Indonesia's Telkom to pursue IPO of unit in Q4; US$1b target

Indonesia's biggest telecommunications company Telkom plans to launch an initial public offering IPO for its infrastructure and data tower unit Mitratel by the fourth quarter of 2021, as part of broader restructuring plans for the overall business, its CEO said.

While no firm valuation target has been set for the IPO of PT Dayamitra Telekomunikasi (Mitratel), chief executive Ririek Adriansyah said in an interview it would "probably be not far" from US$1 billion.

The head of the US$24 billion state-controlled group said it is exploring other potential spin-offs for units outside its core business and holding talks with partners, including private equity firms.

"Being a telco is getting more limited in terms of growth," Mr Adriansyah said, adding that the group was building out its digital businesses, with an expansion into data centres and cloud services. "We have developed private cloud services for clients like the government."

Telkom's wireless network provider unit, Telkomsel, says it has more than 170 million customers in South-east Asia's largest economy, and has increased partnerships in content, entertainment and gaming, including a deal with Disney's streaming service Disney+ Hotstar, which launched in Indonesia in August, 2020.

"The biggest challenge for us is low data usage", the CEO said. "The reception (for Disney+) has been quite strong."

The company, which appointed the co-founder of online retailer Bukalapak as digital director in 2020, is also targeting more business-to-business clients, including in e-commerce, he said, and ramping up strategic technology investments.

Telkom's investment arm, MDI Ventures, which holds more than US$790 million in assets, has taken stakes in a dozen startups, including South-east Asian fintech firm, FinAccel, which said last month it would go public in the United States through a merger with a blank-cheque firm that values the firm at US$2.5 billion.

Separately, Telkomsel announced in May it had invested an additional US$300 million in ride-hailing and payments firm Gojek, which merged in 2021 with e-commerce company Tokopedia, to create Indonesia's largest tech group and is targeting a dual listing in 2022.