I think it's four minutes plus 4:00 P.M. plus, Selvi, if you want to start. You're on mute. I cannot hear you.
Sorry. Hello.
Hi.
Hi. Hello, Pak Adam. Thank you for joining us.
Yes, thank you for having us.
Okay.
All right.
Good day, everyone. Thank you for joining us this afternoon. Today is welcome to the Sarana Menara Conference Call for the FY 2023 result. I am Selvi, the Research Analyst from BCA Sekuritas. All the participants are on the listen-only mode and after the presentation from the management, which is Pak Adam, there will be Q&A sessions. To ask the question, please press the raise hand button, and we will open the line for you. Our speaker today is Pak Adam Gifari, the Vice President Director of Sarana Menara Nusantara. Without further ado, Pak, I will now hand over the call to you to start the presentation. The floor is yours, Pak.
Thank you, Selvi. Thank you everyone for your time, your interest to participate in today's call with the company. We just released our results early this morning. We still be on schedule for the earnings call in the afternoon, which is now. Let me walk you through the presentation that we have prepared for these full-year results. Can you see this?
Yes.
I want to make this full screen. How do I do this? Now we have top left, we have 30,558 towers and 213,463 km of fiber, including this fiber 213 is including that of the revenue generating. If you apply utilization ratio more than 1.8x, then you come across the actual kilometer pole of fiber that we have under FTTP. As a matter of fact, it is the only part of the fiber that we have been able to present in an incremental return mode like the tower tenancy ratio. So far, we still maintain the build-to-suit model, similar with towers, and we include with fiber. For now we have towers, we have Fiber-to-the-Tower , we have FTTH.
And then, I think to some extent, the only one that is not build-to-suit is the enterprise segment, under which we basically go after the customers, go after where they are located, and then try to do as much as possible when getting them, when obtaining their business, their service is they using existing infrastructure that we have. To the left, we still have so far investment grade ratings as maintained with S&P as recent as two weeks ago. And with Fitch is still, I think should be the same. CAGR revenue and EBITDA around 15% over the past five years. ROIC, return on investment is 8.5%. ROE 21% as of December 2023. The stocks has all these particulars. The most recent one is that we get upgrade to double- A by MSCI ESG Ratings.
Capital management, I think, by way of update, for those who are following the company, we think we should have so far the last one issuance we did was first quarter 2023. So we want to do another one as soon as we can, just to be sure when there is a fine moment for us to issue IDR bonds, that we are able to do so. So we are preparing what Indonesian call it PUB, Penawaran Umum Berkelanjutan, which is I think in U.S. terms called short registered bonds. So we will be prepared something like that in coming quarters, second quarter. We're about to launch it in a matter of weeks. So far, number two, the low-risk business nature, is still there.
Only by the time we agree for our customers to move, such as that with the IOH situation, that the customers can move their financial liability to another locations. So, we can talk more about this, but basically, we have been so about 7,000 of leases with IOH post their merger needing to be solved because, they're located in a lot of locations that are redundant. From 7,000 around 1,000 is already short-term contract. So, Indosat Business after the merger decided not to renew, and then that leaves us with about 6,000. And then during 2023, we allow for some 2,000 relocations, including with co-locations on our existing sites. And then so far, this month of April, we have received about 1,000 accumulative from IOH to be relocated.
So that leaves us about 3,000 something of sites under IOH relationship needing to be relocated, which means that we have Left about 45%, the relationship with IOH that needs to be relocated to new locations. Just by way of update to everyone in this call, because some questions came our way. So, that's as of today, which is end of March, early April. So that's where we are today when it comes to that IOH situation. ESG- conscious company, I think we got the mandate, basically from the board, to continue to promote where we can contribute for a cleaner sector. I think some of you may have noticed that we have launched a company called iForte Energi Nusantara to basically complement our existing footprint of infrastructure. So when it comes, there is a more stringent, there is more cost related to excessive emission in the sector.
