Posted by: mel | April 29, 2009

Telkom uses swap to expand

Ika Krismantari ,  The Jakarta Post ,  Jakarta   |  Tue, 04/28/2009 12:53 PM  |  Business

The country’s largest telecom services provider PT Telkom said Monday it will use a currency swap to back a technology deal with Chinese providors.

PT Telekomunikasi Indonesia president director Rinaldi Firmansyah said the company’s US$100 million agreement with China’s Huawei this year would be implemented by making use of currency swap facilities, which were recently approved by the Chinese and Indonesian governments to help boost trade and investment between the two countries.

The $100 million agreement is only a modest part of a $1 billion commitment between Huawei and Telkom under long-term contracts in support of trade and investment.

“It *the swap deal* will reduce our cost of funds,” Rinaldi said, adding the company would also study the possibility of making similar deals with another Chinese firm, ZTE and then with Japanese companies, also with a view to reducing financing costs.

Indonesia has just signed multilateral swap arrangements with a number of countries in the hope of helping participating partner countries to reduce financing costs and currency risks by reducing mutual dependency on the US dollar.

This reflects doubts on the advisability of over-dependency on the US dollar for trade financing in the light of the credit crunch, financing problems and the negative impacts of the global economic downturn.

Under currency swap deals, Indonesia has secured $12 billion from Japan, $4 billion from China and $2 billion from South Korea.

Rinaldi said that Telkom was now turning from European vendors to those in Asian countries like China, due to their competitive prices.

Telkom targets to build at least 300 base transceiver stations (BTS) this year to add to its network of more than 1,000 existing BTS.

Telkom will use the $100-million financing from Huawei to develop code division multiple access (CDMA)-based service infrastructure, broadband internet networks, softswitch and radio broadcasting.

Rinaldi said that the company would spend up to Rp 22 trillion ($1.93 billion) in capital expenditures this year, 30 percent of which would be paid using bank loans or vendor financing.

Rinaldi also said that Telkomsel, Telkom’s largest subsidiary, increased its subscribers by almost 6 million people in the first quarter of this year, compared to last year.

The number of Telkomsel subscribers went up to 71.3 million people in the first three months, from 65.3 million in 2008 said Rinaldi

The president director of Telkomsel’s parent company also said that the number of subscribers of Telkomflexi, Telkom’s unit for fixed landline calls, increased by up to 400,000 people from about 10 million people in 2008.

Telkom has yet to release its financial report results for 2008, compared to 2007, and for the first quarter of this year.

However, according to the State Ministry for State enterprises, Telkom made about Rp 10.30 trillion in net profits last year, around 20 percent lower than the Rp 12.68 trillion in profits which it booked a year earlier.

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