Indosat to inject US$75 million into Satelindo
The Jakarta Post, Jakarta
State-owned telecommunications company PT Indosat plans to inject US$75 million in fresh funds to finance the expansion of its cellular arm PT Satelit Palapa Indonesia or Satelindo.
"Indosat has committed to injecting the fund to give greater flexibility for Satelindo to further develop its network and improve its operational services," Indosat's corporate secretary Wahyu Widjajadi was quoted by Antara as saying on Tuesday during a gathering to promote the IndosatGroup brand.
Wahyu said Indosat was committed in making Satelindo stronger as it would enhance the former's market value in the future at the time the government sold its stakes in the firm to investors.
Wahyu however did not specify where Indosat would take the money from.
Satelindo -- the country's second largest cellular operator after PT Telekomunikasi Selular Indonesia or Telkomsel, which is owned by another state telecommunication company PT Telkom -- has targeted to increase the number of its subscribers to three million this year from 1.9 million last year.
Analysts estimated Satelindo needs about $150 million to expand its network and to boost its services to reach the target.
Under its US$400 million debt restructuring deal with creditors, Satelindo is not allowed to spend in excess of US$50 million for investments.
Analysts say the fund promised by Indosat will enable Satelindo to invest up to US$125 million this year.
The government, which owns 65 percent of Indosat, is planning to sell a 45 percent stake in two stages this year; the first 15 percent in June on the stock market and 30 percent to strategic investors. The government hopes to collect between Rp 4 trillion (around US$434 million) and Rp 5.1 trillion from the sale -- funds which it direly needs to cover the state budget deficit for this year.
Boosting the performance of Satelindo is one of the strategies applied by Indosat to increase its market value. The other strategy is to push Indosat to wholly control the cellular firm. Indosat is now negotiating to buy the remaining 25 percent stake which is owned by German firm Deutsche Telekom AG.
Separately, Indosat's President Director Hari Kartana said the state firm would sell its 30.6 percent stake in PT Mitra Global Telekommunikasi Indonesia (MGTI), which is the joint cooperation scheme (KSO) operator of Telkom's assets in Yogyakarta and Central Java.
Other shareholders in MGTI include Nippon Telegraph and Telephone Corp (NTT) (15.3 percent) and Australia's Telstra Corp. (20.4 percent).
Kartana refused to specify the price for its stake but a company source said the company sets the price at US$480 million.
On Monday, Indosat along with six subsidiaries launched the IndosatGroup brand and announced the group's new business strategy to satisfy customers' needs.
With the new brand, the company seeks to raise the public's awareness that Indosat had transformed itself from initially being a mere international call operator into a business group with various telecoms service.
"IndosatGroup has conducted a business transformation -- from a firm relying on international call service into a comprehensive telecoms service provider, which is commonly called 'full network and service provider'," Kartana said.