DJ Indosat '03 Net May Double On Gains From MGTI Stake Sale
DJ Indosat '03 Net May Double On Gains From MGTI Stake Sale
Dow Jones Jakarta
PT Indonesia Satellite Corp.'s (IIT) sale of its 30.55 percent stake in PT Mitra Global Telekomunikasi Indonesia, or MGTI, may double its net profit this year and help it refinance a large slice of its debt, analysts said.
Indosat said on Wednesday it will sell its stake in the Central Javan fixed line operator to a unit of Saratoga Investama Sedaya, a local investment firm. Saratoga will buy a 100 percent stake in MGTI from Indosat and other owners for US$266 million, which includes MGTI's $81 million debt.
"The sale of MGTI will benefit Indosat and boost its net profit," said Tjandra Lienanjaya, the head of research department with GK Goh Indonesia.
He said if the deal is completed before the end of this year, Indosat will raise around $60 million from selling MGTI, which can be added into its net profit for 2003.
Last year, Indosat's net profit was Rp 525.11 billion($1=Rp 8,455), compared with Rp 604.13 billion in 2001.
Analysts expect Indosat's net profit this year will rise to between Rp 1 trillion and Rp 1.3 trillion - with most of the gain coming from the sale of MGTI.
The sale will also help Indosat refinance its debt, said Adrian Rusmana, head of research with BNI Securities.
Indosat has recently issued Rp 1.25 trillion in bonds and will issue another up to $300 million in foreign bonds to refinance some of its total $900 million debt later this year.
The company's debt load increased in 2002 when it bought PT Satelit Palapa Indonesia, or Satelindo, the nation's second- largest cellphone company. The purchase of Satelindo has been weighing down Indosat's net profit due to its large amount of dollar denominated debt. Satelindo has around $360 million debt.
Analysts said, besides gaining cash from selling MGTI, the sale also ends uncertainty over Indosat's ownership in MGTI after it failed to take it over in 2001 due to opposition from MGTI's workers.
"After selling MGTI, Indosat may now focus more on its plan to develop its cellular business," said a telecommunications analyst in Singapore.
Indosat plans to integrate the company's two wholly owned cellphone units - Satelindo and Indosat Mobile Multi Media, or IM3 - into the main body of the company by the end of this year.
After the business reorganization, the company plans to relaunch its cellphone business, with the three units all under the Indosat brand name.
Indosat's cellular subscribers as of June 30, grew by 81 percent on year to 4.3 million. Revenue from the cellular services contributed around 64 percent to Indosat's total revenue of Rp 3.882 trillion in the first half of this year.
Indosat is 42 percent owned by Singapore Technologies telemedia and 15 percent by the Indonesian government.