Unless the tragedy in New York causes SingTel to postpone, the Singapore company has agreed terms with KPN to buy its stake in the leading Indonesian mobile operator, Telkomsel.
SingTel has agreed to buy KPN's 22.3% stake in Telkomsel for $601 million, a price which on the surface may appear rich.
Telkomsel is 77% owned by PT Telkom, the nation's major telco. PT Telkom recently bought 35% of Telkomsel from Indosat for $945 million, which valued the company at $2.7 billion.
SingTel is buying its stake in Telkomsel at the same valuation even though telecoms valuations have plunged 30% since February when PT Telekom bought in.
This may lead some analysts to react in a similar fashion to when SingTel announced its intentions of buying Optus in Australia, ie cry out that the Singaporean company is once more paying too much.
However, SingTel will reveal that Telkomsel has added 400,000 new subscribers since the PT Telkom deal, making it probably the fastest growing Asian telco outside China. That 30% growth may lead analysts to reconsider their first impression and look to operational cashflow levels for the year end, which will make the price look altogether more favourable.
The move into Indonesia is a natural geographical push for SingTel and with the rumour of DBS's interest in BCA might signal a general pick-up of interest in Indonesia.
Certainly it will confirm SingTel's ambition to be a regional player with strategic footprints as far apart as India and Australia and now a 22.3% stake in Asia third most populous country.
Whether or not analysts will be satisfied with the 22.3% stake is another matter entirely. When DBS took a similar stake in the Philippines top bank, BPI, some analysts complained that the stake was neither fish nor fowl and was shareholder value destructuve. Whether analysts take a similar view of this stake remains to be seen.
KPN, on the other hand, will be glad to have got a non-strategic stake off its hands. The company has E22 billion of debt, and is desperate to lower this via asset sales, given its bank covenants permit only E17 billion of debt.
As for PT Telkom, it will obviously be glad to have SingTel as a strategic and financial partner, especially when the 3G rollout becomes a priority somewhere down the line.
