Govt raises $300m in partial sale of Telkom

Govt raises $300m in partial sale of Telkom

Tantri Yuliandini, The Jakarta Post, Jakarta

The government has sold 11.9 percent of its shares in the
publicly-listed telecommunications company PT Telkom at Rp 2,600
(about US$0.25) a share through a block sale transaction, Telkom
said in a statement on Friday.

Telkom said that the 11.9 percent was equal to 1.2 billion
shares, so that the sale should raise about Rp 3.12 trillion
(approximately $US300 million) for the government and that it was
made mainly to foreign investors.

The sale marked the first successful attempt by the government
to divest shares in state-owned enterprises this year in a bid to
raise around Rp 6.5 trillion in proceeds to help finance the 2001
state budget deficit.

Earlier on Thursday, a senior official at the office of the
state minister for state enterprises said that the government
would sell a 15 percent stake in Telkom to raise around Rp 4
trillion in cash.

It is not yet clear why the government changed the offer.

The Telkom statement also did not mention the names of the
investors who purchased the shares.

Speculation was high that Singapore Telecommunications Ltd
(SingTel) was one of the foreign investors interested in
acquiring a stake in Telkom.

SingTel had recently bought a 22.3 percent stake in Telkom's
subsidiary PT Telkomsel for $602 million.

Telkom's head of investor relations Setyawan Sulistyono said
that the company had not been consulted at all on the sale of the
government's shares.

"The sale was entirely the government's decision as Telkom's
major shareholder. The management of Telkom is left out of the
process," he said. Prior to the sale the government held 66.19
percent in Telkom.

Setyawan admitted that he knew nothing about the private
placement, claiming that all he knew was that "the government had
offered the shares to several parties."

The government said earlier that it planned to sell the shares
in a block sale to institutions instead of to a single strategic
investor and has appointed Merril Lynch, UBS Securities, Goldman
Sachs (Asia) L.L.C., Pierce, Fenner & Smith Inc., and state-owned
PT Bahana Securities to help facilitate the deal.

The publicly listed Telkom is one of several state-owned
companies scheduled to be sold this year as part of the
government's privatization program, which has largely been
stalled due to protests from various quarters as shown in the
privatization case of PT Semen Gresik.

The government may not be able to complete the planned sale of
the giant cement maker to Mexico's Cemex SA de CV due to strong
opposition from politicians, informal leaders and company
employees.

Separately, the Jakarta Stock Exchange suspended the company's
trading on Friday pending an official clarification from the
government about the divestment.

Analysts had said that Telkom's fair value was around Rp 4,000
rupiah a share although at the market the company has been
trading at between Rp 2,600 and Rp 2,700 a share.

Telkom is Indonesia's largest telecommunications company and
currently holds exclusive rights over local and domestic long
distance telephone services.

The other state-owned telecommunications company is PT
Indosat, which currently holds a duopoly for international direct
dialing (IDD) services with its subsidiary PT Satelindo.