Telkom withdraws bid for undersea cable operator

Publicly-listed telecommunication company PT Telekomunikasi Indonesia (Telkom) says that it has withdrawn a bid to take over a majority stake in undersea cable operator Pacnet Ltd.

“It’s canceled. We think that it will not give the added value that we were expecting,” Telkom president director Arief Yahya said on Wednesday.

Telkom submitted a bid to acquire controlling stake in Hong Kong and Singapore-based Pacnet in May.

The telecommunication giant previously said that it had until June to perform due diligence before deciding whether to proceed with the acquisition.

Pacnet, which owns the EAC Pacific network stretching 9,620 kilometers from Japan and the US, reportedly has a value of US$1 billion.

The company provides data connectivity to major telecommunication carriers, large multinational enterprises and well as small and medium enterprises in the Asia-Pacific region.

Despite Telkom’s decision not to proceed with the Pacnet acquisition, Arief said that Telkom would continue to explore expanding its business internationally. “For now, we will look around Asia,” Arief said.

He added that Telkom would be ready to finance any acquisitions as the company has had a healthy financial performance.

“There is also option to issue bonds. However, we’re not considering it as we still have the money. Our net debt-to-equity ratio remains at below 30 percent,” Arief said.

According to Telkom’s most recent financial report, the company had Rp 11.16 trillion (US$1.16 billion) in cash and cash equivalents at the end of the first quarter of 2012, total assets of Rp 104.62 trillion, total liabilities of Rp 40.23 trillion and equities of Rp 64.39 trillion.

Telkom is expecting its business to grow from 5 to 7 percent this year, according to Arief. The company reaped Rp 71.92 trillion in revenue last year, up 3 percent from 2010.

The main contributor to Telkom’s growth came from PT Telekomunikasi Selular (Telkomsel), its 65 percent-owned subsidiary.

Telkomsel, with 110 million customers in Indonesia, is the seventh largest cellular operator in the world in terms of customer numbers.

Telkom has been working to improve income from its Internet data business by building a national broadband network to connect customers to content providers with connection speeds ranging from 20 to 100 megabits per second (Mbps).

Arief said that Telkom was also cooperating with state-owned toll road operator PT Jasa Marga to provide free Internet hot-spot service at rest areas along toll roads.

The roadside Internet service was expected to start in next month, Arif said, declining to discuss how much Telkom had spent to develop the service.

Shares in Telkom (TLKM) closed at Rp 8,000 a piece in the Indonesian Stock exchange (IDX) on Wednesday, up 5.26 percent from Rp 7,600 a day earlier.

The company’s market capitalization reached Rp 153.2 trillion.