Telkom may issue bonds to support its capex

JAKARTA. State-run telecommunications giant PT Telekomunikasi Indonesia (Telkom) is looking into the possibility of issuing bonds to support its capital expenditure (capex) this year.

Aside from bank loans, the company planned to raise money from the stock exchange to finance half of its capex this year, according to Telkom president director Alex J .Sinaga.

“There are many choices available [...]. We plan to enter the stock exchange this year, but we can’t announce the size [of the bonds] yet,” he said without giving an exact date.

Telkom still has plenty of room to seek external funding as its debt to equity ratio (DER) stands at 35 percent, compared to the average DER of above 60 percent in the country’s telecommunication industry, he said.

After officially appointing Alex its new CEO last month, Telkom informed reporters that it would look for external sources of funding — bank loans and bonds — to finance half of its Rp 23 trillion (US$1.8 billion) capex this year.

From its total capex this year, Telkom would use around Rp 10 trillion to build 12,000 new base transceiver station (BTS) towers for its subsidiary PT Telekomunikasi Selular (Telkomsel), Alex said.

Telkom usually spends 10 percent of its annual capex on infrastructure; 20 percent on towers, information and technology (IT), media and international expansion; and the remaining 70 percent for its cellular business — operated by Telkomsel.

Alex said that besides focusing on Telkomsel’s business, his firm would also boost its Indonesia Digital Network (IDN) and international expansion projects this year.

“We will surely focus on our operating business [Telkomsel], but that is not enough to support our growth target of 20 percent above the industry,” he said.

Telkom, which had 138 million subscribers as of the third quarter of 2014, pocketed a 7 percent increase in its revenue to Rp 65.8 trillion in the January-September period of last year from Rp 61.5 trillion in the same period in 2013.

This year, Telkom would boost revenues from products that support business processes of all industrial sectors, Alex said.

Through its IDN projects, Telkom will develop transmission cables, fiber-optic networks and satellites through ID transmission; wireless internet access (Wi-Fi) through ID access and technological convergence through ID convergence.

Alex said that his firm would also expand its business to a number of foreign countries this year. He, however, refused to disclose which countries Telkom would tap into this year.

Last year alone, Telkom had set foot in a number of foreign countries and cities, including Australia, Hong Kong, Malaysia, Saudi Arabia, Singapore, Timor Leste and the United States, through its international subsidiary — PT Telekomunikasi Indonesia International (Telin).

State-Owned Enterprises (SOEs) Minister Rini Soemarno repeatedly said that she wanted more SOEs to expand their businesses to many more foreign countries during her term as the minister.

She also confirmed that the government planned to allocate around Rp 30 trillion to support SOEs’ expansion projects this year.

Shares in Telkom traded at Rp 2,860 apiece on Friday’s close, up 0.88 percent from the previous day.The stocks have risen about 33 percent in the past year, outperforming the broader Jakarta Composite Index’s (JCI) 22.6 percent advance during the same period. (Khoirul Amin)