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22 March 2011

First Media Receives $269m in Investment
S.K. Zainuddin
Jakarta Globe
Copyright ©2011 Jakarta Globe, All Rights Reserved

In a deal that could boost cable and Internet operator First Media's ability to grow its business, private equity firm CVC has agreed to invest $269 million in the company.

The transaction reflects the strong investor interest in Indonesia, especially in its fast-growing consumer market. The deal is the second major investment by CVC in the Lippo Group, following its $790 million purchase of the Matahari department store chain last year.

First Media said CVC would own a 49 percent stake in Link Net, a First Media unit that provides high-speed Internet, cable TV and data communication services.

"First Media has a very exciting expansion plan and we have an opportunity to grow rapidly in the next few years," said Hengky Liwanto, president director of First Media, which has a subscription base of 506,000.

"We want to add an additional 1.2 million home passes in the next four years, and for that we will need approximately $250 million for new infrastructure and equipment."

The CVC investment, he added, would help fund First Media's expansion. If the company achieves those numbers, it will boost its revenue from $90 million last year to $360 million in 2015.

According to Media Partners Asia, an association for the pay-TV industry, there were 1.6 million pay TV subscribers in Indonesia in 2010. That is set to reach 4.4 million by 2015, with total industry revenue expected to rise from $200 million in 2010 to $473 million by 2015.

Indonesia is one of the fastest-growing Internet markets in the region, with 40 million users. Broadband penetration is the lowest in the region at 4 percent, but First Media expects that to expand rapidly.

Shares in First Media closed 13 percent higher at Rp 950 (11 cents) on Tuesday. First Media and the Jakarta Globe are both affiliated with the Lippo Group.