SingTel confirms talks with KPN

SingTel CEO Lee Hsien Yang

By CNN's Geoff Hiscock, Asia business editor

Singapore (CNN) -- Singapore Telecommunications confirmed Friday it is talking to Dutch telco KPN about buying its 22.3 percent stake in Indonesian mobile operator PT Telkomsel.

But a spokesman for SingTel said there was no agreement yet and it would be premature to talk about the price SingTel was prepared to pay.

A report Friday in Singapore's Business Times suggested SingTel was close to a deal and would pay between $500 million and $600 million for the stake.

It said SingTel's chief executive Lee Hsien Yang visited Jakarta this week to finalize the deal.

SingTel, which is the largest telco in South-east Asia, has just completed a $7.5 billion takeover of Optus, Australia's second largest telecoms operator behind Telstra.

Stakes throughout region

SingTel also has major stakes in telcos in Thailand (Advanced Info Service), the Philippines (Globe Telecom), Taiwan (New Century Infocomm) and India (Bharti Telecom Group). Outside the region, it has a stake in Belgacom of Belgium.

SingTel's director of corporate communications, Ivan Tan, told CNN Friday that acquiring a stake in Indonesia's Telkomsel was compatible with the group's business strategy of "actively building our footprint across the region".

"So far we have no mobile representation in Indonesia," he said.

He said that SingTel had been talking to KPN for some months about buying its stake but no early announcement was in sight.

Telkomsel biggest in Indonesia

Telkomsel, majority owned by PT Telkom, is the biggest cellular operator in Indonesia, with about 45 percent of the market.

Its subscriber numbers of more than 1.5 million are about 50 percent higher than second-ranked Satelindo. There are two other operators, Excelcomindo and Komselindo.

A successful acquisition by SingTel will add another piece to its grand plan for exposure to all the high-growth cellular markets in the region.

When it launched its bid for Optus in March this year it said it wanted to create a "true pan-Asia Pacific communications leader".

In KPN it may have found a willing seller. The Dutch operator has been one of Europe's most aggressive telcos, particularly in mobiles, but its strategy has landed it with a heavy debt load of about $23 billion.

Since March this year, it has been attempting to sell stakes in about 20 businesses to cut its debts

KPN warned earlier this week that the sales were unlikely to meet its target of $5 billion. Its planned merger with neighbouring telco Belgacom collapsed last Friday.