Indosat to sell stakes in MGTI

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.