Privatization of Telkom and Indosat to go ahead

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)