HTIL freezes bid for Indonesian 3G

PUBLISHED : Wednesday, 27 July, 2005, 12:00am
UPDATED : Wednesday, 27 July, 2005, 12:00am

Hutchison Telecommunications International Ltd (HTIL) has put a US$120 million bid for a stake in Indonesia's third-generation (3G) mobile-phone service on hold, citing concerns over Jakarta's plans to license more players and reallocate spectrum.

Under a deal announced in March, HTIL said it would pay US$120 million to acquire a 60 per cent stake in Cyber Access Communications, which was awarded national 3G licences in an auction in 2003.

However, completion of the takeover had been delayed by tentative plans unveiled last month by Indonesian Minister of Information Sofyan Djalil to hold a second auction and reallocate spectrum already licensed to Cyber Access and 2G operator Natrindo Telepon Selular (Natrindo), a source told South China Morning Post.

Unlike Cyber Access, Natrindo received a licence in September last year without going through a bidding process.

The Indonesian government is now expected to hold a second 3G auction in the next few months in a move that would raise five trillion rupiah ($3.95 billion).

Industry sources believe Jakarta also plans to grant licences to the country's largest phone companies that missed out in the first auction - Telekomunikasi Indonesia, Indosat and Excelcomindo Pratama.

As Cyber Access had been awarded more spectrum than Natrindo, analysts said the government was likely to carve out part of its 3G spectrum to offer to the newcomers.

'The reason Hutchison was willing to pay US$120 million for Cyber Access was really for its spectrum,' ABN Amro telecommunications analyst Suresh Mahadevan said.

He noted that any changes to that spectrum would probably make Hutchison hold the deal.

Meanwhile, the source said he expected Jakarta to ultimately compensate Cyber Access with 2G spectrum if it is required to take back some of its 3G spectrum, adding that revoking its 3G licence and spectrum was unlikely.