Telkom secures US$129 million loan
Leony Aurora, The Jakarta Post, Jakarta
PT Telekomunikasi Indonesia (Telkom) signed on Thursday a US$129 million loan agreement with ABN Amro to repurchase the former's promissory notes.
Telkom issued the promissory notes in 2002 to help finance the acquisition of PT Pramindo Ikat Nusantara (Pramindo), the company's former partner in developing fixed-line telecom services in the Sumatra region.
Woeryanto Soeradji, Telkom's corporate secretary, announced that the loan and interest would be repaid in 10 monthly installments, starting on March 31 and ending on Dec. 30, 2004.
The funds would be placed in an escrow account on Jan. 30 and used to exercise the call option (of the promissory notes) on March 15. This move would save interest costs as the loan carries a lower interest rate than the promissory notes.
Telkom and Pramindo's shareholders signed a sale and purchase deal totaling $425 million in mid-2002, which is to be paid in installments over 2.5 years.
In 1995, Telkom inked agreements with five companies as joint operation scheme partners to construct and operate fixed telephone lines in various provinces in Indonesia.
Under the 15-year contracts, a partner was required to install new telephone lines and pay Telkom a license fee, a minimum monthly fee, as well as a specified share of its profits.
When the 1997 financial crisis hit Asia and the dollar soared, the partners complained that their revenues were barely enough to cover their investments.
They also lost interest in continuing their partnership arrangements following the enactment of the Telecommunications Law in 2001, which stipulates that Telkom will lose its monopoly in 2003.
Telkom has bought out four of the partners and recently took over the rights to build and operate new fixed lines for the provinces of Yogyakarta and Central Java from PT Mitra Global Telekomunikasi Indonesia (MGTI), the last of its partners.
The giant company will have to make monthly payments to MGTI of between US$5.4 million and $6.8 million for these rights until the expiry of the contract in 2010.