JAKARTA (TheInsiderStories) – Unit of Sinarmas Group, PT Dian Swatatika Sentosa Tbk (IDX: DSSA) exchanged the mandatory convertible bond (MCB) with 26 billion new series C shares of telco operator, PT Smartfren Telecom Tbk (IDX: FREN), said the company on Wednesday. The total conversion worth of Rp2.6 trillion (US$175.67 million).
After the transactions, Dian Swastatika will become the controller shareholders by hold 12.7 percent stake in the cellular operator. Smartfren’ finance director, Antony Susilo, said as many as three bondholders had converted their notes with 34 billion new shares of the company on Sept. 22. 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, Smartfren 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.
This revenue came from the data business of Rp3.91 trillion and non-data revenue of Rp226.52 billion. Then, the interconnection income was Rp61.69 billion and other income was Rp101.83 billion.
The sharholders of Smartfren are PT Global Nusa Data 36.6 percent, PT Wahana Inti Nusantara 22.3 percent, PT Bali Media Telecommunication 14.8 percent and public 26.3 percent.
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.
PT Indosat Ooreedoo Tbk (IDX: ISAT) (BBB/AAA(idn)/Stable) managed to increase its mobile revenue by 12 percent, followed by PT XL Axiata Tbk (IDX: EXCL) (BBB/AAA(idn)/Stable) at 10 percent and PT Hutchison 3 Indonesia’ at 8 percent.
“We expect competition to intensify, particularly in the more saturated Java region. However, the extent of competitive data bundles offered will depend on operators’ available capacity and subscribers’ ability to pay,” Fitch said on August 28.
The effects of the pandemic have been subdued for Indonesia’ mobile market, with industry revenue relatively flat in 2Q of 2020, compared with the 3 – 4 percent YoY contraction in the Philippines and Thailand. Base on the rater analysis, this is partly due to Indonesia’ fixed-broadband market being significantly under-served due to limited fixed-line infrastructure.
“We now forecast 2020 revenue growth in the low-single digits, from mid-single digits previously in 2019 at 6 percent, although a prolonged economic slowdown could temper prospects in 2H of 2020,” the report said.
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