JAKARTA (TheInsiderStories) – Telco operator, PT Smartfren Telecom Tbk (IDX: FREN), has completed the conversion of mandatory convertible bond (MCB) into 39 billion Series C shares amounted to Rp3.9 trillion (US$267.12 million). The notes was issued in 2014 and 2017 with total amount Rp8 trillion.
In the disclosure of information issued on Tuesday (04/13), the management announced, the converted shares have been listed on April 12. With the latest transaction, the issuer has exchanged MCB into 73 billion shares from a total of 80 billion shares prepared for the corporate action.
One of the shareholders, PT Dian Swastatika Sentosa Tbk (IDX: DSSA), has raised another increased their ownerships from 15 percent to 19.9 percent after the transaction. On September 2020, the unit of Sinar Mas Group has exchanged the notes with 26 billion new Series C shares of Smartfren with worth of Rp2.6 trillion.
Beside Dian Swastatika, said finance director, Antony Susilo, Panama-based firm, Boquete Group SA, also participated in the bond conversion. Other parties that hold the MCBs are PT Dian Ciptamas Agung, PT Nusantara Indah Cemerlang, PT Andalan Satria Permai, Hilmas Coal Pte. Ltd., and Cascade Gold Ltd.
Beside MCB program, Smartfren has announced to execute additional rights issue with a maximum targets R700 billion to repay the company’ debt. The provider plans to release a new Series C shares around 7 billion shares and 91.99 billion warrants or around 34.9 percent of issued and fully paid capital.
According to Susilo, the company had obtained shareholders approval on March 2 and will be submitted to the Financial Services Authority on Monday (03/08). He adds, the warrants give the investors to order new shares at a certain price in six months period after the issuance date.
If the shareholders not exercise their rights, their ownerships will be diluted by 37.6 percent. Currently, the shareholder of Smartfren are PT Global Nusa Data (30.30 percent, PT Wahana Inti Nusantara (18.49 percent), PT Bali Media Telekomunikasi (12.26 percent), Dian Swastatika hold 12.15 percent, and public 26.7 percent. The unit of Sinar Mas Group has budgeted a capital expenditure around $300 million in 2021 to improve the service quality.
Recently, Fitch Ratings says the shift toward larger data bundles and unlimited data offerings point to increased competition in Indonesia’ mobile market and the need for continued high investment. However, pricing should remain rational, with major telcos pursuing profitable growth despite tough market conditions.
The agency believes execution of strategy will be paramount amid a slowing economy, as operators strive to boost revenue. Smartfren (CCC+(idn)), the smallest rival and the first to launch unlimited data plans in 2H 2019, has made headway in its subscriber acquisition strategy, expanding revenue by 42 percent.
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