Indosat seeking to raise $260m

The Jakarta Post, Jakarta

State-owned international call operator PT Indosat said it was mulling several options to raise around US$260 million to strengthen its capital and refinance its debts to Bank Mandiri.

Indosat president director Widya Purnama was quoted by the media on Tuesday as saying that it needed to find the new source of funds no later than this year.

The publicly listed company owes Rp 1.5 trillion to Bank Mandiri. The debts mature in December.

Widya added that of all the options, the company would be focusing on loans and bonds issuance.

"It could be either loans or bonds (issuance), but it could also be a combination of both. The cheaper the better," Widya told reporters.

Indosat had to borrow the money from Mandiri last June to help finance the acquisition of Deutsche Telekom's 25 percent stake in PT Satelindo, an Indosat's subsidiary, for $325 million.

The buyout increased Indosat's ownership in the country's second largest mobile company to 100 percent.

The government has said that the move was necessary to make Indosat more attractive for investors under the privatization program.

Indosat is among 25 state-owned companies that has been listed for sale in this year's privatization program which is aiming to raise a total of Rp 6.5 trillion to help plug the state budget deficit, projected at 2.5 percent of gross domestic product.

Meanwhile, Widya also disclosed that the company had injected $75 million into Satelindo, as agreed during a previous shareholders meeting.

The money came from a bridging loan facility from Bank Central Asia (BCA), to be repaid within a six-month period with an interest rate of around 8.5 percent per year.

"The payment will be made every three months," Widya said.

Widya said the injection means the current agreement with Satelindo's creditors, which limits the company's business expansion to a maximum of $50 million, would no longer be effective.

Creditors previously limited Satelindo's expansion for fear it would disrupt the company's cash flows.

This means that in the near future, Satelindo would be able to expand its business to its maximum capacity. The company has said it would need at least $150 million for an expansion program if it is to gain a greater share of the local cellular market.

The country's cellular market is dominated by PT Telkomsel, which controls almost 50 percent of the total number of mobile subscribers, expected to reach 9 million by the end of the year.