Telekom to buy 70% stake in Malaysian satellite company

Telekomunikasi Indonesia (Telkom) is set to acquire a 70% stake in Malaysian satellite company TS Global Network (TSGN) for a reported 108.5 million ringgit ($26 million).

"This partnership and alliance is our effort to expand in the regional market and realize our vision to be a digital telecommunications company," said Andi Setiawan, Telkom's vice president for investor relations in a statement to the Indonesian Stock Exchange.

An agreement between the two was signed by TSGN and Telkom's subsidiary, Telekomunikasi Indonesia International, or Telin. The acquisition is subject to regulatory approval.

Abdus Somad Arief, director for wholesale and international service at Telekomunikasi Indonesia, said that the synergy with TSGN is in line with Telekom’s strategy to expand its satellite business.

At present Telkom has three satellites in orbit with plans for send a fourth one out next year. To date Telkom has been renting transponders to its Indonesian customers which include banks and television networks.

"This synergy will further pave the way for Telkom to achieve our aspiration to become a major player in the satellite business, in line with the company's strategic goal to become one of the top three satellite service providers in Asia," added Arief.

Faizal Djoemadi, Telin president said that in order to meet the demands for cross border business, it needed an experienced satellite partner that already has a presence in the regional market. Which is why it is acquiring the Malaysian satellite company it has been partnering with since 2010.

"The TSGN acquisition is also in line with Telin's vision to become a global digital hub," said Djoemadi. "The corporate action is expected to give added value to Telin in terms of accessing the regional enterprise market, especially in Malaysia, Brunei and Myanmar."

In the official stock exchange filling the company said that the pending acquisition will increase synergy and empowerment of assets and resources” and that is their “effort to expand the regional market, as well as realize our vision of becoming a digital telecommunication company”.

In August, Telekomunikasi Indonesia was part of the consortium of seven members that built the SEA-US subsea cable system linking Davao and the US. The 14,500km system uses the latest 100Gbps transmission technology to deliver an additional 20Tbps capacity.