Government to sell 11.32% stake in Indosat

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.