The Jakarta Post reports that Indonesian firm PT Dian Swastatika is buying a stake in local telecoms operator PT Smartfren Telecom (branded Smartfren), via an IDR1 trillion (USD110.7 million) mandatory convertible bonds deal. Both companies are affiliated to the Indonesian conglomerate Sinar Mas Group; Dian Swastatika’s operations are in the energy and infrastructure segments. Dian Swastatika has announced it will take ten of Smartfren’s bond series, priced at IDR100 billion each, from another firm, PT Valensia Persada. The bonds – the sale of which took place on 20 February this year – will be converted into equity within five years, it added. Upon completion, Dian Swastatika will own a 15.4% stake in CDMA-based telecoms provider Smartfren – based on a valuation by public surveyor Doli Siregar & Rekan. It is understood the deal will also increase Dian Swastatika’s firm value to USD4.40 billion from USD4.34 billion.
Smartfren is currently owned by three Sinar Mas-linked groups — PT Wahana Inti Nusantara, PT Global Nusa Data and PT Bali Media Telekomunikasi — each of which controls a roughly 20% share of the telco. A further 31% stake is in public hands and the remainder is owned by Dubai’s Jerash Investment Ltd. In recent years Smartfren has struggled to grow in a highly competitive domestic market. It booked a net loss of IDR1.56 trillion in 9M11, a 48% increase from the corresponding period of 2010.