Telkom considers Bakrie Telecom buy via rights issue

25 Jun 2010

State-backed telecoms behemoth PT Telekomunikasi Indonesia (Telkom) yesterday confirmed it is considering buying a stake in fellow operator PT Bakrie Telecom through a rights issue, as part of a plan to merge their respective CDMA operations. Reuters quotes Telkom commissioner Tanri Abeng as saying that this option is most likely the only way to successfully complete a merger deal. Bakrie Telecom’s assets are thought to be worth up to USD1 billion, but any deal is obviously subject to a number of conditions that ‘must be agreed by both parties,’ Abeng said. One unconfirmed source says a preliminary agreement between Telkom and Bakrie may even be signed this week.

According to TeleGeography’s GlobalComms Database, in early June 2010 Telkom confirmed it was in talks with Bakrie Telecom on the possible consolidation of their CDMA operations in the country. The news came in the wake of Bakrie Telecom posting a sharp rise in profits in the first quarter of this year. Bakrie said its net profit leapt to IDR29.05 billion in the first three months of 2010 from IDR5.73 billion a year earlier due to foreign exchange gains and lower operating costs. Operating costs for the period fell to IDR585.22 billion from IDR605.12 billion a year earlier, it said while it booked IDR28.21 billion in foreign exchange gains, up from IDR14.19 billion in the previous year. Bakrie Telecom, which had 10.6 million customers at the end of 2009, expects to boost its base by around 32% to 14 million by end-2010. The Indonesian government backs the merger ‘as long as it benefits’ the state company.

Indonesia, Bakrie Telecom (BTel), Telkom Indonesia