State-controlled Telkom and Tower Bersama have agreed to extend the deadline for their share swap deal to March next year. (JG Photo/ Yudhi Sukma Wijaya)

Tower Bersama, Telkom Shares Fall After Share Swap Deal in Question

JULY 01, 2015

[This story was first published at 11:53 p.m. on Wednesday, July 1, 2015, and this update adds Mitratel and Telkom's share price on Wednesday's closing and both companies' statements to the Indonesia Stock Exchange]

Jakarta. Shares of Tower Bersama Infrastructure, a local telecommunication tower operator, dropped after news that the Rp 12 trillion ($900 million) share swap deal with state-controlled Telekomunikasi Indonesia, or Telkom, may fall through.

The company’s shares, which trade under TBIG on the local stock exchange, dropped 4.1 percent to Rp 8,850 on Wednesday. Shares of Telkom, listed under TLKM, fell 0.34 percent to Rp 2,920.

Tower Bersama, majority-owned by investment firms Saratoga Capital and Provident Capital, signed a deal in October last year to acquire up to 51 percent of Dayamitra Telekomunikasi (Mitratel), Telkom’s tower subsidiary.

In exchange, Telkom will receive 13.7 percent shares in Tower Bersama.

However, the Rp 12 trillion deal — which expired on Tuesday — was reportedly dropped by Telkom’s board members, according to State-Owned Minister Rini Soemarno, who spoke with reporters after a meeting with members of the House of Representatives (DPR) on Tuesday.

Reports of the rejection by Telkom’s board member came amid criticisms from the country’s politicians and lawmakers, who saw the agreement as an effort from the private sector to control public assets.

“I see this decision [was taken] based on a thorough corporate consideration. There was no political pressure behind it,” she said.

According to the company’s statute, Telkom directors are required to secure the board’s approval on deals or transactions exceeding a certain amount. Rini said a request to abolish the restriction was rejected during a shareholders’ meeting in April.

The government is the controlling shareholder of Telkom with 51 percent stake in the biggest telecommunication company.

Deadline extended

On Wednesday, Telkom and Tower Bersama, each filed a statement that both companies will still uphold the deal, agreeing to extend the deadline for the share swap until the end of March next year.

Andi Setiawan, vice president of investor relations at Telkom, said in the statement that both companies had agreed to prolong the deal in order to “fulfill certain closing conditions.”

Indra Utoyo, Telkom’s chief innovation and strategy officer, and Arif Prabowo, the company’s vice president corporate communication, did not return calls seeking confirmation.

GlobeAsia, with additional reporting from Investor Daily