Bakrie Telecom to rise $57.4m in IPO

Bakrie Telecom to rise $57.4m in IPO

Soraya Permatasari, Bloomberg/Jakarta

PT Bakrie Telecom, the mobile-phone unit of PT Bakrie & Brothers, said on Monday it plans to raise as much as Rp 577.5 billion (US$57.4 million) selling a 29 percent stake in an initial share sale in January.

Bakrie Telecom, which had 348,392 subscribers as of Sept. 30, is offering as many as 5.5 billion new shares at 105 rupiah each, the Jakarta-based company said in a statement published in the Bisnis Indonesia newspaper on Monday.

Indonesian telecommunication companies are counting on rising demand for cell-phones in the country where fewer than one in four of its estimated 238 million people has access to a telephone. Bakrie, which plans to use the proceeds to expand its network, competes in a market dominated by PT Telekomunikasi Selular (Telkomsel) and PT Indosat, which control 85 percent of the mobile market in Indonesia.

"The company is too small, it won't be able to compete against bigger rivals like Telkomsel and Indosat," said Irvin Patmadiwiria, who counts PT Telekomunikasi Indonesia (Telkom), owner of Telkomsel, among the equivalent of $35 million he helps manage at PT Batavia Prosperindo Aset Manajemen in Jakarta.

Patmadiwiria said he doesn't plan to buy Bakrie Telecom shares.

Indosat, Indonesia's second-biggest cellular operator, had 13.5 million subscribers to its mobile service as of October, while Telkomsel, the nation's biggest mobile-phone operator, had 23.5 million subscribers as of Sept. 30.

The nation's cell-phone users may double to 90 million in five years, making the country among the four largest mobile-phone markets in Asia, Hasnul Suhaimi, president of Indosat, said on Nov. 24.

Bakrie Telecom will use 90 percent of the proceeds, or as much as Rp 519.8 billion, to build more base-transceiver stations and base-station controllers to expand its telecommunication network, the company said in the statement.

The company will also offer one warrant, which can be converted into a share after six months, for every five shares in the initial public offering, the company said.

PT Danatama Makmur is the arranger for the share sale, Bakrie Telecom said.

Bakrie Brothers, a diversified company controlled by the family of Coordinating Minister for the Economy Aburizal Bakrie, owns 71.2 percent of Bakrie Telecom. Bakrie Brothers' holding in Bakrie Telecom will be reduced to 50.4 percent after the share sale.