TMI ... Nov 2008

Its Indonesian unit, PT Excelcomindo Pratama Tbx (XL), is on track to complete the planed sale of its telecommunications towers for close to US$1 billion to fund its expansion and repay debt.

A decision is expected by November 2008 … Plans are unaffected by the credit crunch. It is expected to raise to raise between US$700 million and US$900 million form the 7000 towers.

The buyer will be locally incorporated, fulfilling the government’s conditions. But the funding can be from local and foreign sources … the buyers have expressed their commitment.

Funds from the sale would help XL with the US$1.25 billion in capital expenditure it planned to spend in 2008.

While the sale of the towers is on track, it is unlikely that the divestment of TMI’s stake in XL might be delayed due to the depressed equity prices.

TMI will dispose of between 10% and 15% of its holdings in XL to put more XL shares in the hands of the public. TMI controls 83.8% of XL while UAE’s Emirates Telecommunications Corp has a 15.97% stakes.

The sale of TMI’s 10% stake in XL would have fetched TMI about RM598 million eight months but in Oct 2008, it is worth Rm200 million.
XL’s plan to spin off its towers was hit by ruling by Indonesia’s Communications and IT Ministry in mid March 2008, which banned foreigners from taking equity in companies that build and operate telecommunication towers.

The planned spin off is expected to improve XL’s return on assets as well as return on employed capital. The towers were seen as very attractive assets as XL had sealed tower leasing agreements with smaller rivals.