Telkom confirms preparing a Pacnet bid

Dylan Bushell-Embling
24 May 2012

Indonesia's PT Telkom has confirmed it has submitted a preliminary bid for subsea cable operator Pacnet, and that it is on track to deciding whether to make a final offer in June.

At a press briefing reported on by The Jakarta Post, Telkom's new president director Arief Yahya revealed that the company aims to complete due diligence on the proposed acquisition next month.

He said the company will have until that month to decide whether to pull the trigger on the offer and submit a concrete bid.

Rumors that PT Telkom had submitted an offer to acquire Pacnet first surfaced earlier this month. Arief confirmed that a preliminary offer had been made at that time, when Telkom was under previous management.

The reports indicated that a deal could value Pacnet at around $1 billion inclusive of debt. Arief said that a final offer price has not been determined, but added that the acquisition cost would be funded through both internal and external cash sources.

Pacnet earned around $528.6 million in revenue and $82 million in ebitda during FY11, Moody's estimates.

A Pacnet acquisition would give PT Telkom control of the nearly 37,000km EAC-C2C subsea cable network, as well as the EAC Pacific route between Japan and the US.

Telkom is moving to expand into a global telecom service provider, to combat market saturation at home. The operator is just over 51% owned by the Indonesian government.

Yesterday, Pacnet announced the sudden resignation of long-serving CEO Bill Barney, without giving a reason.

The timing of the departure led some to speculate that the change-of-guard may be in preparation for a takeover of the company.

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