JAKARTA. Conglomerate Media Nusantara Citra (MNC) Group is planning to release up to 20 percent of its stake in new entity Sky Vision Network (SVN) for foreign investors before the end of the first half, according to its owner, tycoon and politician Hary Tanoesoedibjo.
Hary said over the weekend that his business group was looking to sell between 10 percent and 20 percent of its stake in the company, as part of the group’s strategy to establish a more focused holding company for its television businesses.
He said that his company was currently engaged in discussions with a number of interested investors, mostly from Europe and other parts of Asia.
“They will have a minority stake [in SVN],” he told reporters.
Hary said that the group was also open to multiple investors purchasing the shares, adding that the transaction is expected to be concluded this semester.
He said that SVN, which is yet to start operations and is currently wholly owned by his media holding company, publicly-listed Global Mediacom, was prepared as holding company for listed pay television operator MNC Sky Vision and broadband fiber optic company MNC Kabel Mediakom (MKM).
Global Mediacom — the parent company of MNC Group’s media businesses — owns a 77 percent stake in MNC Sky, an approximately 63 percent stake in publicly-listed free-to-air television operator MNC and a 100 percent-stake in a number of news firms.
MNC Group has been working to enhance its paid television and broadband businesses, having allotted US$500 million to develop its fiber optic business between 2014 and 2016, according to previous reports.
MKM, also known as Play Media, was established in January 2013. Play Media targets to have a total of 700,000 home subscribers this year and a total of 1.5 million in three to five years.
Hary said that to support its business, SVN was expected to go public some time in the next five years.
“As an exchange for SVN’s floated shares, we will buy back shares of MNC Sky Vision in return,” he explained.
As previously reported, MNC Group gained shareholders’ approval to buy back a stake of up to 5 percent in MNC Sky Vision mid last year, with around Rp 636 billion of funds prepared to support the plan. The buyback scenario is to be implemented by January 2017, and is part of wider buyback plan for four companies under the conglomerate that will involve around Rp 7.46 trillion of capital.
MNC Sky operates the country’s first and one of the biggest paid TV services, Indovision. The company’s losses ballooned from Rp 28.05 billion in the first nine months of 2014 to Rp 620.02 billion in the corresponding period last year, as a result of surging losses on foreign exchange (forex) that soared by 10 times to Rp 689.99 billion throughout the year as its programming costs were in US dollars.
Moody’s Investors Service has downgraded MNC Sky Vision’s corporate family rating to B2 from B1 with a negative outlook last month, citing refinancing risks associated with a $243 million bank loan — the bulk of which matures in November 2016 — and the rise in leverage due to its significant and unhedged foreign-currency exposure and its weakening operating performance behind the downgrade.
Forex losses have also become an issue for its parent company Global Mediacom, which saw a decrease of its Rp 689.92 billion in net profits during the first nine months of 2014 to Rp 128.66 billion during the same period last year.
The company’s revenues grew by only 2.5 percent on an annual basis to Rp 8.2 trillion between January and September last year, thus failing to offset the Rp 1.1 trillion in forex losses that eroded its bottom line. (Anggi M. Lubis)
