Tue, 14 May 2002

Indosat agrees to buy Satelindo stake for $325m

The Jakarta Post, Jakarta

State-owned telecommunications company PT Indosat has reached an agreement with Germany's Deutsche Telekom to purchase the latter's 25 percent stake in local cellular operator PT Satelindo for US$325 million, according to State Minister of State Enterprises Laksamana Sukardi.

"(The price) is $325 million," Laksamana told reporters on Monday when asked about the result of negotiations with Deutsche Telekom.

The price is much lower than that paid by Deutsche Telekom when it first bought the 25 percent stake, which, according to Laksamana, was $580 million.

Meanwhile, a Deutsche Telekom spokesman was quoted by Reuters as saying that final details of the deal had still to be agreed before an agreement could be signed. "There are still some points to be resolved," he said.

Publicly listed Indosat already owns a 75 percent stake in the country's second-largest cellular operator.

The government wants Indosat to have a 100 percent ownership in Satelindo in a bid to boost its value ahead of the planned sale of a 45 percent government shareholding in the company, as part of this year's privatization program.

The government plans to sell a 15 percent stake in Indosat next month, and another 30 percent in October.

Indosat is planning to launch a rights issue to help finance the Satelindo stake acquisition.

Analysts have said that the acquisition of the Satelindo stake would be positive for Indosat because of the huge growth potential of the cellular industry in the country.

But Indosat shares on the Jakarta Stock Exchange ended lower on Monday at Rp 13,150 from Rp 13,350 on Friday.

Satelindo currently has around 1.9 million customers, and has targeted to reach 3 million this year by expanding its cellular infrastructure.

The company initially planned to launch an initial public offering this month, but it was suspended by the government in order to maintain high investor interest in the Indosat shares to be sold by the government.

Indosat said last week that it would inject some $75 million into Satelindo to help finance the latter's expansion program.

Satelindo has said that it would need at least $250 million to finance the expansion program.

Deutsche Telekom, struggling under a heavy debt burden, is trying to unload its various assets in Asia to focus business in Europe.

In addition to Satelindo, Deutsche Telekom owns stake in Malaysia's TRI Celcom and in Globe Telecom Inc. in the Philippines.