Indonesia mobile telecom operator PT XL Axiata Tbk (EXCL) has offered a five-series Islamic bond issue, called SUKUK, worth Rp 1.5 trillion ($110.29 million) with coupon rates ranging from 8.25% to 11.15%.
XL’s chief financial officer Mohammed Adlan bin Ahmad Tajudin said on Thursday the funds raised from bond sale will be used to pay license fee for radio frequency spectrum 2G to the government for a one-year period from December 2015.
The Ministry of Communication and Information Technology is expected to decide on the license fee in December.
The company launched its bond issue roadshow on Wednesday to gather interest of prospective creditors. The bonds will go on sale from November 25 to 27, pending approval from the Financial Services Authority.
“We not only want to grab SUKUK investors but also (target) conventional investors and to develop a SUKUK market in Indonesia. We are trying to get IDR fixed rate to avoid the rate fluctuation in future,” he said at a press conference.
XL Axiata sells sukuk, under the ijarah scheme, in which it sells operating rights of its telecommunication equipment to the financiers and leases them back over the bonds’ tenure. The company buys back the right on the bonds due date.
XL Axiata, controlled by Malaysian telecommunications firm Axiata Bhd, is setting aside up to Rp 7 trillion ($514.70 million) next year to develop its 4G network, Adlan said. The company has signed up Swedish telecom firm Ericsson to design and implement its 4G network for Jakarta and West Java over the next three years.
XL Axiata has 46 million subscribers and aims to reach up to 10 million users just for its 4G service by the end of next year. The carrier has 1.2 million 4G users, at present.