Indonesia: Telkomsel to issue 2 trln rph bonds

Jakarta, May 10: Indonesia's largest telecommunication firm, PT Telekomunikasi Indonesia Tbk (Telkom), said its mobile phone unit may raise 2 trillion rupiah ($227 million) in bonds or bank loans to finance its capital spending.

Telkom controls 65 percent of PT Telekomunikasi Selular (Telkomsel), the country's largest mobile phone operator, while Singapore Telecommunications Ltd holds the rest.

''Telkomsel plans to issue 2 trillion rupiah worth of bonds, but there is still a possibility to take loans from banks, we are reviewing this,'' Rinaldi Firmansyah, Telkom's president director, said late on Wednesday.

''We can do a combination from both of them or just one. All would be used to help finance this year's $1.5 billion capital spending,'' he told reporters.

Telkomsel controls more than 50 percent of Indonesia's some 70 million mobile phone users.

Indonesia's mobile phone sector has grown quickly in recent years, and experts predict the number of users will top 100 million by 2010. But with among the highest tariffs in the world, analysts say the pace is not as fast as it should be.

Despite strong growth, the penetration rate in Indonesia is still low at around 25 percent compared to 80 percent in Malaysia and 60 percent in Thailand.

But looking ahead, analysts say the business environment in the country's telecommunication sector will be tougher as new customers are likely to be users with lower incomes, generating lower average revenue per user (ARPU) for operators.

They also say that many of those low-end customers would be prepared to give up the convenience of nation-wide mobility for cheaper tariffs and opt for the fixed-wireless service.

Reuters