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Monday, April 22, 2019       09:17 WIB

Premier Insight : Hutchinson Tri Indonesia might receive capital injection Rp47tn from upcoming right issue


Telco Sector: Hutchinson Tri Indonesia might receive capital injection Rp47tn from upcoming right issue.

Based on news by Bisnis Indonesia and VP of Hutchinson 3 Indonesia (Tri), Tri intends to issue new shares. The news shares issuance plan is still in progress (waiting for signature from Communication and Informatics Ministry).

The new shares will be absorped by Hutchinson Asia Telecom and PT Tiga Telekomunikasi Indonesia (Tiga), while PT Cyber Access Communications (CAC; prev. majority owner (65%)) did not execute its right. Tiga is affiliated with Garibaldi Thohir, according to Bisnis Indonesia.

Potential change of ownership structure after the corporate action:

Before: CAC 65%; Tiga 35%

Post-right issue: Hutchinson Asia Telecom 66%; Tiga 33%; CAC 1%.

Proceed from right issue will be used to strengthen companys financial structure.

Tri reported FY18 revenue and EBITDA of HKD7.3bn and HKD1.6bn respectively. (Bisnis Indonesia, Company).

Comment: Neutral for now as the potential capital injection is still waiting for Kominfos approval. We will monitor futher progress of this potential corporate action and Tri Indonesias plan from potentially financial structure improvement (capex, data pricing, etc). We viem impact to Telco sector will depend on Tri Indonesias strategy, e.g. to its data pricing, going forward if the right issue is executed. Using average forex of Rp1,889/HKD in 4Q18 without accounting historical difference, We estimate Tris FY18 revenue and EBITDA would be Rp14tn and Rp3tn respectively. We have a Buy for EXCL TP Rp2,800, but Hold for TLKM TP Rp4,200 and ISAT TP Rp2,800.


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