Indosat to spend $206.4m for new subsidiaries

Indosat to spend $206.4m for new subsidiaries

JAKARTA (JP): PT Indosat will spend at least Rp 500 billion
(US$206.44 million) this year on four projects, including a
multimedia business owned by the Bimantara group, but will sell
86.66 percent of its stake in PT Satelindo.

Indosat's president, Tjahjono Soerjodibroto, said after the
company's annual shareholders' meeting yesterday that the new
investment could rise to Rp 950 billion.

The four projects included a personal communications network
(PCN), a satellite-based telecommunication service, a call-back
service and a multimedia service, he said.

He said Indosat would spend Rp 100 billion on up to 55 percent
of a PCN firm, $20 million on up to 20 percent of Multi-Media
Asia (M2A) satellite system and Rp 120 billion for a 25 percent
stake in call-back service provider Global Link Europe.

The M2A is a satellite-based system which provides major
telecommunications services with an adjunct to public switched
telephone networks.

The satellite, assembled by U.S. firm Space System/Loral, is
scheduled to be launched in the first quarter of 1999 and
operational by the middle of that year.

Tjahjono said the project, initiated by PT Pasifik Satelit
Nusantara, was expected to be operated by a new firm called PT
Multimedia Asia, of which Indosat would own 20 percent.

He said Indosat would lift its shareholding from 5 percent
(worth Rp 50 billion) to 20 percent in private multimedia service
provider PT Datakom Asia.

He refused to name other shareholders in Datakom Asia, but
sources said the company's majority shareholder was PT Asriland,
a unit of the Bimantara group which is controlled by Bambang
Trihatmodjo, President Soeharto's second son.

The sources said the other shareholders were Peter Gontha's PT
Persada Giri Abadi, the Salim Group's PT Lembah Subur Adipertiwi
and Bimantara Group's PT Azbindo Nusantara.

Datakom Asia has several subsidiaries and affiliated firms
including radio trunking firm PT Indocall, PT Matahari Lintas
Cakrawala, PT Media Citra Indostar and PT Indostar Buana Satelit.

Satelindo

Tjahjono said that by owning 25 percent of Global Link,
Indosat would gain from new information technology developments.

Global Link is a telecommunications operator popular for its
callback service but this service is still banned in Indonesia
because it might hamper international call operators Indosat and
PT Satelindo.

Indosat announced yesterday that it would sell 88.66 percent
of its Satelindo stake reducing its shareholding from 7.5 percent
to 1 percent.

Satelindo is 45 percent owned by a joint venture between the
Artha Graha group and Bimantara, 25 percent by Germany's
DeTeMobil, 22.5 percent by the state-owned PT Telkom and 7.5
percent by Indosat.

Satelindo, set up in January 1993, runs the two Palapa-C
series satellites, international calls and the Global System for
Mobile communications cellular phones.

Tjahjono said Indosat had never gained anything from Satelindo
in terms of operational strategy, performance or finances.

He said Indosat had often had conflicts of interest with
Satelindo because both ran an international call service.

In 1995, DeTeMobil bought 25 percent of Satelindo for $586
million.

Analysts said Satelindo's current market value was between $3
billion and $4 billion. (icn)