Government may buy back stake in Indosat from Singapore's firm
Government may buy back stake in Indosat from Singapore's firm
Rendi A. Witular, The Jakarta Post, Jakarta
The cash-strapped government is considering raising its stake in
PT Indosat, the country's second-largest telecommunication firm,
by buying back shares it sold in 2002 to Singapore Technologies
Telemedia (STT).
Vice President Jusuf Kalla confirmed the plan on Thursday,
saying it formed part of the efforts to boost the government's
ownership of strategic state enterprises, including Indosat.
"I haven't heard any plans from STT to raise its stake in
Indosat. On the contrary, the government is now calculating (its
resources) should the foreign owner (STT) in the company sell its
stake," said Kalla at his office.
"If there is such a possibility, the government expects to be
able to enlarge its ownership in the company," he said.
Kalla, a wealthy businessman, is known for his pro-nationalist
views on business ownership.
The plan may raise some eyebrows since the source of the funds
for the buy-back is unclear, especially when the state budget is
already overstretched.
With the higher cost of the fuel subsidy, it is estimated that
the state budget deficit may jump to 1.3 percent of the gross
domestic product (GDP) this year, or about Rp 35.2 trillion
(US$36.2 billion).
Initial projections for the deficit stood at 0.8 percent of
GDP or about 20.3 trillion.
However, Kalla remained upbeat about the plan, saying that
"the government will explore several potential resources."
The previous administration under the leadership of Megawati
Soekarnoputri, sold 42 percent of government's stake in Indosat
to STT for about US$631 million in 2002.
The government now has about 14.6 percent in the company, with
pubic investors holding the remaining 43.4 percent.
Early this month, STT president and chief executive officer
Lee Theng Kiat reiterated, after a meeting with Kalla, the
company's long-term investment commitment in Indosat, and vowed
to continue to develop its networks here.
Indosat's operating revenue has grown by as much as 13.8
percent to Rp 2.87 trillion in the first quarter of this year,
compared to Rp 2.52 trillion in the same period last year.
The company's net profit also jumped by nearly 39 percent to
Rp 282.8 billion, excluding gains from asset sales in the
corresponding period the year before.
Indosat shares ended unchanged at Rp 5,700 on Thursday.