mostly is a build to suit one. So whenever we spend the CapEx, it is non-speculative one.
Yeah.
It is also always coming with a day one return.
Okay, Pak. We move to the question from Calvin Kurniawan, Pak. Can you share the TOWR big picture vision and plan to capture the AI, Pak, and data center trend? How does Data, Remala, or Bach and other future investment play the roles?
Data center always the path for our industry. You know that the path is tower, fiber, and of course data centers. Data center always been an area that we are interested to coming in, but we still looking at the correct way to enter to this business. But we agree that data center is important for our ecosystem. We are reviewing it and then at the right time and the right project, we are very interested to come to the data center business.
And for the second question, Pak, how is the company
Sorry. By the way, about data center, as you know, data center has two different business model, the co-location and then the hyperscale, right? As you know that we have actually several edge data centers. Currently we have it, but for the purpose actually to serve our connectivity business. You know that we serve close to 10,000 enterprise customer for the connectivity business. So they need also data center, a small data center, edge data center. So we have data center, several data center, edge data center, which is actually to support our connectivity business as a co-location type of business.
Okay. For the second question, Pak, how is the company positioning in the fiber industry after the corporate action happening in the industry, Pak? Do you expect any notable change in the business?
Come again, Selvie.
How is the company's positioning, Pak, in the fiber industry?
Our position in the fiber industry. I said that we see that especially after this new spectrum and then 5G things coming in, they need more towers and more fibers. I also touched base before that in term of financing, we have a flexibility. Our net debt to EBITDA only is less than 4x from the 5x, covenant with the bank, so we are able in term of financing. The second, we have the ability also to get the big order. It's proven that we can roll out. We have a very good and long relationship with the operators. So we believe that whenever that comes, we will play quite a big role in that.
Okay. Thank you, Pak Hartono. There is also a follow-up question, Pak, from Danif. What is your estimate on potential FWA orders in the next few years?
Okay. FWA, I read some of the article that you know that to get this spectrum for them is quite expensive. Yeah. And also they have a yearly fee for the spectrum, is also quite expensive. Logically, they have to roll out. They have to roll out to the quite a sizable amount to cover that fixed cost. The spectrum fee is a fixed cost for them. We believe they will become very aggressive to achieve that. But also at the same time, we know this is a new technology. Yeah. This is their first year. We hope and we believe they can be success on this new technology, FWA, and then we can grow together with them. But so far, our strategy is we don't build the new tower for them. We just try to maximize the existing tower.
Because if you know that the FWA, they need the space for rent is not as high as the normal tenant. They need only around 25 m only. And then our tower height average is 60 m to 70 m. That tells us that actually we have the available space there. So that actually that will be complement to us if they start aggressively roll out the project.
Okay, Pak. The second question is more specific on one tenant, Pak, which is Indosat. Could you provide the updates how the orders from Indosat have been trending recently? Are you seeing any acceleration or improvement in order flow from Indosat?
Yes. This year, we see some orders coming from Indosat after the consolidation after the mergers. But this year is still like a relocation still, some of that. But we believe that this year will be the last year for the relocation become finished. Starting next year, we hope to see that more orders, the new orders coming in from Indosat as well as from XLS. Because we see that XLS, the integration process is also faster. So we hope that next year we can see more orders coming from XLS.
Okay. Thank you, Pak. Again, participants, if you would like to ask questions directly, you also can press your right-hand button. We still have another question in the chat box, Pak. A follow-up question from Calvin. From the disclosed segmental report, the non-tower business seems to generate much higher ROA and ROE compared to the tower business. With the recent corporate action in the industry, do you expect this trend to continue?
Sorry, come again, Selvie.
So, the non-tower business, Pak, in the report, in the segment, it generate much higher ROA and ROE if we compare to the tower. So how about this trend will continue?
Yeah. Okay. I think tower and fiber should generate good ROA and ROE. However, maybe because tower is slightly because of the merger of the operators. In the normal days, I think, I believe that the tower and the fiber is as good as in terms of the ROA and ROE. But because of the consolidation in the operator, which slightly impact the tower, it makes the ROA decreasing. But in the long run, I think both generate a very good ROA and ROE.
Okay. Thank you, Pak. If we have no more question left in the chat box, maybe I can also add one question, Pak, about the adjacent business. Currently, it is already 10% contribution. How to see this segment, Pak, in the future? How company expect or the contribution or the growth for the next two or three years? Will it going bigger in the contribution?
Yeah. The adjacent business, the big one is if you see the result of the first six months is from Bach Multi Global. It is IDR 700 billion. Most big portion of it is coming from BMG. We see BMG there is quite room to increase. Let me tell you the story about why we acquire Bach. Maybe five to six years ago, when [inaudible] approach Protelindo to manage the tower site, they used several vendors to manage the tower site. Then as you know that from time to time, we try to be more efficient on the OpEx. So we try to negotiate and find a way to reduce the site maintenance expense. After several attempts, we do not see any room again to be more efficient.
Then we come up with the idea that why do not we just pick one of them and give all the orders to one vendor. So the scale really can take place, and then they can give a better price for us for the tower. So in the beauty contest, and the best is BMG. So we give all the tower site maintenance to BMG. At the same time, we believe that we need to have an influence on this company. That is why we now become a controlling shareholder of BMG, because all the site is managed by this company, which is the important role of the tower business. Now, what you see, suppose we try also to give more fiber maintenance to BMG in the longer run. So we believe there is still a bigger room for BMG to grow.
Also if you see the other business of BMG is the genset. genset contain of the some big portion of it, managed surface genset, which is a recurring revenue also BMG. That's also a promising area that BMG can explore. The other one also, I think, Selvie, we also discussed about the solar energy. The green energy. That's also that is a promising business in the future. So let's see whether this really we can materialize the opportunity there. In short, yes, there's a promising room for expansion in the adjacent business.
Thank you, Pak Hartono. We have no question left, Pak, here. So before we end the call, maybe any closing remarks from Pak Hartono or the team?
Yeah. I want to summarize also that starting this quarter, if you see the presentation slightly changes from the previous one. Because we believe that if you see our non-tower business now represent more than one third of the total revenue. So we believe that we need to disclose more on the non-tower business. This is the first time that we change the format. We understand that it's still some information that we can share for our knowledge. But feel free that if you have any suggestion or that how we can improve the way or the information that we can share to all of you. Please drop me an email, or Happy or Monalisa, so we can look at that.
Okay. Thank you so much, Pak Hartono, Ibu Monalisa, and Pak Ardan. Thank you everyone for joining us in this afternoon call. Have a great long weekend. Thank you.
Yeah. Thank you, everyone.
Thank you, everyone.
Bye.
Thanks, Selvie.
Bye.
Thank you, Pak Hartono, Ardan.