We are prepared, yeah. It is called iForte Energi Nusantara. The company is newly established in 2023. It is called iForte Energi Nusantara because it is basically anything that is non-tower based put under iForte. The industry is consolidating. We have seen just, I think two months ago or one month ago, MNC cable TV business was sold to Indosat. We expect to see more of that. Cable business being sold, fiber business being sold, including towers. There is also possibility for more towers to be sold to whoever has the interest. I think our position is to always look at opportunities, because we have seen what happens with the telcos. After consolidation, we see better financial metrics, better valuation. We want to be active in that space as well. I think contracted revenue, IDR 71.1 trillion, is a significant increase from previous quarter.
I think previous quarter was about IDR 64 trillion, IDR 65 trillion. We had a lot of renewals also, Indosat Ooredoo, XL, that has taken place for this year expirations. Again, we have done it with something that is usual for us. I think for renewals, churn rate is still expected to be around 1%, which is normal in the tower business. You have seen our numbers. We can talk more about dividends. The cash flow is still quite strong. The margins on cash flow is quite strong. We intend to basically continue dividends that we have seen in previous years. Going into next slide. This macroeconomy slide, we just added this quarter because we think this is an important slide to talk about when it comes to investment in Indonesia.
A lot of investment that has come our way in Indonesia, in downstream industries, I do not think it is going to be stopping here, especially that we have seen continuation of the mandate of the newly elected president that is going from the previous president, is going to take place in Q4 this year, and it is going to be a continuation. I think we are very much quite optimistic on where the country is going. Infrastructure spend continues to be important, continues to be significant and a lot of new places, including in Java, will need infrastructure for telcos as well, and that is where we will be. I think for us, no longer dependent on raw commodity prices, but also the value added going forward is important for the country as well as the rupiah. If you look at Sarana Menara Nusantara stock as a rupiah asset.
The telco industry, since the way we look at these two charts, ever since the consolidation taking place in 2021, we have only seen price repairs here for Indosat Ooredoo, XL and Telkomsel. Hopefully this continues, there will be more better monetization of previously made investment by the operators, the towers, the fiber equipment, et cetera. We are cautiously optimistic on the trajectory of this business. Basically offering the same thing, but market structure after certain consolidation can be beneficial for parties involved. Where we have our towers portfolios, I think the split is still around 52%, 53% in Java. We have now going 30,500 towers. We have discussed earlier on that we will be doing a lot of new towers location to serve as a location for IOH post-merger.
This tower count will grow quite significantly from 30,000 to 31,000, 32,000, et cetera, based on the need of the merging parties. Our portfolio of fiber, as you can see here, Java is about 117 km and all these numbers are inclusive of the utilization ratios, as you can see in the asterisk below. Total is 182. Java is 60%, where we have locations, where we have fiber connected FTTP for the backhaul purpose. Sumatra, Sulawesi, Kalimantan are all basically pretty much zero when we started five, six years ago. These numbers on the top, just below the map is excluding that of the FTTH under which we have close to 13,000 km of fiber under FTTH. We are hopeful whatever new fiber solution we are offering to the industry can basically piggyback on all this fiber that we have in the whole of country.
As you may remember also that we only started this fiber venture 2017. Most of our fiber are basically very young, six to seven years old. We probably have among the youngest fiber cable in the country, with the new mindset of build-to-suit still, that is not available in any other markets in the world yet. We can continue talking about this, but we haven't seen any other example like this in market outside of Indonesia. Our build back return strategy, invest in towers for co-locations, expand fiber optic networks. Now we have expanded into FTTH also. You can see also the numbers there. The growth is quite substantial. We continue to see established relationship with customers. We expect to see also from another customers who are wanting or needing our help with their FTTH expansion.
We have a liquid balance sheet, very high cash flow generation from revenue. I think I saw a number, around 70% to 80% of cash is turned into cash flow from operations, from collections. We are using a lot of that cash to basically reinvest into the business, organic or otherwise. During 2023, we added 764 towers. We added 32,400 km of revenue-generating fiber, added 2,100 activations. Home Connect added during the year of more than 100,000 with a total of additional 642,000 homes passed during the year added. So return, so far we are intending to protect investment grade. Retaining dividend policy we mentioned about, whatever numbers that we are showing this year, 2023, the intention is to keep the dividend policy of IDR 1.2 trillion as slated in our budget. This is continuation of what we started in 2017.
