Telkom Indonesia targets Telecom New Zealand

PT Telekomunikasi Indonesia Tbk (Telkom) is in the business development efforts. Telkom currently continues to expand its business into the global market. With this business expansion, Telkom hopes to create a new growth engine. One of the targets of Telkom in this expansion is with acquisition of the stock operators from New Zealand, Telecom New Zealand. Telkom plans to acquire up to a 27 percent stock in Telecom NZ.

According to Arief, chief executive of Telkom, Telkkom has its own reason to target Telecom NZ shares as a strategy to become a global player. Targeted stocks will come from private equity. Funding resources for this acquisition is from internal funds and external. However, the transaction value can not be disclosed yet because it is still processing of due diligence. However, Telkom has current assets of about USD 40 trillion. 

image source: telkom.co.id

To realize the plan, Telkom must invest in the region of the country near the western culture, such as New Zealand and including Australia. Another reason is the ability of Telkomsel, a subsidiary of Telkom to maintain the ratio of earnings before interest depreciation amortization (EBITDA) margins in the range of 55 percent amid competitive pressures.

Telkomsel can maintain the efficiency of the average revenue per user (ARPU) of about 3 dollars. This value will be amazing if best practices Telkomsel was brought to New Zealand where the ARPU of Telecom NZ is around 50 dollars for data services and 15 for voice.

If Telkom success to acquire This New Zealand operator, then the power of the Telkom Group will grow bigger. On the official website of Telecom New Zealand, on August 8, 2014 has introduced their new brand that is Spark. Performance Spark for fiscal year 2014, or the period ending June 2014 showed good results. Spark managed to have about two million mobile customers and 669,000 broadband users.

Spark this year will invest in a big value by maximizing the frequency of 700 MHz. The investment is estimated to have a total investment of 158 million dollars. In the period ending June 2014 revenue of Spark reached about 3.638 billion dollars, down 2.6 percent compared to the same period the previous year amounted to 3,735 billion dollars. While the value of the benefits about 460 million dollars, or up 93.3 percent compared to the previous which only amounted to 238 million dollars.

Some analysts predict that the acquisition of Telkom to New Zealand could be a new catalyst for the stock operator of Telkomsel. Telkom's stock performance in the first half of 2014 so far recorded satisfactory results at the level of Rp 2,785 per share. This value increase up to 48 percent compared to the stock price at the end of 2012.