OPTIMAL CAPITAL STRUCTURE ANALYSIS USING COST OF CAPITAL APPROACH: CASE STUDY OF PT TOWER BERSAMA INFRASTRUCTURE TBK

Abstract

PT Tower Bersama Infrastructure, Tbk is one of Indonesia's foremost telecommunication infrastructure company. Their primary activity is the long-term leasing of space for antennas and other wireless signal transmission devices at tower sites. Since 2020, internet users in Indonesia have been increasing after being hit by a pandemic that causes almost all economic until education to be carried out by online activities. PT Tower Bersama Infrastructure, Tbk then makes investment plan for organic growth, tower colocation, and fiber optics. In addition, PT Tower Bersama Infrastructure, Tbk has two bonds that will mature in the remaining half year in 2022. Both conditions are required to issue funds of IDR 5.087 trillion. To realize the plan, the company needs to carry out a financing strategy. The best financing strategy can be determined by calculating the optimal capital structure so that the company has the lowest cost from its financial sources and also increases the value of the company to the maximum point. This research will use the Weighted Average Cost of Capital method to get the optimal capital structure. PT Tower Bersama Infrastructure, Tbk currently has capital structure with debt proportion of 70.72% and equity proportion of 29.28% which incurs a capital cost of 8.46%. Based on the calculation of the optimal capital structure, PT Tower Bersama Infrastructure, Tbk can get the lowest cost of capital at 7.40% with the proportion of debt at 51% and equity at 49%. Therefore, the best financing strategy for the company at this time is by using equity financing in order to achieve optimal capital conditions.