A syndicated loan worth around US$73mn will help finance a huge broadband rollout in Indonesia.

The finance was obtained by telecoms developer Len Telekomunikasi Indonesia (LTI) in the form of Rp975bn, and will fund a large part of the Palapa Ring broadband project.

The loan was led by government lender Indonesia Infrastructure Finance (IIF), which has syndicated the debt to Bank Negara and Sarana Multi Infrastrutur (SMI – another state-owned lending vehicle).

Government officials hope the project will help develop education and entrepreneurialism in Indonesia, local media have reported.

“Faster internet access will be helpful for students to pursue their studies and entrepreneurs to expand their businesses,” says IIF director Ari Soerono.

The funding will support the laying of broadband through the central section of the overall project, through Kalimantan, North Maluku and Sulawesi, to be completed by 2018.

Earlier in August, it was reported that the west section of the Palapa Ring project was ready to begin construction, with the majority of the US$97mn required ready to disburse.

In July, this section of the project secured a US$66mn loan from Bank Mandiri with a six-year tenor, and a two-year grace period.

Indonesia-Investments reports that in addition to the cash loan, Mandiri is to offer a non-cash loan in the form of a domestic letter of credit and treasury line.

The government of Joko Widodo has prioritised a project that is the first government-to-business co-operation in the telecoms sector and which has been mooted since the 1990s.

The Palapa Ring project will see 13,000km of subsea fibre-optic cable laid, along with 22,000km onshore. It will help bring connectivity to a country with huge economic potential, which is often hampered by its infrastructural deficit.

Tech companies have prioritised Indonesia as a growth market, with smartphone penetration set to rise from 24% in 2014 to 70% next year. Consultancy McKinsey estimates that every 10% rise in internet users adds 1% to Indonesia’s GDP growth.

Again, the issues lie with a lack of underlying infrastructure. The difficulty of traversing Indonesia’s geographic and archipelagic sprawl is clear, while anyone who has spent time in the capital Jakarta will know that even in premium hotels, the wi-fi service is often patchy.

It will be hoped that the Palapa Ring will help boost the country’s connectivity and, by extension, make it more favourable for trade and investment.