Privatization of Telkom and Indosat to go ahead

JAKARTA (JP): The government will proceed with plans to further privatize state-owned telecommunications companies PT Telkom and PT Indosat this year despite objections from the House of Representatives, a government senior official said.

Director general of state enterprises I Nyoman Tjager said on Thursday that the privatization program of both companies could not be delayed as they were seen as the most sought after companies by investors.

"Right now the communications sector is the most attractive of all sectors," he said on the sidelines of a hearing with the House of Representative's Commission IV overseeing infrastructure and transportation affairs.

The government expects to raise Rp 6.5 trillion (about US$575.2 million) from the privatization of 16 state-owned companies this year, including Telkom and Indosat, to help finance the 2001 state budget deficit.

Nyoman said that the privatization proceeds from Telkom and Indosat were expected to be quite significant.

Telkom currently holds exclusive rights over fixed line domestic calls while Indosat holds a duopoly with subsidiary PT Satelindo to operate an international direct dialing service.

Telkom's exclusive rights over local calls will be nullified in 2003, and its domestic long distance calls in 2003. Indosat will lose its exclusive rights over international direct dialing service in 2003.

Nyoman did not specify how much of the companies' shares the government would be willing to let go.

The government currently owns 66.19 percent of Telkom and 65 percent of Indosat. The two are publicly listed companies.

According to the original privatization concept, the government was to relinquish its majority stake in state-owned companies, but at the moment it was still unwilling to do so, Nyoman said.

"(In the original concept) more than 51 percent shares will be held by the private sector, whether foreign or local. And the government may or may not still hold some shares," he said.

The House of Representative's Commission IV has repeatedly asked the government to postpone the privatization of Telkom and Indosat, warning the government against selling too early and too cheap just to meet a target.

Legislators also insisted that the government must retain majority ownership in strategic companies such as Telkom and Indosat. (tnt)