House to probe MGTI acquisition deal

House to probe MGTI acquisition deal

Eva C. Komandjaja, The Jakarta Post, Jakarta

The House of Representatives Commission IV on
telecommunications said on Wednesday that it would form an
investigative team to probe the acquisition of PT Mitra Global
Telekomunikasi Indonesia (MGTI) by PT Alberta Communications.

Commission IV suspected that the deal would cause a major loss
to the government, therefore it was necessary to set up the
special team as soon as possible. The same suspicion was earlier
voiced by the Telkom labor union (Sekar Telkom). The deal was
scheduled to be closed in December this year.

Syahrul Akhyar, head of Telkom's labor union for Central Java
and Yogyakarta, said the loss was estimated to be more than Rp 1
billion (US$117 million), so it would be better to cancel it.

Syahrul also said that at a Telkom shareholders' meeting held
in mid-2003, Telkom agreed to buy out MGTI as the answer to the
prolonged dispute between Telkom and MGTI. However, Telkom
withdrew from the agreement and Alberta Communications arrived as
the new bidder for MGTI.

Alberta is a telecommunications company, which is 95 percent
owned by Saratoga Finance, a financial company based in
Singapore. Local businessman Edwin Soeryadjaya owns shares in
Saratoga.

Telkom argued at the time that it did not have enough money to
buy MGTI. Telkom reportedly had valued MGTI at less than US$250
million, while Alberta agreed to buy MGTI at the price of US$266
million.

"It is absurd that Telkom say they did not have enough money.
Telkom's financial report shows that they are capable of buying
MGTI," said Syahrul.

Another Sekar Telkom official added that it would be much
cheaper in the long run for Telkom to buy out MGTI than pay
annual fees to Alberta as the owner of MGTI.

Syahrul expressed his doubts about Alberta, as it was reported
to have only Rp 25 billion in financial capital. The company
obtained the money to buy MGTI from bank loans.

"Besides, Alberta might sell its shares to other foreign
telecommunication companies in the future, which could be a major
loss for the government, just like what happened to Indosat," he
added, referring the sale of the government's 41.9 percent stake
in telecommunications firm PT Indosat last year to Singapore
Technologies Telemedia.

Syahrul expressed concern the telecommunications and
information industries in Indonesia would be ruled by foreign
countries, which would threaten Indonesia's sovereignty.

The Telkom labor union requested Commission IV to ask Minister
of Communications Agum Gumelar to cancel the deal and urged
Telkom to carry out the previous plan to buy MGTI instead.

MGTI is a joint-operating partner of Telkom in Central Java.
Telkom allows MGTI to operate fixed lines in the region in return
for a 30 percent share of the revenue.

Telstra Corp. Ltd. from Australia owns 20.4 percent of MGTI's
shares, while Nippon Telegraph and Telephone Corp (NTT) owns a 15
percent stake. Indosat owns 30.55 percent, and the rest is owned
by local companies that hold close to a 35 percent combined
share.

Telkom formed similar joint ventures in other regions during
the mid-1990s, but they turned sour after the 1997-1998 crisis.
Telkom managed to buy out four other ventures.