Indosat to sell bonds to fund expansion

Indosat to sell bonds to fund expansion

PT Indonesian Satellite Corp., the nation's second-largest phone
company, said it plans to sell bonds this year to raise funds for
expansion. It will be the company's first bond offering since
October 2003.

"We haven't decided on the amount or the timing," Hasnul
Suhaimi, director of cellular marketing at Jakarta-based Indosat,
said in an interview on Friday.

"We need to raise external funding because our cash is not
enough to fund our expansion plan."

Indosat plans to spend as much as $1 billion this year,
compared with $700 million last year to expand its network,
including its cellular business, and meet higher mobile-phone
demand, Deputy President Director Ng Eng Hoe said on Feb. 2.

Suhaimi declined to say whether the bonds will be sold in the
domestic market or internationally.

The company competes with PT Telekomunikasi Indonesia, which
owns PT Telekomunikasi Selular, the country's biggest cellular
operator.

Indosat, which may sell the bonds by the end of June, is in
talks with investment banks to help manage the sale, Suhaimi
said, without elaborating.

The company, which is 42 percent owned by Singapore
Technologies Telemedia Pte., sold $300 million of seven-year
bonds on Oct. 28, 2003.

The 7.75 percent bonds were bid to yield 6.22 percent, 2.56
percentage points more than five-year U.S. Treasuries, according
to Deutsche Bank prices as of Feb. 8. It received orders for
three times the debt on offer at the sale.

Standard & Poor's rates Indosat's long-term foreign currency
credit BB-, three levels below investment grade.

Moody's Investors Service has given the company a B2 rating,
five levels below investment grade. Both are junk, or high-yield
and high-risk, ratings. --Bloomberg