Agum delays approval for MGTI acquisition
Agum delays approval for MGTI acquisition
Sari P. Setiogi, The Jakarta Post, Jakarta
Minister of Transportation and Communications Agum Gumelar has
decided to delay giving his crucial approval to the planned
acquisition of Central Java telecommunications operator PT Mitra
Global Telekomunikasi Indonesia (MGTI) by PT Alberta
Telecommunications, according to a labor union official.
The decision was made during a meeting on Wednesday between
the minister and members of labor union of state-owned
telecommunications company PT Telkom's Central Java and
Yogyakarta regional office, which had strongly opposed the
transaction.
It was not immediately clear why Agum decided to delay the
approval, but labor union spokesman H.M. Ismail told press
following the meeting that the minister wanted to arrange a
meeting once again between union members, Telkom, and the Office
of the State Minister for State Enterprises to help sort out
differences.
He said that without approval from both Agum and State
Minister for State Enterprises Laksamana Sukardi, the transaction
could not proceed.
The labor union had previously planned to stage a strike to
protest the acquisition deal.
"We do appreciate the minister's decision to postpone giving
his approval and so we will call off our strike plan and wait
until the next hearing,"
MGTI is a partner of Telkom in installing fixed lines in the
Central Java and Yogyakarta areas under a joint operation scheme
in which the Telkom allows MGTI to operate fixed lines in the
region in return for a 30 percent share of the revenue. Telkom
formed similar joint ventures in other regions during the mid-
1990s, but they turned sour after the 1997-1998 crisis. Telkom
managed to buy out four ventures, but it could not acquire MGTI's
interest due to lack of money and disagreement over the price.
Late in September, key shareholders of MGTI, including state-
owned telecommunications company PT Indosat, Australia's Telstra
Corp., and Nippon Telegraph and Telephone Corp., agreed to sell
their interests to Alberta.
The government is under pressure to quickly resolve the long-
running dispute between Telkom and MGTI shareholders so as to
attract new investment into the country's telecommunications
sector.