Indosat-Deutsche Telekom deal expected this week: Official
Indosat-Deutsche Telekom deal expected this week: Official
Dadan Wijaksana, The Jakarta Post, Jakarta
State-owned international telecommunications company PT Indosat
is expected to reach a deal this week with Germany's Deutsche
Telekom over the price for the latter's 25 percent stake in
cellular operator PT Satelindo, a senior official at the Office
of the State Minister of State Enterprises said on Monday.
Mahmudin Yassin, deputy head for privatization, said that the
negotiating process had been going well and was now entering its
final stage.
"The negotiations are now in the final stage. Hopefully, we
can wrap them up this week," he told reporters.
The acquisition of the Satelindo shares is seen as a crucial
step for boosting the value of Indosat before the government
sells its shares in the latter company as part of this year's
privatization program.
Indosat currently controls a 75 percent stake in Satelindo,
the country's second largest cellular operator.
Reports earlier said that Deutsche Telekom was asking for
US$400 million for the 25 percent stake, while the government was
offering $200 million.
Deutsche Telekom, which is currently facing financial losses,
has been trying to unload its assets in the region.
The publicly-listed Indosat is mulling various options for
financing the acquisition plan, including a rights issue and a
bond issue.
As for the source of the funds for the acquisition, Mahmudin
refused to elaborate, saying that the government was moving one
step at a time: "We're now focusing on the price first. We'll
worry about fund-raising after that."
State Minister of State Enterprises Laksamana Sukardi has said
that a rights issue for the publicly-listed Indosat was among the
three options the government had in mind to finance the purchase
of Deutsche's stake.
The other two options were self-financing and borrowing via a
bond issue.
A rights issue means issuing more shares to allow Indosat to
raise funds from the stock market. There is no clear timetable
for the rights issue, but the government hopes to finalize it
before June, when the first stage of Indosat's share sale takes
place.
The government owns a 65 percent stake in Indosat, with a 45
percent stake to be sold this year through a two-step process.
The first divestment is scheduled for June, when the
government will release around a 15 percent stake through the
stock market.
The remaining 30 percent will be sold in October to strategic
investors.
The country's cellular phone industry has been rapidly
growing. Thus raising its stake in Satelindo would help boost
Indosat's earnings, which would in turn make it a more attractive
investment.
Satelindo had some 1.9 million customers as of the end of last
year, and is targeting to raise its customer base to 3 million.
The company needs around $130 million in new investment to
realize this target.
But under a debt restructuring plan agreed with its creditors,
Satelindo is restricted to only spending between $50 million and
$70 million on investment.
Analysts said that Indosat was expected to chip in to finance
the expansion program.
Indosat acquired a majority stake in Satelindo last year in
exchange for surrendering its stake in the country's largest
cellular operator PT Telkomsel to the state-owned domestic
telecommunications operator, PT Telkom.