Telkom to speed up payment of $850m foreign debt

The Jakarta Post, Jakarta

Indonesia's largest telecommunications company, PT Telekomunikasi Indonesia (Telkom), plans to repay about US$150 million of its $850 million in foreign debt by the end of the year, about five years before the debt falls due.

Telkom finance director Rinaldy Firmansyah said on Thursday accelerating the repayment of the debt was aimed at "trying to avoid exchange rate losses".

The debt was to have matured by 2010.

He said the company would use a combination of its own cash and external financial sources to repay the debt.

The $850 million foreign debt is part of Telkom's total debt of about Rp 14 trillion (close to $1.4 billion).

The company also reported it had increased its capitalization sixfold to $10.8 billion -- as of September 2005 -- since it went public in 1995, and the future outlook was promising.

"With the growing telecommunications market, we expect to triple our capitalization in the next five years," Telkom president director Arwin Rasyid said.

He said the company was betting mainly on a rapid growth in revenue from phone subscribers.

Telkom cellular subsidiary PT Telkomsel has engaged in an aggressive expansion to take advantage of the country's rapidly growing mobile phone market, estimated currently at about 50 million users, or some 23 percent of the country's population of 220 million.

As of March, the company had 17.9 million cellular users, or some 55 percent of the market.

Telkom owns 65 percent of Telkomsel, while Singapore Telecommunications Ltd. (SingTel), Southeast Asia's largest telecommunications company, holds the remainder.

Arwin also said the company would go ahead with plans to buy back some shares from the Jakarta Stock Market (JSX) and all its shares traded on the New York Stock Exchange (NYSE), pending approval from shareholders during a meeting scheduled for December.

The company plans to spend Rp 2 trillion to partly withdraw its shares from the two bourses, he said.

The government, Telkom's majority shareholder, earlier approved the plan, which would increase its ownership in Telkom.

Currently, 51.19 percent of Telkom is owned by the government. Since 1995, about 42 percent of Telkom's shares have been traded on the JSX and 7 percent on the NYSE.