Telkom secures US$129 million loan
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.