Indosat to sell stakes in MGTI
The Jakarta Post, Jakarta
Following the annulment of a cross ownership deal with state- owned PT Telekomunikasi Indonesia (PT Telkom), PT Indosat, also a state-owned enterprise, is seeking to sell its 30.6 percent stake in the joint venture which operates a fixed-line service in Central Java.
In a statement made available to Jakarta Stock Exchange Thursday, the international phone operator said that it would bring more fresh cash to develop its fixed line business.
"In a bid to focus efforts on the development of (the company's own) fixed-line network, the company is seeking to divest its stake in MGTI," Indosat said in the statement.
Indosat referred to PT Mitra Global Telekomunikasi Indonesia (MGTI) which co-owns and operates Telkom's assets in Central Java and Yogyakarta. Other shareholders in MGTI include Nippon Telegraphand Telephone Corp (NTT) (15.3 percent) and Australia's Telstra Corp. (20.4 percent).
Early this month, Telkom and Indosat annulled the planned sale of Telkom's assets in Central Java and Yogyakarta which was part of the package of US$ 1.5 billion deal to end their cross ownership. In return for the assets, Telkom received Indosat's stake in cellular operator PT Telkomsel.
Initially, the sale of Telkom's assets in both provinces was meant as a start up for Indosat to enter fixed-line business and for Telkom to enter the cellular industry.
Indosat is one of the two firms holding monopoly on the country's internatinal call, while Telkom holds the monopoly on the fixed line business.
As the deal fell out, Indosat should start from scratch to enter the fixed line business.
Indosat would receive US$375 million from the sale of its stake in Telkomse, of which Telkom had paid $177 million. The remaining payment was still under negotiation.
Meanwhile, the government has indicated that it would sell its controlling stake in PT Indosat in two stages in June and October in a bid to meet the privatization target of Rp 6.5 trillion to cover deficit in this year's state budget.
Minister of State Owned Enterprise Laksamana Sukardi said Wednesday said that the government expects to sell all its stake in Indosat this year.
Government has 65 percent of stake in the company.
The sale of government controlling stake's in Indosat in two stages was revealed in the draft privatization plan published in Reuters on Wednesday.
Indosat finance director Habimono Koesoebijono said that the management supported the decision as long as the price is right.
"We just hope that the government is careful not to sell its stake cheaply. But of course it depends on the market conditions," Koesoebijono said.
Although no figures available on its sales, Indosat was expected to become the largest contributor to the privatization earnings this year.
Based on the draft, which was still being discussed by the government, on the first stage, Indosat's stake would be sold through a tender offer.
While on the second stage, slated for October, the stake would be sold through private placement to a strategic partner.