Government to sell a further 5 percent stake in Indosat

JAKARTA (JP): The government will sell another 5 percent of its stake in the publicly listed international telecommunications operator PT Indosat in a bid to raise cash and provide support for the rupiah.

State Minister of the Empowerment of State Enterprises Tanri Abeng said on Wednesday that the Indosat shares would be sold at a discount of between 3 percent to 5 percent of its market price.

"We will not give much of a discount," he told reporters.

The government sold 35 percent of its shares in Indosat when the company made its initial public offering in October 1994. At present, the government stake in the company listed on the New York and Jakarta stock exchanges is 65 percent.

Tanri declined to disclose when the divestment would be realized, saying: "It depends on the price. If the best price can be achieved this week the (divestment) plan can be realized."

Tanri said that the government would only divest 5 percent of its Indosat stake in order to provide room for a foreign strategic partner to enter into the company through future privatization scheme.

"We will sell only 5 percent of the stake so that we can still sell more to strategic investors at a premium price in the future," he said.

Several international telecom giants including Australia's Telstra, France's Telecom and British Telecommunications have expressed interest to become Indosat's strategic partner.

But the government has yet to revise the country's telecommunications law in which the government retains a majority 51 percent stake in a telecommunication company.

The Indosat privatization was initially scheduled for March, but was canceled due to such regulatory hitches. A new telecommunications law is expected to be approved by the House of Representatives later this year.

Indosat shares closed at Rp 16,400 on the Jakarta Stock Exchange on Wednesday.

The government will raise at least Rp 550 billion (about US$68.75 million) from the sales of the 5 percent stake in the telecommunication company if the sales are based on Wednesday's closing.

The government plans to raise $1.5 billion in the current 1999/2000 fiscal year ending in March from its privatization program.

The government has so far raised $800 million. The privatization program in the previous fiscal year didn't fare well, in which the government only received less than half of the $1 billion target.

Tanri explained that in addition to raising cash for the state coffer, the divestment would also provide support for the rupiah.

He pointed out that the 9.62 percent divestment in publicly listed domestic telecommunications firm PT Telkom on May 7, which raised over US$400 million, had provided the government with hard currency in stabilizing the rupiah.

Tanri added that Indosat would also issue 5 percent new shares, or around 54.5 million shares to raise cash for its expansion programs. The company's shareholders have already approved the plan.

Indosat vice president Safwan Natanagara said last week that the company planned to acquire PT Exelcomindo Pratama, a local cellular phone operator.

Indosat already has stakes in two other cellular operators: 35 percent in PT Telkomsel, and 7.5 percent in PT Satelindo. (rei)