Indonesian mobile carrier Telkomsel has received official approval from the country’s Supreme Court to reverse a lower court’s bankruptcy order, with Moody’s deeming the news ‘credit positive’ today.
As TelecomFinance previously reported, the…
Indonesian mobile carrier Telkomsel has received official approval from the country’s Supreme Court to reverse a lower court’s bankruptcy order, with Moody’s deeming the news ‘credit positive’ today.
As TelecomFinance previously reported, the telco had been declared bankrupt following a lawsuit filed by PT Prima Jaya Informatika, a mobile phone SIM card distributor. The Central Jakarta Commercial Court had delivered the verdict as Telkomsel had not repaid a Rp5.3bn (US$557,000) debt to Prima, according to local media reports.
An unrelated creditor had also complained that Telkomsel had not repaid its debt and, under Indonesian laws, a company can be declared bankrupt if it fails to repay two creditors, regardless of the amount or the company’s financial profile.
“On 21 November 2012, the Supreme Court granted Telkomsel’s appeal and refused the bankruptcy petition from PT Prima Jaya Informatika,” said Telkomsel in a stock exchange announcement. “Telkomsel has received the official copy of the decision through the District Court of Central Jakarta on 10 January 2013.”
Moody’s views the Indonesian Supreme Court decision as credit positive, but the development had not had an impact on the Baa1 ratings and stable outlooks of Telkomsel and its parent company, Telkom Indonesia.
“Although the disputed amount was small relative to Telkomsel’s cash on hand of IDR6.8trn (US$704m) and total assets of IDR58.9trn (US$6.1bn) as of September 2012, the bankruptcy, if upheld, could have resulted in the acceleration of repayment of some of Telkomsel’s bank loans, which could have triggered a cross-default at Telkom Indonesia,” said Nidhi Dhruv, analyst at Moody’s, in today’s statement.
“The Supreme Court’s timely decision also comes ahead of 3G license auctions in Indonesia, and the closure of the bankruptcy litigation means that Telkomsel can now bid for additional 3G spectrum, as local laws prohibit a bankrupt company from participating in the auction.”
Operators can submit bids for addition 3G spectrum until 31 January, with the outcome of the auction process to be announced on 27 February.
Telkomsel is the largest wireless telco in Indonesia and posted net operating revenues of approximately IDR52.6trn (US$5.6bn) for the 12 months ended 30 September 2012.
