Government may approve Telkom buyback plan
Government may approve Telkom buyback plan
Rendi A. Witular, The Jakarta Post, Jakarta
The government may approve a plan by the country's largest
telecommunication company PT Telkom to buy back its shares from
the Jakarta Stock Exchange (JSX) and New York Stock Exchange
(NYSE), pending approval from its shareholders, since it will be
beneficial for the country in the long run.
With the shares, the government's ownership in Telkom will
increase and it will eventually receive higher proceeds from
dividends paid by the company, State Minister of State
Enterprises Sugiharto told The Jakarta Post recently.
"The government in principal supports the buy back plan since
it will give us more advantage from higher dividends paid by the
company in the future. The approval, however, will still be
decided during the upcoming shareholders meeting (in November),"
he said.
The government also believes that Telkom would have sufficient
funds to buy back the shares, as well as receiving a higher
return on the funds from higher proceeds the company might reap
in the near future, he added.
Telkom will have huge prospects of recording higher profit
since it operates in a market where less than 20 percent of the
nation's 220 million people have mobile or fixed-line phones.
Since 1995, about 42 percent of Telkom's shares have been
traded on the JSX, while 7 percent on the NYSE in the form of
American depository receipts. The company's remaining 51 percent
stake is still owned by the government.
The company's president director Arwin Rasyid said earlier
that Telkom planned to spend Rp 3 trillion (US$$288 million) from
its internal cash to partly withdraw its shares from the two
bourses.
In a press statement on Monday, Arwin said the management of
the company's capital was a strategic step to increase the
company's value, with share buy back among several instruments
explored by the company.
"To date, Telkom is still in the process of completing the
plan and its implementation should strictly comply with the
existing regulations and shareholder approval," he said.
The government, desperately in need of additional revenue from
state enterprises to plug the state budget deficit this year and
next year, will also require other listed state firms to reduce
the shares held by the public.
Vice President Jusuf Kalla had earlier said that all strategic
state firms should be entirely controlled by the state. Companies
categorized as strategic include those in the telecommunication,
natural resources and financial sector.