T

he country's largest telecommunication operator PT Telekomunikasi Indonesia (Telkom) confirmed Friday its plan to turn its subsidiary, PT Dayamitra Telekomunikasi, into a public company.

Dayamitra is 100-percent owned by Telkom and focuses its business in the procurement and management of base transceiver stations (BTS).

Telkom's public and marketing communication vice president Eddy Kurnia said there were no definitive targets on the timing and the proceeds expected from the upcoming initial public offering (IPO) as the company is still under intensive treatment to boost performance.

"We still don't know how many shares will be offered, when will it be, or who the underwriters will be, because we are still trying to improve Dayamitra's business performance before we can offer its shares to the public," Eddy said Friday via telephone.

Under its future business development, Dayamitra will buy all BTSs owned by Telkomsel, Telkom's biggest unit, which is also the largest cellular operator in Indonesia.

In the end, Dayamitra will be designated as the operators of all Telkom's BTSs.

Telkomsel has 29,781 BTSs as of the third quarter of 2009, a 19-percent higher than the figures in the same period in 2008.

Eddy said the plan to divest shares in Dayamitra would not be due shortly as the plan would require approval from Telkomsel's shareholders, including Singapore Telecom Mobile Pte Ltd (Singtel), which controls 35 percent of the company.

Previously, Telkom failed to clinch a deal with a company in the BTS management business, PT Solusindo Kreasi Pratama (Indonesiatower), through Dayamitra as due diligence reports said that the deal wasn't feasible.

Analysts welcomed positively the divestment plan, saying that this will give the company a more added value in serving more subscribers.

The number of Telkom's subscribers for both fixed line and cellular telecommunication rose 32 percent in the third quarter of last year to 103.2 million people, the company's latest financial report showed.

The company has predicted "high single digit growth" for Telkomsel through an additional 12 million subscribers next year, and "low single digit growth" for Telkom next year.

Telkom president director Rinaldi Firmansyah once said that the growth of Telkom would be single digit due to the anticipated slow business in the fixed line division.

To stimulate growth, Telkom has allocated US$2 billion for investment next year. The company has announced that it will issue a rupiah-denominated bond worth Rp 2 trillion ($218 million) in the first semester of 2010 to help finance this year's capital expenditure.

The company is in the process of selecting underwriters for the bond issuance.