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NEWS UPDATES 24 July 2009

Indonesia’s Telkom set to acquire stakes in two firms

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PT Telkom, Indonesia’s largest telecoms company, is set to acquire shares in two firms in the information communication technology (ICT) sector, as it seeks to strengthen its non-core business, reported the Jakarta Post.

The company has yet to disclose the names of the companies. However, president director Rinaldi Firmansyah said recently a price had been agreed with one of the companies.

Rinaldi hinted the value of the acquisition would be less than the Rp 598 billion spent to increase Telkom’s share ownership in PT Infomedia Nusantara by 49 percent last month, while the value for the other company would be “below 500 billion rupiah”.

He added the budget had been allocated for in this year’s capital expenditure, which, according to earlier reports, could reach up to 21 trillion rupiah, about 14 trillion rupiah of which has been allocated for its phone business expansion.

Both acquisitions, Rinaldi said, were for majority ownership in the two companies.

Sources familiar with the acquisition plan said Telkom had been in talks for months to acquire majority ownership in the country’s largest Internet news service provider,, under PT. Agranet Multicitra and several other similar companies.

The source said the owners of has asked a price of 800 billion rupiah for majority ownership in the news portal, but Telkom had “bargained for half.”

Speaking to The Jakarta Post through a text message on Thursday, Detik founder Budiono Dharsono denied such a plan existed.

The Internet news service has been online since May 1998, with total daily hits of more than 2.5 million.

Previously, reports in various media quoted a top Telkom executive as confirming a plan to acquire a 51 percent stake in PT Supra Primatama Nusantara, which controls leading Internet provider Biznet. Telkom later denied the plan.

The company recently secured a 2 trillion rupiah loan to support part of its planned capital expenditure program from a group of state banks and from the Government Investment Center (PIP), a government-sanctioned agency specializing in providing funds to state enterprises.

The banks include Bank Rakyat Indonesia (BRI) and Bank Negara Indonesia (BNI), the country’s third- and fourth-biggest lenders.

On its phone business, Rinaldi said Telkom had appointed UBS as its financial adviser to help the company develop its fixed-line phone business unit, Flexi.

Recently, Telkom decided to make Flexi an independent business unit in the company’s management, in what analyst view as an initial start for a spin-off.

On business outlook, Rinaldi said he expected better results in the second half of the year.

“We have more subscribers, our investment has started to take effect and the rate competition is not as fierce as it used to be,” he said, but declined to give figures.

Telkom booked a 23.4 percent drop in its first-quarter net profit in 2009, to Rp 2.5 trillion from 3.2 trillion rupiah last year, due to higher costs.



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