Telkom mulling rights issue

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)