Royal Group is still negotiating with multiple parties interested in buying a stake in its mobile telephone service provider CamGSM, which operates MobiTel, a Royal Group official said yesterday, though the status of the bidding process is unclear.
The French Embassy announced last week that telecommunications giant France Telecom had entered into final negotiations with Royal Group, while the news service Reuters quoted the chief of Telekomunikasi Indonesia as saying he hoped his company would wrap up the purchase of a majority stake next quarter.
Mark Hanna, CFO of Royal Group, acknowledged negotiations have been ongoing “for some time,” but would not reveal any details.
“We’re in negotiations with a number of parties and I wouldn’t take it further that,” he said, declining to comment on the statements from the French Embassy or from Telkom, as the Indonesian company is known.
“These guys are making statements. They are making them on their own,” he said.
A spokesman for France Telecom declined to comment yesterday.
Last month the Bank of China approved a $591 million loan to refinance debt accrued through Royal Group’s $346 million buyout last year of Luxembourg’s Millicom International Cellular and a $100 million loan from the International Finance Corporation in 2008.
A source quoted by Reuters said a deal between Royal Group and Telkom would value MobiTel at $1 billion.
James Sullivan, head of Asia telecom research at JP Morgan Chase & Co, wrote in an e-mail to investors on Wednesday that a $1 billion valuation would be a “hefty” increase over the $600 million valuation of MobiTel in 2009, when Royal Group bought the majority of the company from Millicom.
“The valuation discussed appears rich relative to Millicom’s exit price,” he wrote.
He also said Telkom should focus on lowering operational costs to better compete in its own market, instead of investing abroad.
“Cambodia with approximately 14 mn people and 6mn cell phones (YE09, around 45% penetration) is not large enough to move the needle for TLKM,” he wrote.
He also pointed out that the Indonesian company has an extraordinary general meeting scheduled for today, which could result in management changes.
