IHSG Under Pressure as Mirae Asset Sees Potential Catalyst in Tower Industry Consolidation

Indonesia’s benchmark stock index came under pressure as investors remained cautious amid domestic risks and external uncertainty, while Mirae Asset Sekuritas Indonesia highlighted potential opportunities from consolidation in the telecommunications tower industry.

The Indonesia Composite Index (IHSG) fell 1.5% to 6,405, with investors closely monitoring domestic developments, Rupiah movements, and foreign fund flows. Rully Arya Wisnubroto, Head of Research & Chief Economist at Mirae Asset Sekuritas Indonesia, said investors are likely to remain in a wait-and-see mode ahead of demonstrations at the House of Representatives (DPR).

“The IHSG continues to face risks from both domestic and external factors. We see the Rupiah and foreign flows as key indicators of whether risks stemming from the domestic agenda are beginning to spill over into the broader market,” Rully said.

The market impact of the demonstrations will depend largely on their scale and developments, with the effects expected to be temporary if the protests remain orderly.

External risks also remain in focus. Elevated U.S. PCE inflation continues to leave the door open for higher Federal Reserve rates, keeping U.S. Treasury yields at elevated levels. Domestically, BBRI, BRPT, and AMMN weighed on the IHSG, while EMAS and MDKA supported the index as gold prices remained near a three-month high.

Bank Indonesia’s policy direction is another key factor for the market outlook. Destry Damayanti, the sole candidate for Bank Indonesia Governor, signaled a potentially more growth-oriented (pro-growth) policy stance during her fit and proper test. However, Rupiah volatility and external uncertainty could limit room for further monetary easing.

Rully said such a policy mix could support equities, particularly banks and other domestic, growth-sensitive sectors, although tighter banking liquidity remains a key consideration.

Against this backdrop, sector-specific opportunities remain. Daniel Aditya Widjaja, Research Analyst at PT Mirae Asset Sekuritas Indonesia, pointed to renewed discussions over a potential merger between PT Dayamitra Telekomunikasi Tbk (MTEL) and PT Tower Bersama Infrastructure Tbk (TBIG) as a potential catalyst for the telecommunications tower industry.

A combined entity would have an estimated 65,800 towers and 106,100 tenants, with a tenancy ratio of around 1.61x. The two companies are considered operationally complementary, with MTEL more concentrated outside Java and TBIG having greater exposure to Java, limiting potential asset overlap.

Daniel said consolidation could provide a growth catalyst following several years of moderate tower demand and tenant additions. It could also strengthen tower companies’ bargaining power in lease-renewal negotiations and position them to benefit from the 5G capital expenditure cycle among telecommunications operators.

Mirae Asset maintains a neutral view on the telecommunications infrastructure sector. The brokerage has a buy rating on MTEL with a target price of Rp670, and a Trading Buy rating on TBIG with a target price of Rp1,700. TOWR could also benefit from industry consolidation without directly bearing the associated integration risks.