Govt sells 4.15% of Telkom's shares to repay debt

JAKARTA (JP): The government has sold another 388 million shares in state-owned PT Telekomunikasi Indonesia (Telkom) to repay its high-interest foreign debt faster, Minister of Finance Mar'ie Muhammad confirmed yesterday.

Mar'ie, who made the announcement at a hearing with the House Budgetary Commission, said the shares were traded Tuesday night on the Jakarta and New York stock exchanges.

Mar'ie said the shares, which were sold on the non-regular market, made up 4.15 percent of Telkom's paid-up capital.

"The decision was made... after considering foreign and domestic market conditions and Telkom's current favorable prices. This is a continuation of Telkom's privatization program," he said.

The finance minister is the government's nominee shareholder in all state companies. Telkom is the sole provider of basic domestic telecommunications services.

State-owned PT Danareksa Sekuritas and PT Bahana Securities acted as Telkom's placement agents for the domestic market, and Deutsche Morgan Grenfell was its agent for New York.

"The net proceeds of the sale, amounting to US$600 million, shall be used to accelerate repayments of the government's high- interest foreign debt," Mar'ie said.

Mar'ie assured legislators that the proceeds of the sale would be accounted for as non-tax revenue in the 1996/1997 state budget ending next March, while the foreign loan repayments would appear on the expenditure side of the budget.

"But this will be recorded (in the budget) only if the process of loan amortization has been completed," he said.

Mar'ie said the Telkom shares were offered for between Rp 3,400 (US$1.47) and Rp 3,650 a share.

Telkom shares closed at Rp 3,875 Tuesday night on the Jakarta stock exchange.

Mar'ie said the government decided to sell on the non-regular market instead of issuing a second public offering because public offerings were time-consuming.

"We think it is better to make the sales now because next year the international market will be over-crowded with the initial public offerings of international telecommunications firms," he said.

Deutsche Telekom, he said, was planning to float $12 billion worth of shares next year.

"We are not pushing our sales on the non-regular market. We sold as much as the market could buy. Otherwise, these sales may have a negative impact on Telkom's prices on the regular market," Mar'ie said.

Telkom made its domestic and overseas stock market debut last November, when the government floated 9.33 billion shares, about 20 percent of the company, simultaneously on the New York, London, Jakarta and Surabaya stock exchanges.

On the New York Stock Exchange, Telkom's initial share price was US$18.75 an American Depository Share (ADS). One ADS represents 20 ordinary shares.

Telkom is the 238th issuer on the Jakarta stock exchange, and the fourth state-owned company to be privatized after PT Semen Gresik, PT Indosat and PT Tambang Timah.

Telkom reported a $481 million net profit for the first nine months of this year, up 28.91 percent on the corresponding period of 1995.

Its operating income rose to $664 million for the third quarter of this year, up 15.8 percent on the same period last year.

Telkom's earnings per share increased to Rp 120.59 for the first nine months of this year, up from Rp 104.58 for the first nine months of 1995, while earnings per American Depository Share rose to $1.03 from 92 cents. (pwn)