Telkom mulling rights issue
JAKARTA (JP): State-owned telecommunications company PT Telkom is considering launching a rights issue to finance its telecommunications services' expansion program, president Muhammad Nazif said on Tuesday.
He said that the fresh funds were needed to finance the company's expansion into Internet, multimedia, pay-TV, and international calls services.
"Telkom hopes ... an approval will be forthcoming for Telkom to sell its portfolio shares so as to attract fresh long term funds," Nazif said at a hearing with the House of Representatives' Commission IV for infrastructure and transport affairs.
Nazif said that Telkom needed to expand its services beyond the conventional telephony service because in the future the demand for value-added services would increase and people would turn more and more to other services rather than the conventional telephone service.
The rights issue was pending the approval of the government, Telkom's major shareholder, he said.
Separately, Telkom's director of finance Mursyid Amal said that besides a rights issue, the company could also finance its expansion program through a strategic partnership with related vendors.
"However, it is all still under discussion and we haven't made any decision yet on the amount involved or how we are going to do it (finance the expansion)," he told reporters on the sidelines of the hearing.
Regarding the government's intention to sell some of its shares, Nazif said that he felt the company was currently undervalued both in respect of it's shares on the Jakarta Stock Exchange and its American Depository Shares on the New York Stock Exchange.
Telkom shares closed steady at Rp 2,975, unchanged from Monday's close.
The government plans to divest 14 percent of its 66.19 percent stake in Telkom to help cover this year's budget deficit of 3.7 percent of GDP.
Nazif said that Telkom's shares had not reached their optimum price because, among other things, the company had yet to resolve outstanding problems with its joint operation partners.(tnt)