Indonesian operator PT Smartfren Telecom (Smartfren) booked a net loss of IDR1.64 trillion (USD109.2 million) for the six months ended 30 June 2018, only marginally better than the loss of IDR1.66 trillion reported in H1 2017. In a filing to the Indonesia Stock Exchange (IDX), Smartfren confirmed that operating income in the period under review reached IDR2.54 trillion, up from IDR2.14 trillion, although operating losses spiralled to IDR1.36 trillion from IDR925.56 billion, on revenue of IDR2.41 trillion. CAPEX in January-June 2018 amounted to between USD50 million-USD100 million, it said, broadly in line with its full-year target to invest up to USD200 million to expand the construction of base transceiver stations (BTS) and the development of its data-based service packages. This year, Smartfren targets the buildout of 6,000 BTS, of which up to 2,000 will be delivered in the second half of the year.
To help fund its ambitious rollout targets, Smartfren is reportedly seeking funding via a limited public offering that aims to raise IDR6.74 trillion from the sale of 67.41 billion new shares. According to IndoTelko, the telco has set a fixed price, which is IDR100 per share, while noting that in addition to issuing new shares it will also issue a maximum of 36.30 billion ‘warrants’. Per the plan, every holder of 20 old shares – whose names are listed as shareholders on 14 November 2018 – will be entitled to 13 warrant rights (i.e. the warrant gives the holder the right to buy ordinary shares at an exercise price of IDR100 per share over the period 16 May 2019 to 22 November 2021).
It appears, however, that the telco’s rights issue has divided shareholders. PT Bali Media Telekomunikasi for example, which holds 31.13% of Smartfren’s shares, will not carry out the rights issue, although PT Global Nusa Data (27.40%) and PT Wahana Inti Nusantara (29.65%), both intend to. Shareholders who do not exercise their rights will be diluted to 25%, the statement reads.
Smartfren will use 84% of the proceeds from the rights issue to pay down debt and the remaining 16% for working capital.