Govt sells 3.1% of Telkom stake in privatization push

The Jakarta Post, Jakarta

The government announced on Tuesday that it has raised US$126 million from the sale of a 3.1 percent stake in state-owned telecommunications firm PT Telkom through a placement.

A statement said that 92 percent of the 312 million shares sold through the placement at Rp 3,635 -- which began on Monday night -- went to European, Asian and American investors, while the rest went to domestic investors.

The sale wrapped up the government's plan to sell 15 percent of its shares in the publicly listed company.

Last year, the government sold an 11.9 percent stake in Telkom through a block sale transaction with a price tag of Rp 2,600 per share, raising some $300 million in proceeds.

The transaction reduces the government's ownership in the telecom company to 51.2 percent.

Previously, the government held a 66.19 percent stake in Telkom, the country's largest telecommunications company and currently holds exclusive rights to local and domestic long distance telephone services.

News about the sale prompted the Jakarta Stock Exchange to suspend trading in Telkom in the morning session. It resumed trading in the afternoon session following government confirmation.

Telkom's shares closed at Rp 3,775 on Tuesday.

The sale was part of the government's efforts to sell its ownership in several state-owned enterprises (SOEs) under the privatization program.

So far however, progress has been slow with the sale of many SOEs lagging behind schedule.

During the first semester, the government only managed to collect some Rp 1 trillion from the sale of state international call operator PT Indosat.

In May, it sold 8 percent of its shares in the company through a private placement, falling short of the initial target of 15 percent, which was in part due to a lack of interest by investors and poorly arranged transactions.

From the privatization program, the government is hoping to rake in Rp 6.5 trillion, to be used partly to help plug the 2002 state budget deficit, which is estimated at more than Rp 42 trillion, or some 2.5 percent of the country's gross domestic product (GDP).

Aside from the much-needed proceeds, the smooth process of the program will also pave the way for a revival of confidence among investors that the country is going ahead with its economic reform program.

Analysts have welcomed the Telkom sale, saying the transaction should be positive for the Indonesian economy because it shows that foreign investors remain interested in several of the country's valuable assets.

Foreign investor confidence in the country has been thin, with a 60 percent drop in foreign direct investment during the first five months of this year due to various factors including legal uncertainty, the lack of security and labor problems.