Govt eyes up to Rp 5 trillion from Indosat stake sale
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.