Indosat to use bond yields to expand business

JAKARTA (JP): State-owned telecommunications company PT Indosat will use a larger proportion of proceeds from the issuance of its Rp 1.5 trillion (about US$158 million) bonds to expand its cellular business in Indonesia, a senior executive said on Monday.

Indosat executive vice president for corporate development Budi Prasetyo said that 35 percent of the proceeds of the five- year bonds worth Rp 1.5 trillion would go to the development of its DCS-1800 global system for mobile communications network.

Indosat planned to offer the bonds in the primary market between April 3 and April 5, and list them at the Surabaya Stock Exchange on April 17, he said.

Budi said that the five-year bonds would be issued in two series -- A-series and B-series -- carrying different interest rates.

The coupon yields of the A-series bond will be fixed at interest rates ranging between 17.5 percent and 18.5 percent for the five years.

The coupon yields of the B-series bond will be based on the combination of fixed and floating interest. In the first year, the interest rate will be fixed at between 17.5 percent and 18.5 percent. For the remaining four years, the yields will be floated at 2.5 percentage points above the average interest rate of three-month time deposits at four local banks, he said.

The three banks are Bank Mandiri, Bank Central Asia (BCA), bank Danamon and Bank BNI, Budi said.

Local rating body PT Pemeringkat Efek Indonesia has rated the bonds as id AA+.

The remaining proceeds will go to the development of Indosat's domestic network (26 percent), the development of international direct dial (IDD) services and quality as well as other value- added services (23 percent), the development of its Internet and multimedia infrastructure (10 percent), and to the development of Indosat's international marine cable communications system (6 percent). (tnt)