Government to sell 11.32% stake in Indosat
The Jakarta Post, Jakarta
The government plans to sell an 11.32 percent stake in state- owned telecommunications company PT Indonesian Satellite Corp. (Indosat) through a private placement, a press statement announced on Thursday.
The statement added that Credit Suisse First Boston and state- owned securities firm PT Danareksa Securities were joint book- runners for the offering.
The sale is part of the government's 2002 privatization program aimed at raising some Rp 6.5 trillion (US$696 million) in cash to help finance this year's state budget deficit projected at about 2.5 percent of the gross domestic product (GDP).
The government earlier said that it wanted to raise between Rp 4 trillion and Rp 5 trillion from the sale of a 45 percent stake in publicly-listed Indosat in two stages: the first in June and the second in October.
Reports earlier said that the government, which currently holds a 65 percent stake in Indosat, was to sell up to 15 percent of its shares in the first tranche.
The government statement did not say how much money was expected from the sale of the 11.32 percent stake, which is equal to 117.17 million shares, but Reuters quoted a government source as saying that the proceeds target was Rp 1.4 trillion or around Rp 12,000 per share.
The news agency said that this had prompted widespread dumping of the shares as the above target price was below recent market prices, although analysts said the market reaction was overdone.
In response, the Jakarta Stock Exchange suspended trading in Indosat shares in afternoon trade after the shares plunged 4.6 percent to Rp 12,600.
The stock exchange did not say how long the suspension would last, but the official told the news agency the government wanted trading to be suspended to prevent its price from falling further.
After the sale, the government would still own a 53.68 percent stake in Indosat.
Indosat earlier this week reached an agreement with Germany's Deutsche Telekom to buy the latter's 25 percent stake in PT Satelindo, the country's second largest cellular operator, for $325 million.
The Satelindo stake purchase, analysts said, would increase the value of Indosat, which already owns a 75 percent stake, because of the huge growth potential of cellular business in the country.
Indosat used to be an international phone operator but now its largest source of revenue is the cellular business, with a contribution of more than 45 percent of its total operating revenue, which jumped by 99.7 percent to Rp 1.54 trillion in the first quarter of 2002 compared to the same period last year.
A successful sale of the Indosat shares would give a boost to the government's privatization program, which has been moving at a snail's pace due to various problems, including protests from employees and politicians.
Reports also said that the government was also planning to sell a 3 percent stake in another state-owned telecommunications firm, PT Telkom, later this year.