Tenancy ratio 1.78x over the total towers, 30,500 and 54,300 tenants. A decrease as we have described before, since we are basically allowing for relocation. The two tenant towers becomes one, and then one tower that we are building anew for Indosat relocation, will translate into lower tenancy ratios, before we end up getting more business from the IOH relationship after all these exercises. 53% of the towers located in Java, even though we know Indosat post the merger is very aggressive ex-Java. Fiber to the tower, we have accumulated 182,000 km of revenue-generating fiber for FTTP as of December. This is excluding the connectivity fiber as well as FTTH fiber. Right now we are looking at growing FTTH very aggressively, given that we have on hand the contracts for us to perform the rollout.
The spend of CapEx for 2023, as you can see, is a continuation of 2022. Meaning that the orange part tends to be higher than that of the tower. 2022 is a bit of an anomaly because we paid for a mandatory tender offer for SUPR shares of IDR 1 trillion approximately in January 2022. In actuality, in 2022, 2023, the spend for non-towers is already much higher than that of towers. The non-tower CapEx is higher than that of towers. As you can see here at the bottom here, the tenancy ratio of towers has dipped to 1.78x from previously 1.81x, but the utilization ratio on fiber has grown on the FTTP, has grown nicely from 1.7x to 1.86x. We continue to do so, basically utilizing our existing infrastructure.
It's just that we have not been able to pinpoint with high accuracy where we see overlap of FTTH with that of the FTTP, or vice versa, where we have seen FTTP on existing FTTH fiber. Not to mention, we also intend to use our FTTH, FTTP assets for our connectivity business. I think the proof will be on the numbers, return on equity at the end of the day. Because the more we are efficient, the less we spend on CapEx, the better we become on our P&L. This is a continuation. I think for 2023, we did not do any tower acquisition. We see opportunities for us to acquire some towers this year, 2024 and 2025. I think this is not to say the consolidation in towers is done, it's finished.
I think there's still opportunity for us to buy something, as well as into fiber internet service providers, to complement our existing footprint. On the table below, as you can see, the growth of revenue-generating fiber continued to grow nicely as well as the number of activations under connectivity. You may see some noises on the connectivity part because some accounts with the government require us to audit it, and then some business may not be continuing because they have replacement, and our solution was only temporary for them. But basically, on the non-government accounts, we are very much active, we are very much aggressive, trying to basically go after the customers in the connectivity segment. This is the CAGR of the revenue growth on towers. As you can see, has dipped a bit from 8.6% just last year, 2022, to 8.4%.
But the growth on the non-tower is IDR 900 billion on its own during the year, driven by FTTP as well as FTTH and then connectivity. EBITDA grew by 12.4%. AFFO grew by 11% because of interest expense. We saw an increase in interest expense during third quarter or fourth quarter in 2023, which is the market did not expect it. We had some of our debts still floating. So that got an impact of that just second half of last year. This is the contracted revenue, IDR 74 trillion, including the IDR 3.3 trillion committed for customers to do business with us. This is a significant increase from previous quarter of IDR 67 trillion. A lot of this driven by renewals and then the new businesses that we have under non-towers. Leverage will remain at 4.3x net debt to EBITDA.
We are doing a lot of organic SaaS for IOH and enter into FTTH, as you can see, during these four quarters here. I mentioned to you already that we have done about 55% of the sites needing to be relocated under IOH relocations relationship. We look to basically getting it done as soon as we can because that leaves the overhang between us and them, between us and IOH, when it comes to new business that we want to do with them. We really look forward to getting it done, the relocation between us and IOH. The average interest rate as of December is 6.1%. Interest from great ratings maintained with S&P and Fitch. Triple- A when it comes to Fitch National Rating Scale . Going over the numbers, I think you've seen this also.
The top-line revenue growth of 6.4% is basically more than what we had expected originally at the start of the year of 5%. We garnered 6.4%. The growth in cost of revenues of 12% year-over-year is basically reflecting us going into higher growth in the non-tower segment. FTTH is a relatively newer segment for us as well as connectivity, making it even bigger. Depreciation is also impacted by certain accelerated depreciation under IOH relationship. Some of that increased depreciation amortization is a one-off item for this fourth quarter. Operating expense increase, as mentioned, is related to our going into non-tower segment, which is with lower margins. As you can see here, the EBITDA margins maintained at above 80%. Here it is from 86% to become 85%.
