Telkom to spend big for acquisitions

The country's largest telecommunication firm, PT Telekomunikasi Indonesia (Telkom), plans to spend more than Rp 1 trillion (US$107 million) for acquisitions this year in an attempt to strengthen its non-core business.

Telkom president director Rinaldi Firmansyah said Friday that the company was eyeing to purchase three telecommunication application service providers this year.


Rinaldi said that the company had recently acquired the first company in a deal costing up to Rp 150 billion for a 75-percent ownership stake.

"We signed an SPA *sales purchasing agreement* today," Rinaldi said, refusing to name the company.

He explained further that Telkom would develop the newly acquired firm as a division that would provide an online healthcare practice (e-health).

The company currently has 1 million customers, he added.

Meanwhile, Rinaldi refused to elaborate on plans of the acquisition of two other firms, citing a confidential agreement was made during the negotiation process, but said that deals would be finalized this year.

"They are not telco firms, but application services and data providers," he said, adding that the company preferred to be active in acquiring non-telco firms, but preferred a passive approach in purchasing small telco firms.

"If we receive good offers, we will take them," he said.

Previous reports said that Telkom planned to take over one small telco this year to strengthen its fixed-line business.

Speculation is rife that companies for acquisition would include PT Bakrie Telecom, the telecommunications unit of Bakrie and Brothers group, the operator of CDMA brand Esia and wireless telecommunications services Wifone and Wimode.

Rinaldi also revealed the company's plans to sell the shares of its subsidiary - PT Dayamitra Telekomunikasi - to the public through an initial public offering next year, waiting for the improvement of the unit's business performance.

Under its future business development, Dayamitra will buy all base transceiver stations (BTSs) owned by Telkomsel, Telkom's biggest unit, also the largest cellular operator in Indonesia.

Dayamitra will be designated as the operator of all Telkom's BTSs.

Their total number reached 29,781 as of the third quarter of 2009.

Rinaldi assured that Telkom would only sell a minority stake in the company, but he did not mention the figure.

Meanwhile, the divestment of a 40 percent stake in terrestrial network provider PT Patra Telekomunikasi Indonesia will be finalized in the first half of this year, he said.

Telkom has allocated $2 billion for investment next year.

The company announced that it would issue a rupiah-denominated bond worth Rp 2 trillion in the first half of 2010 to help finance this year's capital expenditure.

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