Govt supports Indosat, Telkom ownership deals

JAKARTA (JP): The government has given its full support to the US$1.5 billion transactions recently approved by state-owned telecommunication companies PT Indosat and PT Telkom to end their cross-ownership, despite resistance from the latter's employees.

Coordinating Minister for the Economy Rizal Ramli said here on Wednesday that termination of the cross-ownership was essential to allow the two companies to operate more independently.

"We have met with Pak Agum Gumelar (Minister of Transportation and Telecommunication) and the related director general, and we fully support the efforts toward making the two companies fully fledged," Rizal was quoted as saying by Antara news agency.

Rizal said the government wanted the two companies to not only provide fixed telephone services, but also operate mobile phone and data transmission services.

Under the $1.5 billion package, Telkom agreed to acquire Indosat's 35 percent interest in cellular company PT Telkomsel for $945 million, and give Indosat an additional $346 million in cash.

Indosat will in turn acquire Telkom's 22.5 percent interest in cellular company PT Satelindo for $186 million, Telkom's 37.66 percent interest in PT Aplikanusa Lintasarta for $38 million, as well as its Central Java and Yogyakarta operations for $375 million.

Both Telkom and Indosat will hold their annual shareholder meetings on Thursday next week to approve the deal.

Telkom's sale of its Central Java and Yogyakarta operations to Indosat have been encountering strong opposition from its employees in the region, who fear the new management will retrench many of them.

In a meeting with House of Representatives Speaker Akbar Tanjung last month, the chairman of Telkom's Central Java and Yogyakarta workers' union, Syahrul Akhyar, said the workers were particularly concerned about the entry of foreign investors in the region through Indosat.

He had said that foreign investors would only prioritize corporate customers, while neglecting household costumers which account for 80 percent of Central Java telephone subscribers.

At the time, Akbar said he would ask the government, as the major shareholder in both Telkom and Indosat, to review transactions before making a final decision.

The government owns a 66.19 percent stake in Telkom and 65 percent of Indosat. Both companies are listed on the Jakarta Stock Exchange.

Telkom employees in Yogyakarta staged a protest on Tuesday demanding an annulment of the transaction related to Telkom's Central Java and Yogyakarta operations.

The protesters, grouped under the Telkom Workers Union, said they would stage more protests until the acquisition was canceled, and that they would raise the issue in a meeting with Vice President Megawati Soekarnoputri scheduled for May 10.

Rizal stressed on Wednesday the need for Telkom and Indosat to proceed with the transactions, saying that it would increase the companies' economic value.

"International response to the transactions (between Telkom and Indosat) is also very positive," he added.

Commission

He also said that the government was currently preparing the establishment of an independent telecommunication commission to formulate the country's long-term telecommunication policy.

The planned commission, which would function just like the Federal Communication Committee in the United States, would comprise representatives of the telecommunication society, representatives of consumers and legislators, the minister said. (tnt)