BTel-Smartfren merger on cards, paper says

24 Sep 2014

According to a report in the business news journal Investor Daily, Indonesian CDMA operator Bakrie Telecom (BTel) is to merge with fellow CDMA wireless service provider Telekom PT SmartFren (Smartfren) in a move that would further consolidate the nation’s telecoms industry. Details are sketchy at present, but it is understood that under the plan BTel will relinquish its 5MHz block of spectrum in the 850MHz band to Smartfren, establishing the latter as the full network operator and BTel as the service provider. Such a move, if realised, would exempt BTel from paying frequency usage fees. When approached, Imanuddin Kencana Putra, BTel’s director and COO, said: ‘The merger plan is true, but we can’t disclose more details, because both parties are bound by a non-disclosure agreement.’ The two companies hope to elaborate more on their plans within the coming days/weeks, but are waiting to hear from the communications and information ministry concerning their proposed merger.

TeleGeography notes that BTel booked gross revenue of IDR928 billion (USD79.53 million) in the first six months of this year, down sharply by 28.9% from IDR1.31 trillion in H1 2013, as net revenue also slumped 30.5% year-on-year to IDR773 billion. Net income (loss) for the six months under review was IDR316.8 billion, on the back of a sizeable IDR292.7 billion loss in the corresponding year-earlier period. The plummeting net income came despite the operator booking a profit of IDR210.7 billion in Q1 2014; BTel’s second trimester saw it record a massive loss of IDR527.6 billion to wipe out the earlier gains. In June this year, the provider set out its stall to sign up a net one million new customers in 2014, despite its rising level of debt and the indifferent consumer appeal of its CDMA business. It reported a total of 12.5 million subscribers at mid-2014.

For its part, Smartfren announced plans last month to invest up to IDR10 trillion 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 operator’s deputy CEO Djoko Tata Ibrahim says 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’. 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.

Indonesia, Bakrie Telecom (BTel), PT Smart Telecom (Smartfren)