BTel to own 6% of Smartfren post-merger

18 Dec 2014

Indonesian CDMA operator Bakrie Telecom (BTel) has said that it will take a 6% stake in fellow CDMA wireless service provider Telekom PT SmartFren (Smartfren) as part of their planned network merger deal. In a filing to the local stock exchange late yesterday, BTel confirmed it will become a minority shareholder in Smartfren post-merger, in response to a query from the bourse.

BTel and Smartfren confirmed plans in November this year to merge their respective network operations. While neither side divulged the exact value of the deal, upon completion it intends to lease part of Smartfren’s network to serve its own customers. The move came in the wake of BTel’s escalating financial woes: the carrier is being sued by three bondholders in New York for its alleged failure to make two interest payments on a USD380 million bond, while in December this year, BTel creditors voted on a plan to convert the majority of the ailing company’s debt into equity. Under the plan, BTel parent Bakrie & Brothers intend to convert 70% of the telco’s debt at a price of IDR200 (USD0.016) per share. The remaining 30% of debt will then be amortised over a five-year period. The debt restructuring plan followed a ruling from the Jakarta court ordering the telco to renegotiate a restructuring plan with its creditors by 9 December.

According to TeleGeography’s GlobalComms Database, BTel booked gross revenue of IDR928 billion 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.

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