ASEAN KEY DESTINATIONS
Indosat to issue $455m bonds, refinance its debts next year
Telecommunication company Indosat says it plans to issue rupiah-denominated bonds equal to US$455 million next year, as part of its strategy to refinance debts and book net profit by 2015.
Indosat president director Alexander Rusli said over the weekend that the company’s bond issuance would be used to repay its $650 million debts.
The debts are due in 2020, while the new bonds to be issued will mature in 10 years.
Alexander said the bonds would be issued in the second quarter of 2015 and were expected to help the company put an end to its losses by next year.
He said Indosat would appoint the underwriters for the bond issuance late this year.
“The bonds will be in rupiah. We expect to reduce our financial burden by exchanging our dollar-denominated debts into rupiah,” he explained.
“It will provide more certainty and help us avoid [more losses from] currency volatility.”
Indosat has been facing pressure from foreign exchange (forex) losses due to its dollar denominated debts, and nearly half of Indosat’s total net debt of Rp 22 trillion ($1.9 billion) is in US dollars.
The company registered Rp 2.78 trillion in net losses last year, as it closed the year with Rp 3.01 trillion in forex losses. Its revenue for the year was Rp 23.85 trillion, a 6.42 increase compared to the previous year.
This year, Alexander said, Indosat aims to secure a moderate revenue growth of around 5 to 6 percent, in line with the industry’s growth.
However, he said Indosat may not generate a net profit this year because his company was still working on a major network-modernizing program.
He also predicted that the operator’s bottom line would plunge in the second quarter of the year compared to the previous three months, as currency volatility was projected to have once again eaten into its profit.
After making losses in 2013, Indosat finally booked a profit in the first three months of this year.
Alexander, however, said his company had found it difficult to maintain such financial achievements in the succeeding quarter.
“The rupiah has yet to pick up. It even hit 12,000 per US dollar recently,” he said.
“Given this situation, we think our performance in the second quarter will deteriorate. Our net profit may grow negative,” he continued.
Indosat has yet to publish its first half financial results.
In the first quarter, Indosat booked Rp 797.3 billion in net profits, in contrast to the total losses of Rp 13.03 billion it reported in the same period last year.
However, the biggest chunk of income came from the sales of its shares in tower operator PT Tower Bersama Infrastructure, amounting to Rp 1.39 trillion. Its revenue remained stagnant at around Rp 5.8 trillion.
Despite predicting the slowdown in the second quarter, Alexander said Indosat had seen its mobile data usage grow significantly in the second quarter due to customers’ enthusiasm about the World Cup in Brazil.
The growth in mobile data usage, he explained, was expected to momentarily boost Indosat’s revenue and counter plunging income from voice services.
Besides issuing bonds, Alexander said his company may also sell 7,000 of its 8,000 towers to source more funds to repay its debts.
The plan, however, will only be carried out next year at the earliest, after the company redenominated its $650 million debt and finalized its network-modernization project.
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