Thu, 20 Nov 2003

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.