Swastatika buys stake in Indonesian Smartfren Telecom
In a deal worth IDR 1 billion ($110,000), PT Dian Swastatika Sentosa (DSS) has bought a 15.4% stake in CDMA provider, Smartfren Telecom.
Under the deal, Swastatika has bought convertible bonds in Smartfren Telecom, which will be converted into equity within five years, reports the Jakarta Post.
Both businesses are part of the Indonesian conglomerate Sinar Mas Group. This transaction was valued at 31% of Smartfren Telecom’s equity, according to Swastatika’s director and corporate secretary, Hermawan Tarjono. In Indonesia, shareholder approval is only required for transactions valued at more than 50% of the company’s assets.
Smartfren has been under pressure from tight competition in the telecoms market. The telco reported a loss of IDR 1.56 trillion ($171 million) in the first nine months of 2011, although this does show a 48% increase upon the same period in 2010.
Swastatika, which largely focusses on energy and infrastructure, has stated that it wants to diversify its investment portfolio and find opportunities to develop its telecoms business.
This is a massive turn around for Swastatika. Last year, it decided to focus on its coal and power plant business, selling its telecoms assets to Inti Bangung for IDR 690 billion ($76 million). Under the sale, Swastatika divested 1,211 operational telecommunications towers and over 90 towers which were still under construction.