Tue, 09 Mar 1999

Foreign investors want a stake in Indosat

JAKARTA (JP): Foreign investors interested in state-owned international telecommunications provider PT Indosat are demanding a controlling stake in the Indonesian satellite communications firm, a company official said on Monday.

Indosat vice president for corporate development Safwan Natanagara said the foreign investors may withdraw their bids if they could not become majority shareholders.

"They demand to become majority shareholders, if not they don't want to invest," he told journalists after the signing of a cooperation agreement between Indosat and international air express company DHL Worldwide Express.

Sofwan said that under a law on state enterprises issued in 1989, the government must hold majority stakes in all state-owned enterprises, which includes Indosat.

"But the government is preparing a scheme to accommodate the interests of both the state and foreign investors," he added, without giving further details.

Indosat, one of the country's major state companies, floated its shares on Jakarta and New York Stock exchanges in 1994.

The government, which at present holds 65 percent of the company's shares, plans to sell more of its stocks and reduce its stake to 51 percent as part of its privatization program.

It has appointed Goldman Sachs and state-owned securities firms PT Bahana and PT Danareksa as financial advisers for Indosat's privatization.

Indosat is one of seven state-owned companies on the government's privatization program for the fiscal year ending March 1999. The government is attempting to raise US$1 billion to help finance the state budget deficit.

Safwan said the prospective investors were still assessing the company and the bidding process would be concluded in April.

"The bidders are currently conducting the due diligence process. We are seeking what is best for Indosat and for the country," he said, without giving the names of the prospective investors.

According to the latest issue of Finance Asia magazine, France Telecom, British Telecom and Telstra Corp. of Australia have all expressed interest in Indosat. The three companies were reported to have completed the initial stages in the bidding process and to have started the due diligence process on Indosat last month.

Indosat president Tjahjono Soerjodibroto said the prospective investors would submit their final bids in the third week of March.

"We can not reveal their names because all of them are publicly listed telecommunications operators," he said.

"Finding the right strategic partner will be another milestone for Indosat's development in enhancing our position for expected global competition," he said.

Tjahjono said Indosat would consider issuing new shares after closing the deal with the new partners, but added that "the new shares issue is still being discussed".

Indosat signed on Monday an agreement with DHL's Indonesian affiliate PT Birotika Semesta/DHL to assist in online services to DHL customers.

Under the agreement, Indosat's Internet service provider -- IndosatNet -- will install software needed for the service as well as provide training to DHL customers.

DHL country marketing manager Soraya Rudianti said the alliance is aiming at getting half of DHL's 10,000 Indonesian customers online by the end of this year.

"For the initial stage we will serve consumers in Jakarta. After three to five months, we will serve those in Bandung, Surabaya, Medan and Denpasar," she said.

Birotika's President Louise Pesik said DHL is committed to invest up to Rp 600 million to put its existing customers online.

"The initial agreement with Indosat is for 12 months, however we are looking forward to longer-term cooperation," she said.

Birotika chairman Rudy Pesik said DHL has always been a leader in technology in Indonesia, and despite the gloomy investment climate, the company is looking to increase its business in Indonesia. (gis)