Telkomsel seeks more funds for expansion

Telkomsel seeks more funds for expansion

JAKARTA (JP): PT Telkomsel, a private company which operates
the Global System for Mobile Communications (GSM) cellular
system, is seeking additional funds to support its expansion
plan.

Company president Koesmarihati Sugondo said here yesterday
that fresh funds were necessary to compensate for the increase in
operational costs resulting from the sharp depreciation of the
rupiah.

"Contracts (with suppliers) have been raised, causing an
inevitable high cost in investment. We have to look for fresh
funds," she said after the launching of the company's SimPATI
card.

Telkomsel was now preparing for its initial public offering
(IPO) to raise funds, but the best possible alternative at this
time would be to issue convertible bonds or to seek loans from
financial institutions, she said.

She said the World Bank had also committed to providing
financial aid.

In a related development, another GSM operator, PT Satelindo,
recently signed a loan agreement with German financial
institutions to support its expansion projects.

The rupiah has declined about 35 percent against the U.S.
dollar since speculative attacks first hit the country three
months ago. The rupiah's sharp depreciation has caused a sharp
increase in the price of imported goods, including
telecommunications equipment.

The government has cut the state budget and postponed state-
related projects, mostly in the infrastructure sector, to deal
with the monetary crisis.

In addition, the government has also introduced tight monetary
measures and has curbed imports in a step to survive the crisis.

Telkomsel was incorporated in May 1995. In February 1996, the
company sold 22.5 percent of its shares to PTT Telecom of the
Netherlands and the Setdco Group of businessman Setiawan Djody,
receiving US$333 million from PTT Telecom and $94.4 million from
Setdco.

Telkomsel is now 42.72 percent owned by PT Telkom, 35 percent
by PT Indosat, 17.28 percent by PTT Telecom and 5 percent by
Setdco.

Last May, Telkomsel claimed it would float part of its shares.
Swiss securities firm SBC Warburg predicted that the operator
would launch its IPO by the fourth quarter of this year, raising
about $250 million in fresh funds.

Sugondo refused yesterday to disclose any figure or timetable
for the fund-raising scheme.

Company director Garuda Sugardo said yesterday that Telkomsel
had assets worth about Rp 2 trillion.

"We booked Rp 50 billion in profit last year. We're aiming to
increase our profit by 40 percent this year," he said.

He said 65 percent of his company's investment went to
infrastructure projects, such as base and transmission stations
and other supporting facilities, therefore additional funds were
essential.

Telkomsel, which has 410,000 customers, launched the second
phase of SimPATI yesterday -- the subscriber identity module card
with limited time which allows users to make as many local calls
as they want until the purchased time runs out. The prepaid cards
are refillable.

The company plans to market its product to foreigners, company
employees, students and other people who cannot afford to buy
Kartu Halo cards. The company plans to sell 15,000 SimPATI cards
by the end of 1997 and 150,000 cards by the end of 1998. (icn)