Government to sell Indosat stake next month

Dadan Wijaksana and A'an Suryana, The Jakarta Post, Jakarta

Moving ahead with its privatization program, the government plans to start selling a 30 percent stake early next month in state- owned telecommunications company PT Indosat through a strategic sale in a process it expects to finalize by December.

"We plan to sell the Indosat stake through a strategic sale," State Minister for State Enterprises Laksamana Sukardi told reporters on Tuesday.

The government currently holds a 56.9 percent stake in the publicly-listed Indosat. There are a total of 1.04 billion Indosat shares.

The plan should reaffirm the government's commitment towards the privatization program, which is aimed at raising a total of Rp 6.5 trillion (US$718 million) this year to help finance the 2002 state budget deficit.

So far, the government has only managed to raise around Rp 2.26 trillion. The first half target was set at more than Rp 3 trillion.

Indosat is one of five state-owned enterprises in which stakes are to be sold in the second semester of this year to meet the privatization target.

An earlier attempt to sell an 11.32 percent stake in Indosat turned out to be a disappointment as the government only managed to sell 8.1 percent of the company at a lower-than-expected price due to a weak response from investors. The amount raised by this sale was $110 million.

The disappointing result prompted Laksamana to publicly accuse some parties of being involved in insider trading, saying that this had jeopardized the sale of Indosat.

The Capital Market Supervisory Agency (Bapepam) is currently investigating the case.

But some have said that the government was merely trying to find a scapegoat for the failed sale.

Laksamana didn't disclose how much he expected to raise from the second sale, but it's obvious that the government is hoping to obtain significant proceeds in order to meet the state budget target.

Progress in the privatization program could also prove crucial in helping to revive investor confidence in the economy.

Under the Indosat sale plan, the government will start sending the required documents to potential investors in the first week of September, hoping to receive responses from investors a week later.

Potential investors will then launch a due diligence process in October and submit their business plans for Indosat to the government.

The final bid stage is set for the first and second weeks of November.