Smartfren earmarks USD854m investment in network and frequency migration plan

26 Aug 2014

Indonesian CDMA wireless service provider Telekom PT SmartFren (Smartfren) has revealed plans to invest up to IDR10 trillion (USD854.1 million) to prepare the ground for its 4G network launch and to migrate its 1900MHz band network to 2300MHz, as requested by the country’s government. The Jakarta Post cites the operator’s deputy CEO Djoko Tata Ibrahim as saying that the capital expenditure project will be financed through a combination of vendor financing and syndicated loans from China Development Bank (CDB), adding: ‘We will probably also find other sources of funding’.

The statement follows an announcement in June this year in which Smartfran said it would issue mandatory convertible bonds worth up to IDR8 trillion as it looks to refinance IDR4 trillion of debts that mature in 2014 and 2015, and to finance future operations, one of which is to provide technology for the migration to the 2300MHz band. Up to five companies have submitted bids to carry out the plan and the carrier is currently assessing them, its director Merza Fachys said. ‘We expect that we will finish evaluating all the bidders by the end of this month so that we can start the migration soon,’ he noted. Between IDR3 trillion and IDR5 trillion will be needed to pay for the usage rights and fees for the new spectrum. The official said that the migration should be completed within two years, allowing Smartfren to launch its 4G services in 2016.

Smartfren, which is controlled by the Sinar Mas Group, counted a total of 11.7 million subscribers as 30 June 2014 and is looking to boost this to 15 million by the end of the year. It has been reducing its losses of late – having booked deficits every year since 2011 – with total losses for January-June 2014 dropping 22% year-on-year to IDR652.1 billion. First-half revenue was up to IDR1.43 trillion from IDR1.13 trillion.

Indonesia, Smart Telecom (Smartfren)