XL seeks to refinance debts, targets 4m new subscribers

The Jakarta Post, JAKARTA | Fri, 03/20/2009 12:28 PM

Having suffered losses last year in part because of foreign exchange losses, PT Excelcomindo Pratama (XL) — the country’s third largest mobile phone operator — is seeking US$400 million worth of loans this year to help refinance its debts.

The plan, by which most of the new loans would be rupiah denominated while the debts to be refinanced are mostly dollar debts, was approved by the company’s shareholders meeting Thursday, said finance director Willem Lucas Timmersmans.

He said the new loans would be used to pay up $130 million in debt due to mature throughout this year, while “the remaining proceeds would be used to accelerate debt payments” in the following years.

Beyond 2009, the publicly listed company has loans of $300 million maturing in 2010 and 2011.

The refinancing program is part of XL’s strategy to lower its debt-to-equity ratio, which stood at the level of 4.1 percent by the end of last year.

The company was hit last year by higher spending on network expansion and on dollar-debt servicing as the local currency weakened, slumping to post a Rp 15 billion ($1.26 million) loss as against Rp 251 billion in net profits a year earlier.

“The idea is to reduce exposure to dollar debts and replace them with rupiah debts,” Hasnul said.

Previous reports stated that XL’s outstanding debts stood at around $1 billion by the end of 2008, about 90 percent of which was dollar denominated.

This year, the company plans to spend up to Rp 700 billion in capital expenditure, lower than the Rp 1.25 billion it spent on capital in 2008.

In relation to a planned rights issue, Hasnul said no decision had been taken as yet, pending the company’s next shareholders meeting later on this month.

The company previously said it was considering a rights issue to partly finance its capital expenditure, following the scrapping of its plan to raise funds from the sale of its 7,000 transmission towers.

With lower capital expenditure, and a predicted slower economic growth amid the global recession, the company has set a conservative target to add 4 million customers to its existing 26 million subscribers.

In 2008, it increased the number of its subscribers by 67 percent.

Thursday’s shareholders meeting also retained Hasnul as XL’s president director until 2011.

XL is 83.8 percent owned by Malaysia’s TM International Bhd through Indocel Holding Sdn Bhd, 16 percent by Emirates Telecommunications Corporation International Indonesia Ltd. and 0.2 percent by investing public.