Smartfren explores USD350m loan facility to replace CDMA with LTE

3 Feb 2015

CDMA wireless service provider Telekom PT SmartFren (Smartfren), owned by Sinar Mas Group, is exploring options to secure up to USD350 million in loans to finance a planned upgrade of its current CDMA 3G network with 4G Long Term Evolution (LTE) technology. The group is reportedly looking to invest USD400-USD500 million over two years to migrate to an LTE frequency division duplex (LTE-FDD) platform in the 800MHz band as part of its planned network-only merger deal with beleaguered Indonesian CDMA operator Bakrie Telecom (BTel). The latter took a 6% stake in Smartfren – via one of its fellow operator’s shareholders, PT Wahana Inti Nusantara – under that deal, following a network merger announcement in November last year. Whilst the pair will continue to operate in the local market as distinct legal entities post-merger, they hope to benefit from improved operational efficiencies and performance as a result of the cooperation. Smartfren says the move will hopefully increase revenues and ensure that earnings before interest, taxes, depreciation, and amortisation (EBITDA) remains ‘positive’. BTel president Jastiro Abi was quoted recently as saying that it expects to save up to 70% of its network costs through the tie-up – monies that can be retargeted for the company’s operating costs.