Mobile-8 touting for new backers, subscribers to trim debt

1 Jun 2009

Heavily indebted Indonesian wireless operator Mobile-8 Telecom says it is seeking new investors, additional subscribers and a fresh business plan to help to turn the company around, as it faces the threat of a legal challenge after it defaulted on interest payments for both rupiah and dollar-denominated bonds. Mobile-8’s incoming president Merza Fachys says he has appointed securities company Mandiri Sekuritas to formulate a business plan designed to attract between one million and 1.5 million new customers in 2009, to take its total close to the five million-mark. ‘We hope that we can restructure our bond debts, so we can invite other parties to support the company’s funding,’ Merza said, adding that the proposed debt restructuring could be facilitated through rescheduling or a combination of debt rescheduling and equity swaps. The president also said that Mobile-8 was considering a rights issue, the details of which would be hammered out upon completion of its new business plan.

The local stock exchange suspended trading of shares of Mobile-8 Telecom after it defaulted on interest payments for a 2007 bond worth IDR675 billion (USD65.4 million) in March this year. The notes will mature in 2012. The company has reportedly scheduled a bondholders meeting on 30 June 2009 concerning the default. Adding to its woes, in December 2008 Mobile-8 failed to make repayment on the principal and unpaid interests for 2007 dollar bonds worth USD100 million. The Jakarta Globe writes that dollar bonds trustee DB Trustee appealed to the South Jakarta District Court in mid-March. Under the bond agreement, Mobile-8 was expected to buy back the bond notes after former main shareholder Global Mediacom’s stake in the company dropped below 51%. Global Mediacom currently owns 19% of Mobile-8 after selling a 32% holding to Dubai-based private equity fund Jerash Investment late last year. UOB Kay Hian Private currently holds 13.29% of Mobile-8, PT Bhakti Asset Management has 7.28% and US-based Qualcomm owns 5%. The remaining 23.42% is owned by public investors. The second hearing regarding the bonds is scheduled for 15 July the paper says.

In the first three months of 2009 Mobile-8 reported net losses of IDR181 billion, compared with a net loss of IDR22 billion in the year-earlier period. Net revenue declined by 55% year-on-year from IDR210 billion to IDR93.6 billion, while finance and interest charges rose 34% to IDR115 billion and foreign exchange losses amounted to IDR97 billion.

Indonesia, Mobile-8 Telecom