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.