Smartfren to issue bonds up to Rp 2 trillion

JAKARTA. Publicly listed telecommunications operator PT Smartfren Telecom plans to issue between Rp 1 trillion (US$75.02 million) and Rp 2 trillion in convertible bonds in the second half of this year to support its working capital and to refinance some of its bank loans.

Smartfren finance director Anthony Susilo said after a shareholders meeting on Friday that his firm would issue the convertible bonds, which are part of its second round of convertible bonds issuance, in the second half of this year.

“We still have a slot to issue another Rp 4.4 trillion for the second-round convertible bonds issuance. Of that portion, we’ll issue between Rp 1 trillion and Rp 2 trillion to cover our needs this year,” he said.

The company had agreed to issue a total of Rp 9 trillion in convertible bonds, with Rp 4.6 trillion being issued in June last year as part of the second round of its convertible-bond issuance.

Smartfren planned to use the funds from the bonds issuance this year to finance its working capital and refinance its bank loans, Anthony said.

The firm’s total debts maturing this year amounted to around $80 million, he added.

Anthony disclosed that his firm would issue another Rp 2.4 to Rp 3.4 trillion in convertible bonds next year based on its working capital needs.

Smartfren, which is now the sole CDMA operator in the country, also plans to spend a total of $400 to $500 million on multi-year capital expenditure for its adoption of the 4G/LTE network, with between $200 and $300 million being allocated this year.

The firm will rely on bank loans and loans from vendors to finance the LTE network development.

Smartfren has signed master agreements to develop the LTE network with technology companies ZTE and Nokia with contract prices amounting to $401.98 million and $383.58 million, respectively.

The contract price will be paid gradually based on the progress of the LTE development.

Anthony explained that his firm targeted finalizing a $300 million-revolving loan facility from the China Development Bank next month to finance part of its contract price with ZTE.

In another development, Smartfren’s newly appointed president director Merza Fachys said that his firm would increase its total number of base transceiver stations to 10,000 units by year-end from 6,115 units as of the end of last year.

“Our LTE network will cover all areas our CDMA network covers,” he said, hinting that the 10,000 units would be 4G-ready.

Smartfren has carried out its 4G trial in Solo in Central Java and Batam. It aims to take the LTE service commercial in the second half of this year on the 850-Megahertz (MHz) and 2.3-GigaHertz (GHz)-frequency bands.

In anticipation of a large number of 4G customers, Smartfren has recently launched five types of 4G-Andromax smartphones with prices of around Rp 2 million.

Merza said his firm hoped that its new LTE service would help the firm achieve its double-digit growth target this year.

The firm expects to see the number of its subscribers surge to 15 million this year from 11.9 million last year.

The CDMA operator booked a 22 percent increase in its revenues to Rp 2.9 trillion last year from Rp 2.4 trillion in 2013. (Khoirul Amin)