I think we've seen this before back six years or seven years ago, back in 2018, when we went into a newer segment. Back then we were only starting on FTTP segment. The non-tower segment was, EBITDA margin was about 40%. Now we have been very successful in maintaining or achieving a very high EBITDA margin for the non-tower. It is above 70%. But when it comes to bringing in new segment and making it bigger, we have to spend for human resources, human capital, to make that business bigger for the coming quarters. For Bilta's balance sheet, I think, this is a bridge version of the balance sheet. This is the cash flow. Collection was quite healthy for the year, IDR 11.4 trillion. We used it for CapEx and OpEx. Interest expense, IDR 2.7 trillion.
Dividends included in here with cash ending IDR 400 billion. This is the profit and loss for the quarter. Revenue increased by 3.2%. That's year-over-year. On the quarter-over-quarter, 2.6%. EBITDA increased by 0.5%. That's year-over-year or month-over-month is 2.4%. Net profit decreased by 6.3% year-over-year, and month-over-month it decreased by 4.5%. By segment, tower declined by 2.4% by various impact of churn as well as repricing. Even though the blended average revenue per tower is still about 12.4%, if I'm not mistaken. Fiber-to-the-Tower grew by more than 49%. Connectivity grew by double-digit, 13.8%. FTTH grew from a small base IDR 13 billion last year to IDR 172 billion. Consolidated revenue grew by 66.4% for 2023 compared to 2022. For towers, we added towers, 2.6%.
Tenancy increased by 0.6%. Since we are relocating a lot, the impact of new towers addition is bigger than we are adding tenancy. So tenancy ratio went down, even though the number of tenants maintained as around 54,000. For FTTO, the growth grew by kilometers of 21% year-over-year. Connectivity grew almost 20% year-over-year in terms of activations. FTTH Home Connect, this is not just homes passed here, increased by close to sevenfold from 15,000 almost last year, 2022. We closed 2023 with almost 120,000 homes passed. I think the penetration is about 13%, around 13% to 14% for the first year, which is not bad. I think this is it from the company. Selvi, handing back over to you for discussion points or questions from the floor.
Yes. Thank you so much, Pak Adam, for your comprehensive presentation. Before I open the line for the participants, please allow me to raise the first question, Pak.
Probably you could please share with us the outlook on the tower industry in 2024. Probably any guidance on the new build-to-suit and also the collocation target.
Yeah. I think we have received about new towers here. Most of them are basically relocations proposed for 2024. So far, we have received 1,000. Most of them will be for relocations. We expect tower revenue to be not too far from where we have today, 2023. But the growth will still be on the non-tower siting. If you look at the pace where we have organically served for IOH relocations, 1,500 to 2,000. Hopefully in two years' time, we should be done by this relocation proposed with IOH relationship. Yeah. For non-towers, that will be the biggest of the growth for 2024. We think this 2024 growth revenue or core revenue should be around 4% to 6%. Yeah.
Okay. Thank you, Pak Adam.
Yeah.
Now we will open the Q&A session. For participant who would like to raise a question, please raise hand. We have Henry Tedja here.
Hello.
Henry, your line is open. You may raise your question.
Yeah. Hi. Thanks, Selvi, and thank you, Pak Adam, for the call.
Yeah.
Perhaps two questions from my end, please, Pak. First, regarding, perhaps it's more about the housekeeping question. You mentioned before about the one-time expense in the D&A expenses, which is related to the site relocation, Pak.
Would you elaborate more, Pak, on that and how big is that amount, Pak, if you could ask? That would be the first question. The second question, Pak, talking about the non-tower business. If you look at on the FTTP business segment, we highlight that the revenue-generating fiber OpEx has been quite slowing down, right? Last year, starting from the first quarter 2023 to fourth quarter 2023. Just curious, Pak, would you perhaps more color on how should we expect this FTTP business going forward, Pak? Perhaps in terms of the revenue-generating fiber adds or perhaps in terms of the revenue growth, Pak, in this side.
