Indosat to issue bonds, cut down debt burden
Indosat to issue bonds, cut down debt burden
The Jakarta Post, Jakarta
Indonesia's second largest telecommunications firm, PT
Indonesia Satellite Corp. (Indosat), will issue bonds this year
to help refinance its debt and to fund the merger of its cellular
units.
President of Indosat Widya Purnama told reporters on Thursday
that the company would issue rupiah and dollar-denominated bonds
worth Rp 3 trillion (US$352 million) and US$300 million.
"We plan to issue the bonds to refinance Indosat's debts at a
cheaper rate and to fund the merger plan. We plan to conclude the
issuance this year," said Widya.
He said Indosat had shortlisted several financial companies
including ING Groep NV, Goldman Sachs, JP Morgan, Barclay
Capital, Andalan Artha Advisindo and Mandiri Sekuritas to be
advisors for the bond issuance.
It is now in the process of selecting the winner and expects
to make an announcement later this month.
The news on the bond issue, however, failed to lift Indosat
shares at the local bourse on Thursday, as they ended lower by
0.6 percent, or Rp 50, at Rp 8,250 on profit taking.
Currently, Indosat has total debts of $900 million, including
short-term debts totaling $360 million owed by its cellular unit
PT Satelite Indonesia (Satelindo).
The debt burden has hampered Satelindo's investment program as
under the agreement with the existing creditors, the company is
restricted to a maximum yearly capital expenditure of $50
million.
The restriction has impeded Satelindo's efforts to catch up
with its arch rival PT Telekomunikasi Selular Indonesia, a
cellular unit of Indonesia's largest telecommunication company,
PT Telekomunikasi Indonesia, or Telkom.
To solve Satelindo's problem, Indosat plans to integrate the
unit with its other cell phone subsidiary PT Indosat Mobile Multi
Media to become a division of Indosat, rather than a subsidiary.
Indosat has hired ING Groep to advise the merger plan, which
is scheduled to be completed in October or November this year.
Indosat hopes that by "vertically" merging its cell phone
units, it will be able to consolidate the companies' debts,
making it easier for the company to refinance the debts and
invest more to develop its cellular business.
The company's cellular subscribers are forecast to increase to
around 5 million by the end of the year, compared with 3.1
million in 2002.
The company said that the increase in revenue from the
cellular business was expected to compensate for an expected
decrease in revenue from its international call business. The
government plans to end Indosat's monopoly on international calls
soon as part of the liberalization of the country's telecoms
industry.
Indosat said that revenue from its international call business
would drop by up to 10 percent to around Rp 1.92 trillion this
year from Rp 2.137 trillion a year earlier.
A Singapore state-owned telecommunications company, Singapore
Technologies Telemedia, bought a 41.94 percent controlling stake
in Indosat last year from the Indonesian government, whose
ownership in the company was trimmed to 15 percent.