Furor over Indosat sale<\/p>\n
It is saddening to note that a strategic sale that was
\nsupposed to be the deal of the year and become a strong building-
\nblock for helping restore confidence in the country amid the
\ngloomy economic outlook has been turned into a controversy by
\nseveral narrow-minded politicians and misguided trade union
\nleaders who resorted to fallacy to advance their vested
\ninterests.<\/p>\n
Alleging that Singapore Technologies Telemedia Pte.Ltd (STT)
\nhad acquired almost 42 percent of publicly-listed PT Indonesia
\nSatellite Corporation (Indosat) at a fire-sale price reflects
\ncomplete ignorance of the rapid deterioration and vulnerability
\nof Indosat market competitiveness.<\/p>\n
Trumpeting the fear that the deal would result in Singapore's
\nmonopoly of Indonesian cellular phone business and threaten the
\nsecurity of the country's satellite system is either a total
\nmisunderstanding about the telecommunications industry or simply
\na blatant subterfuge to mislead the general public into
\nsabotaging the transaction.<\/p>\n
Questioning the business and economic rationale of the deal is
\nnothing but simply an attempt to whip up narrow-minded
\nnationalist sentiments at the expense of the economic recovery.<\/p>\n
Just witness this equation.<\/p>\n
On one side was debt-ridden Indosat, which before the sale was
\ncontrolled by a cash-strapped government. Its mobile phone
\nbusiness, through its subsidiary PT Satelindo, which contributes
\nmore than 70 percent of its revenues has increasingly been losing
\nout to the cash-rich PT Telkomsel, a subsidiary of state-owned PT
\nTelkom that also controls the fixed line service. Indosat simply
\nhas no adequate investment capacity to match Telkomsel's rapid
\nexpansion.<\/p>\n
Indosat's former core business as the mandated monopoly
\nprovider of international call services has been increasingly
\ntaken away by other much cheaper alternative communications means
\nsuch as chatting facilities and Voice Over Internet Protocol. The
\nmonopoly itself will end in August. Worse still, the market share
\nof its satellite service has increasingly been eroded by other
\nsatellites.<\/p>\n
On the other side is STT, which is advancing to become a
\nglobal communications service provider. It now offers a wide
\nsuite of services including fixed and mobile telephones, e-
\ncommerce solutions and services, paging, mobile-data
\ncommunications, digital mobile communications network, satellite
\nservices and cable television.<\/p>\n
It is crystal clear therefore that business and macroeconomic
\nwise, the transaction will truly ensure Indosat's survival in the
\nhighly-competitive and capital and technology-intensive
\ntelecommunications industry. Put another way, STT will bring
\nsynergy to Indosat and help jump start the modernization of
\nIndonesia's telecommunications industry, will heighten the
\ncompetition, and at the same time inject US$630 million to the
\nstate coffers.<\/p>\n
The more irrelevant and harmful have been the protests by
\nIndosat employees against the deal because they are supposed to
\nbe the most apprised of the company's vulnerable condition and
\nthe most enlightened of the benefits of the synergy to the
\ncompany's growth and their career development.<\/p>\n
After all, none of their basic worker rights has been violated
\nor harmed by the deal. The employees instead are ensured to own 5
\npercent of Indosat through an employee stock option and will get,
\nin case of layoffs, allowances three times as much as mandated by
\nlabor regulations.<\/p>\n
The office of the state minister for state companies cannot,
\nhowever, escape the blame for the unnecessary uproar, even though
\nSTT won the 41.9 percent stake in Indosat through a competitive
\nbid by paying a hefty 50 percent premium over its market price.<\/p>\n
The government apparently has not learnt anything from the
\ncontroversies over its previous transactions with private
\ninvestors, seemingly refusing to acknowledge the imperative need
\nfor full transparency for such a major deal.<\/p>\n
Since the government, perceived to be one of the most corrupt
\nin the world, has very low credibility and therefore has always
\nbeen a suspect in every major transaction with private
\nbusinesses, it should have gone all out to broadly inform all
\nstakeholders on all aspects of the strategic sale, fully
\ndisclosing the identities and background of the bidders and the
\nstep-by-step bidding process.<\/p>\n
That the government seemed to have been caught off guard and
\nfailed to immediately come up with credible explanations about
\nIndonesia Communication Ltd., the special purpose vehicle (SPV)
\nused by STT in the bid, indicated a lack of transparency about
\nthe process.<\/p>\n
Even though the use of SPV is normal in international business
\npractices in asset acquisition, as attested by most analysts, and
\nSTT claims it wholly owns ICL, that still raised a lot of
\ntroublesome questions as to who are the real investors and what
\nis the function of the SPV, besides those of getting lighter tax
\nburdens and minimizing financial risks.<\/p>\n
It is therefore most imperative for the government and STT to
\ncome up with credible explanations about the issue to remove the
\ncontroversy and destroy any ammunition that could be used by ill-
\nintentioned critics to attack the deal. An independent audit of
\nthe whole bidding process is even warranted to stop the uproar
\nonce and for all.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/furor-over-indosat-sale-1447893297",
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"sponsor": "Okusi Associates",
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