I think for FTTP, the increase should be single digit or low double digit for 2024. For, what do you call it, for the FTTH will be the other one. Again, this is build-to-suit, Henry. So it's all driven by the operators. If they want to monetize and pause on assisting on adding fiber, we're fine with that. I think what we are doing as a company is to be sure whenever there is a growth opportunity to serve as an infrastructure provider, then we don't want to be left behind. That's why we started with FTTP. The rest of the industry also follows our footprint with the FTTP, right? Now we are working very hard on FTTH execution. For FTTH, I think we should be about 2 million homes passed by year-end 2024.
Got it, Pak. Perhaps regarding my first question, Pak, on the one of-
The amount is about IDR 130 billion from more than 100 towers in 2023 accounts. This is the impact of Indosat moving where they want to cover, right? By the time there is the need for not to renew, they decided to do that. What we care is actually the continuity of the business on elsewhere. We continue to grab those opportunities to follow them where they needed the locations or where they need to serve the customers with relocations. We continue to do that. What happens with the industry, we cannot always control, including these locations of sites.
Okay. I think that is clear, Pak. Thank you.
Thank you, Henry.
Thank you, Henry. Next we have Niko. Niko, your line is open. You may raise your question.
Yeah. Hi. Good afternoon, Adam.
Hey.
Hi. Can you hear me, guys?
Very clear.
Oh, thank you. My questions will be on the revenue on the fourth quarter. I see an uptick in non-tower business.
Yeah.
If you can explain, this is from business connectivity, is it? How sustainable is this going forward?
Well, a lot of these are build-to-suit, Niko. Remember when we bought the company iForte, 2015, we only know the industry will need the fiber. That was 2015. Only 2017, the business picked up. So with FTTP, which we are talking still today. Still growing nicely into 2024 still. The need of the customers is FMC, Fixed-Mobile Convergence , which started in 2022. The first discussion about this business, FTTH, under which we become the white label, providing lease of infrastructure and fiber for long-term contracts is 2022. That demand seems to be continuing since the penetration is low. Say, for instance, Indosat, they are just digesting FMC cable business that they announced two months ago, if I am not mistaken.
We like this business because that helps us expand our footprint with build-to-suit cash flows, under which we can try to find points where we can basically extract value by operating efficiently. So I am not in the position to tell you which segment is growing, Niko. I have visibility for the next 12 months, and we are discussing it now.
Okay.
I mean, the density of towers compared to other markets is still low. But who knows when the tower business will go up again. There could be some more consolidations in the tower as well as telcos. So there will be another cycle like this. But fortunately, we have a lot of towers already built that can help the purpose of whatever industry events that may happen. For FTTP, again, 60% of sites that is used by XL in the whole of Indonesia only is fiberized. So we can be hopeful that there could be more higher penetration. With the FDI story of Indonesia that is taking place as we speak. A lot of that is happening ex-tower. So we can never know if there could be another higher growth, escalating growth on the FTT side as well.
What we know right now is FTTH.
Yeah. Right. Was there an increase from business customers, such as the VSAT and business activation, that kind of thing?
Maybe VSAT not so much, because digitalization of customers' accounts with a lot of banks. I think the most recent one of the big banks is BNI, just launched a new app, which is very nice. I think that alleviates a lot when it comes to the need of ATMs. VSAT has a lot to do with ATMs. For enterprise segment, I think we are growing. That is why we do not want to limit who we serve when it comes to providing digital infrastructure, Niko.
Okay, Adam. My next question is on the CapEx. How much CapEx you budget for 2024? If you can tell me how you are going to allocate your estimate.
I think about IDR 6.5 trillion for 2024 CapEx. More than 50% will go towards non-tower.
Okay. Non-tower. The other one is tower for the tower relocations, yeah? The 1,000-
Included. The tower relocations, ground leases, everything lumped in into that IDR 6.5 trillion number.
Okay. Maybe one housekeeping question. Your tax expense is much lower in fourth quarter. Can you help me use some reference rate for next year?
Yeah. I have Daniel here from Chief Of Financial Reporting .
Okay. For the tax, I think, as you can see, our portion of final tax now increased year by year, right? The more our tax expense under final, then it will closer and closer to the 10% of the tower revenue.
Yeah.
Right. That by 2028, yeah, 2027 maybe, FY 2027, that is already reaching. I think by that year is the final year where we can still enjoy the non-final. But after that, it will be 100% final tax for tower business.
