Telkom welcomes SingTel's entry to wireless unit
Tantri Yuliandini, The Jakarta Post, Jakarta
State-owned telecommunications company PT Telkom said that the entry of Singapore Telecommunications Ltd. (SingTel) as a strategic partner in cellular company PT Telkomsel marked another step forward for Telkom in the restructuring of its wireless interests.
Telkom said in a statement on Thursday that the company would now move forward with its plan to combine Telkom's cellular services, called Telkom Mobile, with Telkomsel.
"With SingTel's technological and commercial expertise ... we believe that through our partnership Telkomsel will be better positioned to construct the most advanced wireless networks in the country," Telkom's president Mohammad Nazif said.
SingTel signed a definitive agreement on Wednesday with KPN Mobile BV to purchase KPN's 22.3 percent stake in Telkomsel for a cash consideration of US$602 million.
SingTel said that the company would pay for the sale from borrowings.
With the purchase, SingTel replaces KPN as Telkom's strategic partner in Telkomsel and assumes the rights and responsibilities under the shareholders' agreement previously held by KPN.
SingTel said in a statement that it would also be assuming the liability for commitments made by KPN, under a technical assistance agreement with Telkomsel, for an amount of $25 million.
Telkom also said that it was in discussions with SingTel over a possible purchase of additional Telkom shares in Telkomsel. Telkom currently owns 77.7 percent of Telkomsel.
Telkomsel currently has the largest number of cellular subscribers in the country with more than 2.5 million customers signed up.
The company has targeted a total of 3 million subscribers by the end of the year.
"International investments are integral to SingTel's goal of becoming the leading communications service provider in the Asia Pacific region. Indonesia, with its vast market, is central to our plans for the region," SingTel's president and CEO Lee Hsien Yang said.
He said that although Indonesia had a weak economic environment, its mobile market had displayed strong resilience, growing by 82 percent a year over the last two and a half years.
"With just over 4.6 million mobile users in Indonesia, we believe there is significant room for further growth," Lee said.