Bakrie Telecom and Sampoerna Telekomunikasi Indonesia Merge

Bakrie Telecom and Sampoerna Telekomunikasi Indonesia Merge:
JAKARTA—PT Bakrie Telecom, Tbk (BTEL) and PT Sampoerna Telekomunikasi Indonesia (STI) today announced the signing of Conditional Sales and Purchase Agreement (CSPA) that took place on 13 March 2012 between BTEL and Sampoerna Strategic and Polaris as STI’s major and co-shareholders.

Following the CSPA, BTEL acquires 35% of STI through a share swap agreement with options to become majority shareholder in the next three years. In return Sampoerna Strategic will become meaningful shareholder of BTEL.

“After a very thorough yet smooth negotiation process, both BTEL and STI’s shareholders agreed to integrate the two business operations under one management in BTEL. The new BTEL aims to accelerate the penetration of true mobile convergence offerings for every customer in Indonesia. Whether they are in cities, suburban or even rural areas throughout the country, the new BTEL will offer the most cost effective data and voice connectivity services in Indonesia,” said BTEL President Director Anindya Bakrie.

The transaction constitutes one leg of a bigger operational and financial transformation initiative that BTEL plans to complete this year. The strategic collaboration will create significant added value for the new entity which will focus in four major business areas in order to achieve operational excellence, financial excellence, service excellence and great customer experience.



“We share the confidence in BTEL’s business model of faster, better, and most affordable, which proved very effective in revolutionizing mobile voice connectivity by bringing down price and tariff barriers. It should have worked the same way too in data communications. However there appears to be a disconnect in the growth of data communications due to heavy infrastructure investment, lower unit price, and slower scaling up due to stiff competition. With this synergy we can scale up the business faster and bigger in order to better serve and compete,” says Sampoerna Strategic President Director Michael Sampoerna.


Technically the competitive advantage of the new BTEL is obvious. STI’s 7.5 MHz frequency within the 450MHz band will add ample capacity for the new BTEL to offer low cost mobile data connectivity, building further the exponential growth the company has achieved with its Aha product series. On the other hand, BTEL’s existing 800 MHz band will give the company large additional capacity to increase low cost voice connectivity penetration in Jakarta, Banten and West Java areas, in which BTEL already dominates with 40% market share for CDMA. By integrating STI’s existing rapid penetration in the rural areas of Java, Sumatera, Nusa Tenggara Islands and Bali, it will be much easier for the new BTEL to enlarge its footprint outside of Java.
“Our customers must be the ones to receive the greatest benefit from this collaboration. We aim to make the new entity become Indonesia’s most cost effective and fastest growing operator by providing the most complete and best convergence experience for customers. Both groups are committed to prove that synergy between operators is not only good for operators but also necessary for Indonesian consumers who demand more and better value for every rupiah that they spend,” added Anindya Bakrie.

On the financial side, the transaction is a part of BTEL long term strategy whose theme is “expansion with healthier capital structure”. The company is in the process of deleveraging its book by raising up to USD 140 million worth of capital this year, which consists of USD 90 million from issuing Non-Preemptive Rights and USD 50 million from Bank Loan facility. BTEL plans to hold an Extraordinary General Meeting of Shareholders (EGMS) in one month time before issuing the non-preemptive-rights of up to 10% of paid up capital.

The proceeds will be used to make early repayment of Rp650 billion debts maturing in September 2012, to finance the share swap with Sampoerna, to make further investment in data connectivity, as well as for working capital to improve service quality and customers experience.
“As public listed company, we will work closely with all relevant authorities especially the Ministry of ICT and the capital market regulators to ensure a smooth process and transition for both BTEL and STI towards the new BTEL. We are going to socialize this process also to creditors and vendors to make sure that all stakeholders are supportive of this great synergy,” said Anindya.

On the operational side, BTEL’s strong branding and marketing capabilities coupled with the Bakrie Group’s large footprint in telecommunications, media, and technology (TMT) industries will sync with Sampoerna Strategic’s leading expertise and long-term experience in penetrating and dominating the Indonesia’s consumer goods industry. Sampoerna Strategic’s unique capabilities include product development and distribution, market penetration as well as service and quality control.

“We will also ensure that Human Resources Development, followed by a strong combined corporate culture, will be another ‘bonus’ area of complimentary synergy that both BTEL and STI employees will benefit greatly from this transaction. A great customer experience begins with a great corporate culture and high degree of loyalty among employees,” added Michael Sampoerna.
Immediately, the new entity will benefit from greater efficiency through shared marketing expenses, shared infrastructure maintenance and in waived intra-operator charges, which will be passed on to shareholders and customers to gain from.(id)