Yeah.
But for the non-tower, that is also something that you can put some calculation. Yeah. Because the non-tower still using the non-final regime, right? That would be still using the corporate income tax. That is something that probably helpful for you to project what kind of tax that we will have. Going forward, we think that this will slowly increase for the final towards the 100%. Right. Then non-tower, depending on the proportion of the non-tower business growth compared to the total revenue, that will still enjoying the non-final tax.
Yeah.
I think that is from me.
Okay. Thank you guys, and best of luck going forward.
Thank you.
Thank you, Niko. Henry, I still see your raised hand. Do you have a following-up question? Good. Okay. Okay, ladies and gentlemen, to ask the question, you can press the Raise Hand button, and we will open the line for you. We have several question as well, Pak, on the Q&A box.
Okay.
From Jung Hon Woon . Can you kindly give a color on the operational performance target for 2024 with the revenue, EBITDA, number of towers, and tenancy ratio?
Top line should grow by 4% to 6% net range for 2024. We gave you some towers. Towers is about 1,000 additions that we have done so far. Right now today, that number is as of today. Who knows, we can get done more, so we can actually get this relocation done with IOH sooner than later. For fiber, we mentioned about FTTP, the growth could be high single digit to low double digits. For FTTH, we think we could be achieving 2 million homes passed by end of 2024. It is basically a repetition of what we said earlier on for Jung Hon Woon .
Thank you, Pak. There is also the second question from Jung Hon Woon. Why tower leasing revenue in 2023 decreased while your tenants increased?
The tenancy increased, but the revenue decreased is because there was a certain repricing. We tried to give some value add, but not continued in 4Q. So we saw a bit of a dip on tower revenue while the number of tenants remain approximately 54,000 leases. Sometimes we also treat the relationship between us and certain customers on a per name basis. So say one customer has towers with us, but with the opportunity of getting us more business on the other segment. Sometimes we also treat one segment subsidizing the other because of volume consideration.
Thank you, Pak Adam.
Yeah.
We have the next question from Etta from Maybank. What is the average lease rate for fiber optic per kilometer basis?
Yeah. I think you can see in our presentation, the split of revenue for FTTP and then the volume itself. Pak Etta, you can try and then look it up yourself. For FTTH, it's a bit more complex because there is a certain formula. There is a floor, the volume of Home Connect that despite the client customer achievement, we would still be getting a minimum amount. Anything above that, there will be a split of revenues between us and the said customers to whom we give the FTTH infrastructure. So, I don't have a IDR amount, frankly speaking. But hopefully, if you do the metric on your own, you can try to estimate by yourself, Etta. Yeah. Because we have the revenue by segment, towers, FTTO, FTTH already there, and then the volume itself. So hopefully that's helpful for you.
Okay. Pak Adam, following up the Etta question. Actually, I do the rough calculation on the FTTH is around IDR 215,000 per month. Is it the standard, Pak, or-
Is that per month or per year?
It should be IDR 215,000 per month, if I am not mistaken on my calculation.
Yeah. I think that is a bit high.
Okay.
Yeah. Maybe just to give you some highlight on the FTTH revenue, we have two components, right? One is the minimum commitment from the client, which is certain percentage of the homes passed times a certain amount. Then, for the another component is the Home Connect, right? When we do a Home Connect for the client, we also receive certain payment. These two components that you mentioned might play together.
Yeah.
It seems like it is around 200,000. In fact, it is not yet there.
Yeah.
At the moment.
There is a lot of effort from both sides, us and then the client who use our FTTH infrastructure to get that number. The contracts are different from one batch to another, so I don't have a single number to give to Etta or Selvi this afternoon. You can try to gauge from the numbers in revenue as well as operational that we have set forward in the presentation. Just to be sure that you are segregating quarter by quarter and then as well as the operational numbers for your calculation, okay?
Okay. Thank you, Pak.
We have another raised hand from Erwin Wijaya .
Yeah.
Yes, please, Erwin, you can raise your question.
Hello? Hello.
Hi.
Hi. Yeah. Thank you.
Can you speak a bit louder, Mr. Erwin?
Thank you, Pak Adam and Ms. Selvi. Just a quick one from us. If you could give us any colors on EBITDA growth for the next few years, that would be great. Thank you.
