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.