The telecommunication firm, PT Smartfren Tbk (IDX: FREN), plans to releases 7 billion Series C shares to pay debt and potentials to grab more than Rp450 billion (US$32.14 million) - Photo by the Company

JAKARTA (TheInsiderStories) – The cellular provider, PT Smartfren Telecom Tbk (IDX: FREN), plans to release 7 billion Series C shares to pay debt, said the management last week. Referring to the stock price on Friday (01/22) at Rp66 a unit, the unit of PT Dian Swastatika Sentosa Tbk (IDX: DSSA) could grabbing Rp462 billion (US$33 million) from the corporate action.

Together with the rights issue, the company also offered 91.99 billion warrants or around 34.9 percent of the total issued and fully paid shares. The company has not yet determined a standby buyer for the limited public offering.

“We expect as much participation as possible from the shareholders to exercise the rights and warrants. If the shareholders do not exercise their rights they will be diluted as much as 37.6 percent,” wrote Smartfren.

To support the business expansion, the operator prepared capital expenditure around $300 million in this year. Finance director of the provider, Antony Susilo, said on Jan. 12, the company aimed to improve the service quality, after received an additional 10 megahertz of spectrum from the government end of last year.

Recently, information and communication ministry has picked Smartfren, PT Telekomunikasi Selular, and Hutchison 3 Indonesia (Tri) go to the next 2.3 gigahertz of 2360MHz – 2390MHz spectrum tender. The other participants, PT Indosat Ooredoo Tbk (IDX: ISAT) and PT XL Axiata Tbk (IDX: EXCL) has been declined.

To help the operator, its parent has exchange the mandatory convertible bond with 26 billion new series C shares of the issuer with total conversion worth of Rp2.6 trillion. After the transactions, Dian Swastatika hold 12.7 percent stake in the cellular operator.

Susilo stated that as many as three bondholders had converted their notes with 34 billion new shares of the company on Sept. 22, 2020. Boquete Group SA also participated in the MCB conversion with 2 billion shares of the provider.

After this action, Smartfren still has the remaining 46 billion series C shares which the holders of the MCB could exchange at any time. 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. The notes was issued in 2014 and 2017 with total amount Rp3 trillion and Rp5 trillion, respectively.

As of the first semester of 2020, the provider still recorded a net loss that swelled by 14 percent to Rp1.22 trillion compared to the same period last year which also saw a net loss of Rp1.07 trillion. But the revenues up 41.98 percent to of Rp4.3 trillion over the same period the previous year.

The revenues came from the data business of Rp3.91 trillion, non-data revenue of Rp226.52 billion, interconnection income was Rp61.69 billion, and other income was Rp101.83 billion. Currently, the shareholders of the operator are PT Global Nusa Data 31.20 percent, PT Wahana Inti Nusantara 19.10 percent, PT Bali Media Telekomunikasi 12.60 percent, Dian Swastatika 10.50 percent, and public 28.40 percent.

US$1: Rp14,100

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