We don't have that forecast, because we do a lot of build-to-suit, Pak Erwin. We do have budget that we build basically rolling 12 months into the year, like we have just discussed with everyone in this call. Because we do build-to-suit, I think a lot of the need of infrastructure is driven by the operators, and this is as a result of them getting money from their end customers, right? That's why, we are very hopeful that there's a good price repair, profitability repair in the whole segment of Telco as we are a part of this ecosystem, Pak Erwin.
Got it. Thank you.
Thank you.
Thank you, Pak Erwin. Thank you, Pak Adam. We have another question on the chat box without a name. The first one is jump in for depreciation. What is the size in IDR terms? The second is, what is the budget CapEx for 2024? I think Pak Adam has already addressed this one. Any color on the EBITDA growth?
The depreciation impact from towers for this year, 2023 book, was about IDR 130 million from more than 100 towers. There was accelerated depreciation on those sites because of the locations. On the EBITDA itself, I think should be around that number as well. Unless we see a decrease in the EBITDA margins. Okay?
Okay. Thank you, Pak Adam. There is also another question from Niko. Home Connect, how many percentage is mostly FTTH or also includes fixed wireless?
Yeah. Mostly FTTH. Home Connect at this stage, mostly, I think it is not all, is FTTH.
FTTH.
Yeah. We do not have yet fixed wireless, even though we are talking. The second question about inorganic growth for FTTH. Yeah, we see opportunities that has emerged in marketing for that kind of business, FTTH.
Okay. Thank you, Pak. We have no questions left, but Henry, would you like to have another follow-up question, please?
Sure.
Yes. Sorry, Pak. Just one follow-up question from me, Pak. Could you touch a little bit on the debt management, Pak? I recall you mentioned that this first half you might have a new bonds, Pak. Just curious, how should we expect on the interest expense trends going forward, and when should we expect the net debt to EBITDA start to trending lower?
Thank you, Henry. The market saw an increase on the interest rate side second semester 2023. Our cost of funding for 2023 was around 6.1% to 6.3%, even though it ended in December 2023 at 6.1%.
In 2024, we have budgeted slightly higher, around 6.4% to 6.6%. I know the market is saying Fed rate is going to go down, but we want to be conservative on that part.
Okay, sure. Thanks, Pak.
Thank you.
Okay. Pak Adam, following up the Niko questions on the inorganic growth. How about on the tower side, Pak? Is there any acquisition plan in the pipeline? Or probably you could share with us about the IBST tower sales as Sarana Menara has the input on the buying progress so far.
Yeah. I think we always look at towers. If there's opportunity for us to go out and acquire. I cannot name names, but we see opportunities for that to happen. We see probably now several names in the towers as well as fiber available in the market. I cannot say which one that we will close, so we're still in the process of getting some of the deal done in terms of renewing. Okay.
Thank you, Pak Adam.
Thank you.
Okay. Anyone would like to have another question? You may raise hand. Okay, we have no questions so far, Pak.
Okay. We try to be efficient. We try to have an overlap of different operations on different types of assets as much as we can. As you know, under Sarana Menara Nusantara, everything is under one roof, meaning the thinking hat is done by how to make the harmony between different types of business work. We are still in the infrastructure space for not just telcos, but also other segments. We are going into green energy generation as well. Basically, that is also another infrastructure that we see could be an upside, given that Indonesia has just introduced a carbon taxation back in September 2023. Even though at the early stage, only six industries have been basically under scrutiny, under monitoring by the Otoritas Jasa Keuangan and the stock exchange.
But I think having seen the trend in many parts of the world, I think all sectors will have to pay attention or be involved in that carbon taxation. You also see how the telco, the data market, is impacting the way energy is consumed because a lot of data traffic is taking place. We are hopeful we can add value to this whole infrastructure role that we have in the market. Hopefully, talk to you again. We should be releasing our first quarter results in about 30 days. Talk to you soon. Okay.
Okay. Thank you so much, Pak Adam, and thank you everyone for joining us in today's call. Have a great day.
Yes.
Okay. Let's wrap up the call today. Thank you, everyone.
Thank you. Thank you, Selvi. Thank you, everyone.
Thank you.
Bye.
Bye.