UPDATE 1-Indonesia's Telkom eyes merging tower unit with rival

Thu Feb 7, 2013 4:14am EST

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JAKARTA Feb 7 (Reuters) - PT Telekomunikasi Indonesia , the country's biggest telecoms firm, is considering merging its tower unit with a listed telecom firm as it moves to expand its tower business, an official said on Thursday.

The plan, if successful, will create the biggest telecom tower company in Southeast Asia's biggest economy, where foreign ownership is prohibited in the tower business and the market is controlled by only a handful of firms.

Telkom is considering four listed telecom tower firms, including Tower Bersama and Sarana Menara, for the merger with its unit PT Dayamitra Telekomunikasi (Mitratel), but has not yet begun official talks, said Indra Utoyo, a Telkom director.

"The plan is to unlock the value of Mitratel, which could be via a merger with listed telecom firms or an IPO," Utoyo told Reuters.

Tower Bersama is controlled by Indonesia-based private equity firm Saratoga Capital, which was founded by Edwin Soeryadjaya and Sandiaga Uno, while Sarana Menara is controlled by the country's wealthiest conglomerate, Djarum Group.

Other potential candidates are PT Solusi Tunas Pratama , nearly a quarter of which is owned by U.S. private equity firm Carlyle Group, and PT Centrin Online , which is conducting a backdoor listing for a telecom tower firm owned by private equity firm Northstar Equity Partners.

Telkom has hired Barclays Capital to advise on the plan, Utoyo said.

Mitratel manages around 3,000 towers and is in the process of acquiring around 14,000 towers from sister firm PT Telkomsel, in which Singapore's Singtel has a 35-percent stake.

Asian telecommunication firms, from India to Indonesia, are selling their towers and other infrastructure assets to raise cash to pay down debt or fund expansion.

In December, sources told Reuters that PT Axis Telekom Indonesia, controlled by Saudi Telecom Co, planned to sell 1,600 towers, worth around $300 million. (Reporting by Janeman Latul; Editing by Neil Chatterjee and Clarence Fernandez)

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