JAKARTA: Publicly listed telecommunications firm PT Indosat (ISAT) plans to spend between Rp 6.5 trillion (US$502.8 million) and Rp 7.5 trillion for its capital expenditure (capex) this year, with funds coming from a mix of internal cash, bonds and a revolving loan facility.
“We plan to use our internal cash as well as proceeds from bond issuance and a revolving loan facility,” Indosat spokesman and investor relations officer Andromeda H. Trisanto said recently.
Indosat’s current financial condition is sufficient to finance the capex, he said, refusing to explain in detail what portion of the capex would come from each of the sources.
Indosat’s cash and cash equivalent stood at Rp 3.5 trillion as of December last year and the firm successfully secured a new revolving loan facility amounting to $300 million in February and March this year, according to the firm’s latest financial report.
The publicly listed company issued late last year bonds worth Rp 2.5 trillion, comprising Rp 2.31 trillion in conventional bonds and Rp 190 billion in Islamic bonds.
The firm has secured a permit from the Financial Services Authority (OJK) to issue Rp 10 trillion in sustaining bonds for a two-year period.
Indosat stated earlier it would issue another Rp 2 trillion bond between May and June this year, as part of the planned Rp 10 trillion in sustaining bonds.
Indosat president director Alexander Rusli said that from the total Rp 6.5 trillion to Rp 7.5 trillion in capex this year, 80 percent would be for network improvement and building more base transceiver stations (BTS).
Alexander, meanwhile, refused to disclose details of his firm’s investment in supporting 4G/LTE this year, saying that its two-year network modernization had been part of the investment.
As of November last year, Indosat had concluded its network modernization in 23 big cities across the country, including Greater Jakarta, Bandung, Sukabumi, Semarang, Yogyakarta, Surabaya and Makassar.
This modernization process has already made most of its BTS compatible with 4G.
Alexander said that besides enhancing his firm’s network performance, Indosat would continue to slash exposure from its US-dollar-denominated debts, which resulted in high debt interest rates.
“In July this year, we will exercise an option to call our $650 million bond due 2020,” he said, adding that his firm would call back as much as possible of the bond.
Until next year, Indosat has the option of calling back the $650 million bond, which was issued in 2010,.
As of December last year, Indosat’s US dollar debt accounted for 46 percent of its total debts — including bonds — that hit Rp 23.29 trillion.
The company hedges only about 50 percent of its US-dollar debt exposure through short-term hedges, which are rolled over periodically, according to Moody’s Investors Service.
Indosat, which is majority owned by Qatar-based Ooredoo, saw its revenues grow by only 0.9 percent to Rp 24.09 trillion in 2014 from Rp 23.86 trillion in the previous year.
The firm’s net losses, meanwhile, dropped by 30.3 percent year-on-year (yoy) to Rp 1.86 trillion from
Rp 2.67 trillion, mostly due to declining foreign exchange losses.
