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Indonesia's Telkom reportedly in $1B bid for Pacnet

Country's biggest telco has submitted a bid to acquire Asia's leading undersea cable operator Pacnet, in deal estimated to be worth US$1 billion, report says.
Written by Ryan Huang, Contributor

Indonesia's largest telco PT Telekomunikasi (Telkom) has submitted a bid to buy Asia's leading undersea cable operator Pacnet, in a deal that could value the company at about US$1 billion including debt, newswire says.

According to a Reuters report Wednesday, Telkom handed in the bid last week after it reviewed Pacnet's business over the past few months, said one of the sources with direct knowledge of the matter.

A Pacnet spokesperson in response to ZDNet Asia queries, said: "Based on Pacnet's unique growth position in the Asia telecom/technology space, there will be occasional rumors and speculations about the company.  Pacnet cannot comment on any speculations."

Telkom did not reply by press time.

The reported bid has not gone down well for at least by one market watcher. CIMB Research's analyst Kelvin Goh, in a research note Wednesday, said: "We are cautious about Telkom's interest in Pacnet which operates in a challenging environment. Based on industry checks, international transit prices have been falling 20 percent year-on-year because of a glut in capacity."

"Barriers to entry to the undersea cable business are low. We believe Telkom should eye just higher-value-adding data centers, instead of dumb pipes," he added.

Reuters noted that Pacnet had put itself up for sale last year after it shelved its IPO plans because of volatile markets. The sale then stalled after it received lower-than-expected offers in the initial round of bidding, according to the newswire.

Pacnet is an undersea cable and data center operator, owning over 46,000 km of undersea cables across Asia and the Pacific Ocean. It is owned by groups including Ashmore Investment Management and Clearwater Capital Partners.

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