Government to sell a further 5 percent stake in Indosat

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)