Government sells 8.1 percent of Indosat stake for Rp 1 trillion

Dadan Wijaksana, The Jakarta Post, Jakarta

The government has sold some 83.5 million of its shares in state telecommunications firm PT Indosat, or 8.1 percent of the company's total shares, for Rp 1 trillion (US$110 million) through a private placement scheme.

"Given the volatile market conditions, we are pleased to have been able to successfully complete an equity offering of Indosat," State Minister of State Enterprises Laksamana Sukardi said in a press release over the weekend.

He did not specify who purchased the shares. Officials from the ministry could not be reached for confirmation.

It is the year's first sale to be made by the government under its privatization program, the proceeds of which will be partly used to help plug this year's state budget deficit, estimated at more than Rp 42 trillion.

Now that the first sale has been completed, Laksamana said he was optimistic about meeting the program's revenue targets.

"The government is also on track to meet its privatization target by the end of 2002," the state minister said.

The state budget has set a target of raising Rp 6.5 trillion from its privatization program this year.

The sale of the 83.5 million shares reduced the government's holding in Indosat from 65 percent to 56.9 percent.

Initially, the government intended to sell 11.32 percent of the company, but it cut the number of offered shares in order to achieve the best price possible.

"The offering was downsized...in order to achieve an optimal pricing and to accommodate the proposed sale of 54.5 million new shares from Indosat," Laksamana said.

He was referring to the number of new shares Indosat plans to issue to raise $325 million in cash for its acquisition of German firm Deutsche Telekom's 25 percent stake in cellular firm Satelindo.

Following the acquisition, Indosat will wholly own Satelindo.

Indosat's shares are currently priced at Rp 12,000, compared to its last price of Rp 12,600 when trade on Indosat on the Jakarta Stock Exchange (JSX) was suspended on Thursday.

"But the price reflects a 1.3 percent premium to the three- month volume weighted average trading price," Laksamana said.

The JSX suspended trade on Indosat on Thursday right after the government announced its plan to sell off 11.32 percent of Indosat's shares.

It is not clear when the trading will resume, but with the completion of the sale it is likely that the suspension will be lifted on Monday, analysts said.

Indosat is among 25 state enterprises that are on the government's privatization list.

The government had planned to sell 45 percent of its stake in Indosat this year, with expected earnings of between Rp 4 trillion and Rp 5.1 trillion.