ASEAN KEY DESTINATIONS
Telkom enters bond market to finance expansion
State-owned telecommunications giant PT Telekomunikasi Indonesia (Telkom) aims to reap up to Rp 7 trillion from the bond market to finance part of its capital expenditure (capex) and strategic merger or acquisition.
The company announced in a public report on Wednesday that the bond issuance was part of the company’s Rp 12 trillion (US$911.5 million) sustaining bonds offering, which would be carried out in a two year-period.
The Rp 7 trillion worth of bonds will consist of four series: those maturing in seven years with coupon rates of around 8.91 to 10.16 percent, 10 years with 8.96 to 10.31 percent, 15 years with 9.21 to 11.01 percent and 30 years with 9.55 to 11.55 percent.
Telkom has appointed Bahana Securities, Danareksa Sekuritas, Mandiri Sekuritas and Trimegah Securities as the underwriters.
Novita Lubis, Bahana Securities investment banking director, said the bond offering would take place from May 20 to June 4.
Telkom is scheduled to list the bonds on the Indonesia Stock Exchange (IDX) on June 24.
Ratings agency PT Pemeringkat Efek Indonesia (Pefindo) has assigned triple A ratings to the firm’s bonds.
Telkom finance director Heri Sunaryadi said his firm would use 87 percent of the raised funds, from bonds of Rp 6.09 trillion, to finance its infrastructure development, and the remaining 13 percent to support merger and acquisition plans.
Telkom network director Abdus Somad Arief said the majority of the funds from the bond issuance would be used to support the firm’s Indonesia Digital Network (IDN), comprising IDN digital link, IDN access and IDN convergence.
“Under IDN digital link, Telkom will develop its infrastructure backbone in Papua,” he said.
Telkom is now at the forefront of the government’s $24 billion-drive to expand the country’s broadband capacity over the next five years to improve Internet access.
The publicly listed company is now expanding its Internet network in the country’s eastern region by installing a fiber optic ribbon cable system, namely the Sulawesi Maluku Papua Cable System (SMPCS), in Manokwari, Papua.
The firm is also making progress on turning the country into a global Internet transit hub by developing a submarine cable system directly connecting the country to the world’s Internet hub.
For the IDN digital access, Telkom is committed to introducing a 4G network in seven cities by end of this year, increasing its Wi-Fi points to 200,000 from 117,000 at present.
The company also aims to develop its application and digital service platforms to develop its IDN digital convergence.
Telkom is set to allocate a total of 22 to 25 percent of its revenue target this year of Rp 100 trillion to its capex, including for IDN projects.
From the total capex, 61 percent will be to develop the business of its cellular arm PT Telkomsel, 26 percent to develop broadband networks and the remaining 13 percent to develop its other subsidiaries.
“Meanwhile, we will use 13 percent of the raised funds from the bonds for merger and acquisition to support business development,” Heri said.
Telkom emerged triumphant in the first quarter of this year as it became the only telecommunications operator booking double-digit growth in its revenues.
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