via CAAI
* CamGSM valued at about $1 billion - source
* Deal could be biggest for Cambodia and for Telkom overseas
* Telkom shares end flat in weaker broader market (Updates with details, quotes)
By Janeman Latul and Fathiya Dahrul
JAKARTA, Dec 15 (Reuters) - PT Telekomunikasi Indonesia , Indonesia's biggest telecommunications company, is in talks to acquire a majority stake in Cambodia's largest mobile operator CamGSM in a deal that could be worth more than $500 million.
The planned deal would be Telkom's first major purchase overseas and could be the biggest acquisition deal in Cambodia, and signal further consolidation as fast-growing Southeast Asian mobile markets mature.
"I hope that the process of acquisition will be completed by the first quarter next year," Tanri Abeng, Telkom's chief commissioner, told Reuters.
"We've made it through the bidding process and we're now in talks to get financial details done, but we are surely going to take a majority stake," Abeng said, but declined to give financial details.
CamGSM, fully owned by Cambodia's Royal Group after it bought Millicom Group's 58.4 percent stake last year for $346 million, is the largest mobile operator in Cambodia through its Mobitel and Cellcard brands.
Mobitel's CEO David Spriggs declined to comment on the deal.
State-owned Telkom's plan to acquire a majority stake in CamGSM is part of the company's strategy this year to find acquisition opportunities in the region as the once-buoyant Indonesian market is starting to mature. [ID:nJKB003971]
"They are trying to find a new market for growth as they're struggling to retain their dominance domestically," said Harry Su, head of research at Bahana Securities in Jakarta.
"However, for me it's a distraction because they're supposed to focus on the domestic market where they face fierce price wars compared to overseas acquisitions."
Telkom shares dipped 2 percent after the news before recovering to end steady in a broader market down 0.9 percent. Telkom shares have slid 17 percent this year to underperform the index's 45 percent rally.
COMPETITION
The telecoms market in Cambodia has also been growing fast in recent years in a country with just 13 million people but a lack of fixed line infrastructure.
Industry source estimate there are about six to eight million users nationwide, while the Ministry of Post and Telecommunications also estimates mobile penetration is between 50-59 percent of the population.
But the market is already crowded with nine mobile operators competing for business. Two small players, Latelz Co Ltd and Applifone Co Ltd, will combine operations under Latelz's brand Smart Mobile this month.
Duy Thov, a deputy secretary general at the government's Council for the Development of Cambodia, a body that deals with investments, said the country had never seen "such big talks" as Telkom-CamGSM before.
Analysts said it was possible Telkom would not be able to execute the deal, after a failed bid last year to acquire Iran Telecommunication Company, but said major telecoms players would still be looking to do more deals.
Telkom is also in talks with Bakrie Telecom to merge Indonesia's two biggest CDMA operators in a deal estimated at up to $1 billion, while Thailand's No. 3 mobile operator True Move is in talks with Hutchison Telecommunications International Ltd to buy its CDMA business in Thailand.
"I think in the last two years the telecom sector has been struggling to score some healthy profit growth, especially for the big players...So I think consolidation could continue to take place next year," said Bahana's Su. (Additional reporting by Prak Chan Thul in PHNOM PENH; Writing by Neil Chatterjee; Editing by Anshuman Daga)
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