Indosat to sell 7.1% of its stake in Telkomsel

JAKARTA (JP): The state-owned PT Indosat is to sell 7.1 percent of its shares in PT Telkomsel, a digital cellular telecommunications firm, to the existing shareholders.

Indosat's president, Tjahjono Soerjodibroto, said after the annual and extraordinary meetings of the company's shareholders yesterday that the shares would be offered firstly to PTT Telecom of the Netherlands and PT Setdco Megacell Asia, a domestic firm owned by businessman Setiawan Djody.

"PT Telkom, Telkomsel's major shareholder, has decided not to increase its equity participation in the company," he said.

Telkomsel, which operates global system of mobile telecommunications (GSM) cellular telephone, is currently 42.72 percent owned by Telkom, 35 percent by Indosat, 17.28 percent by PTT Telecom and 5 percent by Setdco.

When incorporated in 1995, Telkomsel was 49 percent (worth Rp 63.9 billion) owned by Indosat and 51 percent (worth Rp 66.6 billion) by Telkom, both of which are state-owned telecommunications providers listed on domestic and international stock exchanges.

Under an agreement signed in March, PTT Telecom increased its equity ownership in Telkomsel by 17.28 percentage points by paying $304 million in cash and $29 million in other means, while Setdco paid $88 million in cash and $8.4 million in other means to increase its ownership by 5 percentage points and Telkom provided an additional payment of $109 million to keep its equity participation at the 42.27 percent level. Indosat's stake was therefore diluted to 35 percent.

Because Telkomsel, which plans to start full GSM operation in Jakarta next month, is now worth about $1.9 billion, Indosat's offer is estimated to have a value of $47.5 million.

Tjahjono said yesterday that Indosat will use the funds raised from the sale of the 2.5 percent of Telkomsel to finance its diversification plan to enter other potential telecommunications- related businesses.

"We also want to show that Telkomsel has been well-valued," he said, adding that by holding 32.5 percent shares, Indosat would still be the second largest shareholder in Telkomsel.

When asked for comments, PTT Telecom Asia's president, J.B. Volbeda, said yesterday that he had not yet learned about Indosat's decision to sell some of its shares in Telkomsel.

Meanwhile, Setdco's owner and chairman, Djody, said that Indosat's offer should firstly go to a domestic firm.

"Setdco has proposed to buy up to 10 percent of Telkomsel's shares. We are eager to buy additional shares," he told The Jakarta Pots.

Djody said last month that he planned to eventually increase his company's ownership in Telkomsel to 25 percent.

Indosat's annual shareholder meeting agreed yesterday to retain Tjahjono as the company's president for the 1996-2001 period.

Three former directors, Herman Simandjuntak, Safwan Natanagara and Bambang Sulistyo, were appointed as directors of finance and administration, of business development and of commerce respectively.

Meanwhile, Achmad Rivai of PT Satelindo was elected as a new director, responsible for operational/technical affairs. Before being assigned to Satelindo, Rivai worked at Telkom and Indosat.

Yesterday's meeting also agreed to allow Indosat's former finance director, Johanes Djajadi who started his career in the company in 1973, to resign.

Indosat's net profits increased by 59 percent to Rp 459.4 billion ($235 million) last year over 1994.

The company's chief commissioner, Jonathan L. Parapak. said that 69 percent of last year's profits will be used for investment, 1 percent for backup investment, and 30 percent will be given to the shareholders as dividends.

The company will pay a final dividend of Rp 69.18 per share for 1995, out of the total dividend of Rp 133.18 per share. Indosat paid an interim dividend of Rp 64 per share last year.

Indosat, whose shares were floated in New York and Jakarta in October 1994, is 65 percent owned by the government, 32 percent by overseas investors and 3 percent by domestic investors.

According to Tjahjono, Indosat will shortly hold a series of road-shows in Singapore, Hong Kong, Zurich, Edinburgh, London, New York, Los Angeles and San Francisco to publicize the results of yesterday's shareholders meetings.

The company's shares closed yesterday at Rp 8,350, down Rp 100, on the Jakarta Stock Exchange and at $35.75 per ADS on the New York Stock Exchange on Wednesday. (icn)