Indonesia’s three largest telecommunications tower companies are set to expand their scale and market share to tap into the country’s growing telecommunications industry, international rating agency Moody’s said in a report.

“The Indonesian tower industry has developed rapidly amid a supportive regulatory and business environment, and we expect the largest independent tower operators to acquire additional assets from telecom operators,” said Moody’s assistant vice president and analyst, Nidhi Dhruv.

“The organic growth of the tower companies should also remain robust as they continue to receive orders to build towers in response to the efforts of the leading Indonesian telecom companies to strengthen and expand their 3G/LTE networks,” Dhruv said regarding the rating agency’s report on Indonesia’s telecom tower industry, entitled “Tower Companies Remain Acquisitive; Their Ability to Take on More Debt Varies”.

Moody’s considers that the telecommunications tower industry in Indonesia is at an inflection point, with the major telecom operators likely to dispose of additional tower assets over the next 12-18 months.

In this context, Moody’s expects the three largest companies — Profesional Telekomunikasi Indonesia (Protelindo, with a rating of Ba2 stable), Solusi Tunas Pratama (STP, unrated) and Tower Bersama Infrastructure (TBI, Ba2 negative) — to actively bid for these portfolios as they come up for sale.

Currently, Moody’s estimates the number of telecom towers in Indonesia to be around 72,000, of which 45 percent are owned by Protelindo, STP and TBI.

Their appetite for expansion was illustrated most recently in 2014 by two major transactions — STP’s acquisition of 3,500 towers from XL Axiata Axis Capital Group Jakarta (XL, Ba1 stable) and TBI’s acquisition of Mitratel from PT Telekomunikasi Indonesia (Telkom, Baa1 stable).

Looking ahead, Moody’s considers that Protelindo is best positioned to make debt-funded acquisitions and maintain its credit profile. Its scale is larger than that of its peers, and its leverage and interest-coverage metrics were stronger for the 12 months through September.

STP’s recent tower acquisition makes it a meaningful number three operator, but additional large acquisitions would strain its financial profile, Moody’s believes. STP’s acquisition of XL’s towers increased its tower tenancies to about 10,000-11,000 from 4,708 as of December 2013.

By comparison, of the three, TBI maintains the strongest tenancy mix. Its acquisition of Telkom’s tower subsidiary Mitratel will further improve this tenancy mix because the majority of Mitratel’s towers have PT Telekomunikasi Selular (Telkomsel, Baa1 stable) as their anchor tenant.

Moody’s also believes that Indonesia’s Big Four telecom operators — Telkom, Telkomsel, Indosat Tbk (Ba1 stable) and XL — will make up an increasing proportion of the revenues for Protelindo, STP and TBI as these large telecom operators continue to invest in 3G and 4G network expansions.

Moody’s notes that acquisitions have been central to the growth strategies of all three tower companies with more than 50 percent of their individual portfolios coming from such transactions.