Govt eyes up to Rp 5 trillion from Indosat stake sale
Dadan Wijaksana, The Jakarta Post, Jakarta
The government expects to raise between Rp 4 trillion and Rp 5 trillion (about US$545 million) from the sale of a 42 percent stake in international call operator PT Indosat, part of last- ditch efforts to meet the government's privatization target for this year.
State Minister for State Enterprises Laksamana Sukardi called Indosat a trump card that would boost privatization proceeds from Rp 2.26 trillion to the Rp 6.5 trillion targeted for the year.
"I'm optimistic that Indosat's sale can raise between Rp 4 and Rp 5 trillion," Laksamana said after a meeting with the House of Representatives' budget committee on Friday.
The government owns a 51.9 percent stake in Indosat, after selling an 8.1 percent stake in May for US$110 million.
Ensuring the successful sale of Indosat is crucial if the government hopes to cover this year's state budget deficit, even more so amid concern the Oct. 12 terrorist strike in Bali will widen the deficit.
Over the past 11 months the government has shelved the sale of a number of state companies, resulting in meager privatization proceeds of Rp 2.26 trillion.
Indosat is among six companies slated for sale this year.
But aside from the first Indosat sale in May, the only other sale was a 3.1 percent stake in local call operator PT Telkom.
Lack of investor interest, low bids and opposition from an assertive legislative have frequently gotten in the way of the privatization program.
With Indosat, however, interest is high, Laksamana said.
He said eight investors submitted bids by the Wednesday deadline. Of these, he added, the government had short-listed five investors for the second round of bidding beginning next week.
At that stage, bidders are allowed to conduct a due diligence of Indosat until December.
Laksamana did not name the bidders, but several media reports have said that the successful bidders included Singapore Technologies Telemedia Ltd. (STT), Telekom Malaysia Bhd and Maxis Communications Bhd, also of Malaysia.
STT is said to be teaming up with the state-owned Government of Singapore Investment Corp. for its bid.
To qualify for the bidding process, investors must control a minimum of $450 million in assets and have a proven track record in the industry of the company in which they wish to invest.
Acting as financial advisers for Indosat's sale are state- owned brokerage firm PT Danareksa Sekuritas and Credit Suisse First Boston (Singapore) Ltd.
The government began the Indosat sale in September, and the process has proven frustrating at times. Low bids forced the government in May to sell only an 8.1 percent stake rather than the planned 11.32 percent.
And even this sale was marred by rumors of insider trading, which sent Indosat's share price plunging ahead of the sale.
With less than two months left in the year, the sale of pharmaceutical companies PT Indo Farma and PT Kimia Farma, property company PT Wisma Nusantara Internasional and airport operator PT Angkasa Pura II, which manages the Soekarno-Hatta International Airport, will likely be delayed until next year.
The planned sale of Indo Farma and Kimia Farma has stirred debate within the government, with the health ministry concerned about who will provide the public with affordable medicine if the two state companies are privatized.
For 2003, the government hopes to raise Rp 8 trillion from its privatization program, although this target is not definitive with revisions to the 2003 state budget draft ongoing.
The Oct. 12 Bali bombing forced the government to return to the drawing board for a new budget draft amid a weaker economic outlook.