Indonesian cellco Telkom is planning to IPO its tower business, but first it will have to buy out tower partner SingTel in a deal which could cost it up to $1.2 billion.
Telkom has secured almost $400 million in loans from local banks to help buy out SingTel’s stake in its tower arm, reports Jakarta Globe.
Telkom announced the deal on Friday when it released its first quarter results.
The Macquarie Group is advising Telkom on the proposed deal – worth up to $1.2 billion - to buy SingTel out of the 9,000-strong tower business.
The towers are owned by Telkomsel, which is 65%-held by Telkom, with SingTel owning the remaining 35% stake.
In February, SingTel was reported to seeking to strengthen its hand in Indonesia’s tower game.
Gita Wirjawan, chairman of the Investment Coordinating Board (BKPM), told the Jakarta Globe in February that SingTel was interested in buying a stake in Telkom’s small tower arm Mitratel.
Telkom and SingTel were reportedly hoping to transfer 30,000 towers from Telkomsel to Mitratel – the latter was being considered for an IPO.
But the BKPM failed in its attempts to have telecom infrastructure removed from its Negative Investment List as planned in March, thus preventing foreign investment in the tower industry.
Coordinating Minister for the Economy, Hatta Rajasa, has vowed the government will to continue follow the 2008 ministerial decree banning foreign ownership in mobile towers.