Government wants Indosat to increase stake in Satelindo
Government wants Indosat to increase stake in Satelindo
The Jakarta Post, Jakarta
The government plans to have state-owned international call
operator PT Indosat raise its stake in its cellular operator
unit, as part of an effort to make Indosat more attractive ahead
of its divestment later this year.
State Minister of State Enterprises Laksamana Sukardi said
that acquiring the Satelindo stake would wet the appetite of
potential Indosat investors.
"One option for raising Indosat's value is to buy Deutsche
Telekom's stake in Satelindo through a rights issue," Laksamana
told a late Wednesday hearing with House of Representatives'
Commission IX for financial affairs.
Germany-based Deutsche Telekom owns a 25 percent stake in
Satelindo, the country's second largest cellular operator, while
the state-owned Indosat owns the other 75 percent.
Laksamana said he planned a rights issue for Indosat to
finance the purchase of Deutsche's 25 percent stake.
"The rights issue is still at the preliminary planning stage,
but it's an idea," he said.
Issuing more shares would allow Indosat to tap the capital
markets for funds to finance its investment in Satelindo.
The plan would hinge on the market's appetite for Indosat's
new shares, and whether the company could secure an underwriter
willing to take up the remainder.
Given the fast growth in the cellular phone market, raising
its stake in Satelindo would help boost Indosat's earnings, which
should help make it a more attractive investment.
Indosat acquired a majority stake in Satelindo last year in
exchange for surrendering its stake in rival cellular operator PT
Telkomsel.
Laksamana gave no schedule for the rights issue, but if the
plan were to be realized it would have to be effected before next
June when the first stage of Indosat's divestment process is
slated for completion.
The government owns a 65 percent stake in Indosat, with a 45
percent stake to be released this year through a two-step sell-
off process.
In June, the government plans to divest a 15 percent stake
through the stock market, and in October another 30 percent to a
strategic investor.
From the sale, the government hopes to raise between Rp 4
trillion (about US$400 million) and Rp 5.1 trillion to help it
fill out the yawning state budget deficit this year.
Indosat is one of the 24 state-owned enterprises on this
year's privatization list. Its sale is expected to yield the
lion's share of the Rp 6.5 trillion targeted from privatization.
Wednesday's hearing with Commission IX ended without the
legislators endorsing or approving the divestment list.
Although their approval is not mandatory, securing political
support before selling state companies could prove crucial to
making sure that deals proceed smoothly.
Earlier privatization deals or state asset sales came under
pressure from legislators, jeopardizing signed sales contracts at
the expense of the country's investment climate.
House Commission IX has asked the government to hold further
meetings with it in the future.
At this stage, Indosat's sale is already hanging in the
balance. The company's workers oppose the privatization on the
grounds that Indosat is too vital to be surrendered to foreign
control.
Joining ranks with other workers in the telecommunications and
postal services sector represented by the ISP Postal labor union,
Indosat workers warned they would go on strike unless the
government dropped the plan.
ISP Postel said it insisted on meeting Laksamana this week to
demand his resignation, while at the same time also demanding
that the government give assurances that it would drop the
planned sale.
Laksamana earlier said he would hold talks with the labor
union, but as of Thursday no meeting had taken place according to
his Deputy for Privatization Mahmuddin Yasin.