Telekom to work on XL IPO to raise $300m

Telekom to work on XL IPO to raise $300m

B.K. Sidhu, Asia News Network, The Star/Kuala Lumpur

Telekom Malaysia Bhd (TM) is believed to be working with at least
two advisers on the initial public offering (IPO) for its
Indonesian unit, PT Excelcomindo Pratama (XL), from which it
plans to raise about US$280 million to $300 million.

It is learnt that the two advisers are Commerce International
Merchant Bankers Bhd (CIMB) and Credit Suisse First Boston
(CFSB), and an offering for international institutional investors
is being planned. Since it is an Indonesian IPO, CIMB's regional
unit, CIMB-GK Pte Ltd, may be involved as well.

Sources said XL -- Indonesia's third largest mobile operator
-- is likely to issue new shares for its listing on the Jakarta
Stock Exchange and the exercise would involve a sale of about 15
percent to 25 percent of its current share base.

TM had earlier said it was looking towards a year-end listing
date for XL, and is believed to be working out the finer details
in consultation with the other partners of XL.

Late last year, TM paid $265.7 million for a 23.1 percent
stake in XL and subsequently raised this to 27.3 percent after
forking out another $48 million.

TM had indicated it has the option to take up to 80 percent
interest in XL. While its shareholders have approved the
potential investment, it is learnt that TM may be content with
about 55 percent to 60 percent interest in XL. What is important
to TM is to maintain a stake that is above 51 percent after XL's
floatation, a source said.

TM has management control of XL and had in late April
appointed Christian de Faria and Jaffa Sany Ariffin as the
company's president director and chief financial officer
respectively.

The proceeds raised by the XL IPO are likely to be used for
capital expenditure since there is a lot of potential in
Indonesia to provide mobile connectivity in the areas designated
to XL, which had 4.5 million mobile subscribers as at end June.

Meanwhile, Bloomberg quoted XL director Rudiantara as saying
in Jakarta on Wednesday that XL may spend up to $400 million,
double the amount last year, to boost capacity and expand
coverage this year and the company may sell bonds to finance the
expansion.

"We are expanding coverage, network as well as improving our
services," he said in the report.

Besides a mobile network in both GSM 900 and 1800 and
associated transmission infrastructure, XL also has a substantial
presence in the Indonesian corporate data market and is
developing businesses in VoIP and wireless broadband. XL recorded
gross revenue of about $254 million in the first nine months of
2004.

It has 2,100 base stations covering the islands of Java,
Sumatra, Kalimantan, Sulawesi and Bali.