Yahoo Finance Singtel to pay $236 million to raise stake in enlarged Indonesia associate
Singtel will hold a 30.1% stake in the enlarged entity, down from 35% it now holds in Telkomsel alone
Telkomsel, Singtel's mobile associate in Indonesia, will be merging with the broadband unit of Telkom, the parent company of both entities.
Telkomsel will pay for the deal by issuing new shares.
Upon completion of the deal, Singtel's stake in the enlarged entity will be 29.6%, versus 35% it now holds in Telkomsel alone.
As part of the deal, Singtel plans to chip in 2.7 trillion rupiah, or $236 million, to increase its stake in the enlarged entity by 0.5 percentage point, or 30.1%
At this valuation, the enlarged entity is worth 58.3 trillion rupiah, or $5.1 billion.
The deal, said to be value accretive for Telkomsel, is slated for completion in the early third quarter of the year.
Yuen Kuan Moon, Singtel's group CEO, calls this deal a "rare opportunity" for Telkomsel to tap the fast-growing fixed broadband market.
"Not only will customers get more choice and innovation, the enlarged entity will also reap significant cost synergies from the higher utilisation of networks and convergence of systems," he adds.
TelkomGroup CEO Ririek Adriansyah describes the integration of the mobile and broadband businesses as a way for his company to strengthen its position as a market leader in digital telecommunications in Indonesia.
Singtel shares last traded at $2.52.
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