PT Telkom hot item on privatization list

PT Telkom hot item on privatization list

FRANKFURT (Reuters): Indonesia said on Friday it will talk to
Deutsche Telekom about taking a stake in telecoms group Indosat,
and that France Telecom has shown interest in domestic telecoms
firm PT Telkom Indonesia.

Promoting Indonesia's ongoing privatization drive, State
Minister for Empowerment of State Enterprises Tanri Abeng told a
news conference that the country's debt-ridden banking sector
would also be restructured and recapitalized by the end of the
year.

He also said the government would announce the winner of the
bid for a stake in state airport operator AngKasa Pura II in the
third week of July and the new tender will open on July 19.

Indonesia is privatizing state assets as part of economic
reforms demanded by the IMF and World Bank to restructure its
economy following its financial crisis last year which
reverberated throughout the emerging market world.

The southeast Asian country, still awaiting the final results
of its first democratic poll in 40 years held on June 7, hopes to
earn $1.5 billion from selling state assets to fund the 1999/2000
government budget.

Tanri, traveling Europe and the United States as part of a
investor roadshow under the guidance of Goldman Sachs, said that
all political parties had agreed to stick to current economic
policy regardless of the composition of the new government.

He said that his delegation had already spoken to 12 strategic
partners and that more than half of them were interested in
investing.

Asked by Reuters if Deutsche Telekom was one of the potential
partners already addressed, Tanri said: "We will be talking to
them as well."

Telekom already owns a stake in Indonesia's biggest cellular
telephone company, Satelindo, and has said it is interested in
gaining a majority stake in the firm.

Tanri said that while France Telecom had not given a firm sign
about Indonesian investment targets it had "indicated interest in
Telkom and was open-minded about Indosat".

Possibly the most complex task facing the Indonesian
government is overhauling its debt-laden banking system.

"The state-owned banks will all be restructured before the end
of the year. It is very likely that the restructuring and
recapitalization of Indonesian banks will be completed before the
end of the year," Tanri said.

The Indonesian Bank Restructuring Agency is the government
body responsible for the restructuring and it has taken over the
assets of dozens of insolvent banks closed down by the government
in a bid to sort out the mess.

Tanri said the decline in Indosat's share price did not
necessarily pose an obstacle in its privatization. Indosat shares
were around Rp 18,000 in early June and have fallen to about Rp
13,500.

"We want to invite strategic partners to bid and if they are
in for the long-term then they may be prepared to pay a little
bit of a premium to the market," Tanri said.