Indonesian media giant MNC Vision Networks has abandoned its plan to acquire local broadband and cable TV provider LinkNet, backed by PE firm CVC Capital and local-listed company First Media. Local press reports cite a filing to the Indonesia Stock Exchange (IDX) from First Media Corporate Secretary Harianda Noerlan dated 4 May 2020, which disclosed that at 30 April 2020 there was no definitive agreement on a final deal, or agreement on a continuation of the term sheet signed by both sides the previous December. First Media, which is backed by the Indonesian conglomerate Lippo Group, holds 27.90% in LinkNet while CVC Capital indirectly owns 35.55% through Asia Link Dewa.
As previously reported by TeleGeography’s CommsUpdate, in December 2019 MNC confirmed the signing of a term sheet to purchase a majority stake in LinkNet from CVC Capital’s local subsidiary Asia Link Dewa and Lippo Group-controlled First Media in a regulatory filing. Meanwhile, in a separate filing First Media said that it anticipated the transaction could be completed by all parties ‘within six months’. No financial details were disclosed.
CVC Capital first took a stake in LinkNet in 2011 when it paid USD275 million for shares and bonds (issued by parent company First Media), going on to up its stake in the following years. More recently, however, the private equity group and First Media have reduced their holdings, selling off around 30% of the ISP in 2014 via a USD454 million offering to leave CVC and First Media with the stakes they have today.
Deal Street Asia adds that in the wake of the annulment, LinkNet claims to have been approached by ‘a number of new potential investors’ – the names of which have not been disclosed for confidentiality reasons. In the meantime, LinkNet intends to continue its network expansion and has set aside IDR2 trillion (USD132.6 million) in CAPEX for 2020 as it seeks to extend its operational footprint in seven new cities, namely Yogyakarta, Cirebon, Cikampek, Purwakarta, Tegal, Madiun and Kediri. In FY 2019 LinkNet reported revenue of IDR3.5 trillion, up 9% from IDR3.2 trillion in FY 2018, as net profit reached a record high of IDR312.3 billion, reversing a net loss of IDR46.9 billion the previous year.
TeleGeography notes that this is not the first time that CVC has been thwarted in its hunt to find a buyer for LinkNet. In 2018 Malaysia’s Axiata was interested in acquiring a roughly 40% stake in the Jakarta-based company, but that deal never materialised.