Fri, 27 Jun 2003

Indosat earmarks Rp 63 billion for Singapore's STT's coffers

M. Taufiqurrahman, The Jakarta Post, Jakarta

Shareholders of the country's second-largest telecommunications operator, PT Indosat, agreed on Thursday to pay Rp 63 billion (US$7.6 million) in dividend to its majority shareholder, Singapore Technologies Telemedia (STT).

The amount represented 41.7 percent of the total Rp 151 billion in dividend for 2002 that the meeting agreed to distribute.

It also agreed to distribute 45 percent of the firm's 2002 net profit of Rp 336 billion, or Rp 146 per share, to shareholders.

"The relatively small proportion of the proceeds going to STT shows that foreign investors do not always want to reap as much profit as they can," Telkom president Widya Purnama told a media briefing after the shareholders meeting.

He was quick to add that the remaining 54 percent of Indosat's net profit would be reinvested in the company.

The dividend will be paid on Aug. 1.

The shareholders meeting also agreed that 5 percent of Indosat's stakes would be provided for its employees.

Late last year, STT acquired 41.9 percent of then state-owned telecommunications company PT Indosat for Rp 5.6 trillion. The amount is considered the largest-ever gained by the government in its privatization drive.

STT is one of the largest information-communication firms in Singapore. It is a subsidiary of Singapore Technologies Group, employing more than 54,000 people worldwide.

Indosat's top executive said that the share ownership program would increase employee motivation.

The privatization of Indosat met with strong resistance from company employees and many politicians, who considered the acquisition of the firm by STT amounted to the loss of a national asset to foreigners.

Protests against the acquisition have, nevertheless, been on the wane over the past few months.

While retaining the members of the board of commissioners, the shareholders meeting agreed to downsize membership of the board of directors from nine to seven.

Among outgoing members of the board of directors are Raymond Tan Kim Meng, Joseph Chan Lam Seng and Junino Jahja.

As for Widya Purnama, just reelected as Indosat president, the shareholders agreed a bonus for him of about Rp 230 million.

The annual meeting also decided to increase the number of cell phone subscribers by 1.2 million by the end of 2003. It also planned to continue installing 700,000 fixed phone lines in the country.