PT Indosat, the country's second largest telecommunications company, plans to sell bonds worth Rp 1.5 trillion (US$149.6 million) in the fourth quarter of the year to help refinance its maturing debts.
Indosat president director Harry Sasongko said late Wednesday that the company had appointed PT Mandiri Sekuritas, PT DBS Vickers and PT Danareksa as underwriters in the rupiah-denominated bond issue.
The bonds will be Rp 1.1 trillion in the form of conventional bonds and Rp 400 billion in sharia bonds.
"The bonds will have a maturity period of between 1 and 5 years," Harry said.
He said that the proceeds would be used to repay the company's loans. According to its latest statement, the company's total liabilities rose 15.3 percent to Rp 22.68 trillion in the first half of this year.
The cost of borrowing in the country has been on a decline, supported by recent aggressive moves by the central bank to cut its key interest rate, which currently stands at only 6.5 percent.
The telecommunication sector is among the most lucrative businesses in the country, although tight competition has in the past two years led to a fierce tariff war which has cut revenue, while costs have increased.
Indonesia is home to 11 mobile phone providers, operating both GSM and CDMA technologies.
Against that backdrop, Indosat expects only a modest growth in revenue in the second half of the year.
"It *the growth* will be around between 1.6 percent and 2 percent," he said.
Indosat's revenue stood at Rp 8.91 trillion in the first half of this year, relatively flat from Rp 8.83 trillion in the same period a year earlier.
This is partly because the company lost 3.5 million subscribers during that period, reducing its customers to 28.9 million, as the company launched a program to eliminate its one-time users, a type of customer who used a number and then threw it away after the credit ran out.
The program was aimed at reducing the company's burden in network costs arising from excessive usage from non-loyal customers.
"With this, we can be more focused serving loyal customers," Indosat spokeswoman Adita Irawati told The Jakarta Post.
However, Harry said that he hoped that the number of subscribers can start to pick up in particular during the Idul Fitri holiday season. But he refused to mention figures.
Indosat is 65 percent owned by Middle East-based Qatar Telecommunications Co.
