Government wants Indosat to increase stake in Satelindo<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government plans to have state-owned international call
\noperator PT Indosat raise its stake in its cellular operator
\nunit, as part of an effort to make Indosat more attractive ahead
\nof its divestment later this year.<\/p>\n
State Minister of State Enterprises Laksamana Sukardi said
\nthat acquiring the Satelindo stake would wet the appetite of
\npotential Indosat investors.<\/p>\n
"One option for raising Indosat's value is to buy Deutsche
\nTelekom's stake in Satelindo through a rights issue," Laksamana
\ntold a late Wednesday hearing with House of Representatives'
\nCommission IX for financial affairs.<\/p>\n
Germany-based Deutsche Telekom owns a 25 percent stake in
\nSatelindo, the country's second largest cellular operator, while
\nthe state-owned Indosat owns the other 75 percent.<\/p>\n
Laksamana said he planned a rights issue for Indosat to
\nfinance the purchase of Deutsche's 25 percent stake.<\/p>\n
"The rights issue is still at the preliminary planning stage,
\nbut it's an idea," he said.<\/p>\n
Issuing more shares would allow Indosat to tap the capital
\nmarkets for funds to finance its investment in Satelindo.<\/p>\n
The plan would hinge on the market's appetite for Indosat's
\nnew shares, and whether the company could secure an underwriter
\nwilling to take up the remainder.<\/p>\n
Given the fast growth in the cellular phone market, raising
\nits stake in Satelindo would help boost Indosat's earnings, which
\nshould help make it a more attractive investment.<\/p>\n
Indosat acquired a majority stake in Satelindo last year in
\nexchange for surrendering its stake in rival cellular operator PT
\nTelkomsel.<\/p>\n
Laksamana gave no schedule for the rights issue, but if the
\nplan were to be realized it would have to be effected before next
\nJune when the first stage of Indosat's divestment process is
\nslated for completion.<\/p>\n
The government owns a 65 percent stake in Indosat, with a 45
\npercent stake to be released this year through a two-step sell-
\noff process.<\/p>\n
In June, the government plans to divest a 15 percent stake
\nthrough the stock market, and in October another 30 percent to a
\nstrategic investor.<\/p>\n
From the sale, the government hopes to raise between Rp 4
\ntrillion (about US$400 million) and Rp 5.1 trillion to help it
\nfill out the yawning state budget deficit this year.<\/p>\n
Indosat is one of the 24 state-owned enterprises on this
\nyear's privatization list. Its sale is expected to yield the
\nlion's share of the Rp 6.5 trillion targeted from privatization.<\/p>\n
Wednesday's hearing with Commission IX ended without the
\nlegislators endorsing or approving the divestment list.<\/p>\n
Although their approval is not mandatory, securing political
\nsupport before selling state companies could prove crucial to
\nmaking sure that deals proceed smoothly.<\/p>\n
Earlier privatization deals or state asset sales came under
\npressure from legislators, jeopardizing signed sales contracts at
\nthe expense of the country's investment climate.<\/p>\n
House Commission IX has asked the government to hold further
\nmeetings with it in the future.<\/p>\n
At this stage, Indosat's sale is already hanging in the
\nbalance. The company's workers oppose the privatization on the
\ngrounds that Indosat is too vital to be surrendered to foreign
\ncontrol.<\/p>\n
Joining ranks with other workers in the telecommunications and
\npostal services sector represented by the ISP Postal labor union,
\nIndosat workers warned they would go on strike unless the
\ngovernment dropped the plan.<\/p>\n
ISP Postel said it insisted on meeting Laksamana this week to
\ndemand his resignation, while at the same time also demanding
\nthat the government give assurances that it would drop the
\nplanned sale.<\/p>\n
Laksamana earlier said he would hold talks with the labor
\nunion, but as of Thursday no meeting had taken place according to
\nhis Deputy for Privatization Mahmuddin Yasin.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-wants-indosat-to-increase-stake-in-satelindo-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}