SingTel may sell assets in Indonesia

SingTel may sell assets in Indonesia

Bryan Lee, Asia News Network, The Straits Times/Singapore

SingTel is in talks to sell its stake in a fixed phone line
network in eastern Indonesia to Telkom, the country's biggest
telecoms company, for an undisclosed sum.

If it goes ahead, the sale is expected to return a profit to
the Singapore telco from the US$47 million it has invested in the
network, industry watchers said, although no specific figures
were suggested.

In 1995, SingTel took up a 40 percent stake in Bukaka SingTel,
the joint venture company which operates the network. Its
Indonesian partner Bukaka Telekomindo owns the rest of the firm.

Garuda Sugardo, Telkom deputy president director, told wire
agencies recently that Bukaka SingTel has approached Telkom to
sell the assets to the telco.

"It is a good offer. We want to end the KSO contract as soon
as possible so that we will be free to develop our network in
eastern Indonesia," he told AFX Asia.

KSO is an Indonesian abbreviation referring to a 15-year
revenue sharing deal under which Bukaka SingTel would build and
operate a network in the area for Telkom.

The contract was awarded, along with four other similar deals
to various telcos, 10 years ago as part of government efforts to
accelerate telecoms development in the country.

Under the agreements, telcos, including Telstra and France
Telecom, would build and operate fixed-line networks in parts of
Indonesia for 15 years before transferring them to Telkom.

Since then, Telkom has canceled and bought out the four other
partners involved in the scheme.

For the Bukaka deal, Sugardo said Telkom has appointed ABN
Amro as its adviser, while Bukaka SingTel is seeking advice from
UBS.

SingTel declined to comment on the possible sale on Tuesday.

Bukaka was one of SingTel's first regional forays back in 1995
and was lauded as an early success of the telco's overseas
expansion.

Serving about 841,000 customers in Bali, Lombok, Sulawesi,
Maluku and Papua, it has however been outshone by SingTel's later
investments in the region's mobile operators.

These include Indonesia's Telkomsel, in which SingTel owns a
35 percent stake, which boasts more than 20 million customers.