DETERMINING THE OPTIMAL CAPITAL STRUCTURE OF TELECOMMUNICATION MANUFACTURER COMPANY (A CASE STUDY OF PT XYZ)

• Main Author: Felynda, Afilia
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/62627
• Institution: Institut Teknologi Bandung

Indonesia is still relatively lagging in implementing an inclusive internet when compared to several neighboring countries. The uneven digital access is caused by planning and data collecting issues due to a lack of cooperation between the central and local governments in building telecommunications networks. As a result, the government is attempting to continue developing and equalizing communications infrastructure since equitable access is critical in satisfying the rights of all Indonesians. One of the most needed telecommunication infrastructures currently is the construction and development of Base Transceiver Stations (BTS) in areas that still lack a network. A Base Transceiver Station (BTS) product is one of the biggest revenue streams of PT XYZ since the beginning. As a response, company needs to strive to participate in the development and distribution of this telecommunication infrastructure. PT XYZ's involvement in the development and equalization of communication infrastructure could be a strategy for increasing company profitability and improve the financial performance since the PT XYZ's financial performance has fallen drastically due to the Covid 19 pandemic. As a result, suitable plan should be required to ensure that all efforts are of optimal quality and performance. Every company's sustainability is dependent on the capital structure. The lower the weighted average cost of capital (WACC), the greater the value of the company. With maximum value of the company, the company expects to earn the credibility of all relationships, including banks, vendors, customers, and investors. Therefore, the Author performs an optimal capital structure analysis for PT XYZ as a goal to maximize the value of the company using simulation. The Author provides three scenarios condition of the financial situation, there are the best case, base case, and the worst case. In the simulation, the value of the company is estimated at every debt proportion from 0% - 95%. The debt ratio that obtains the highest value of the company is the most optimal capital structure of the company. From the simulation, the optimal capital structure for PT XYZ is 30% of debt ratio in best scenario, 70% of debt ratio in base scenario, and 80% of debt ratio in worst scenario. According to the Damodaran Framework, PT XYZ could undertake an equity swap or borrow money as a present strategy.