Rates uncertainty makes Telkom, Indosat unattractive
JAKARTA (JP): The government may not receive good offers for the planned sale this year of between 10 percent and 14 percent of its shares in state-owned telecommunications companies PT Telkom and PT Indosat due to uncertainties over rates, a senior analyst said.
"I think it would be difficult to obtain an optimum price this year," PT Danareksa Sekuritas' vice president for research and equity capital markets Agung Prabowo said on Monday.
He said the government's dallying with the telephone rate hike this year had created uncertainties, which had prompted investors to take a wait-and-see attitude.
The interest in the telecommunications sector is enormous, Agung said, adding that this was especially true in the mobile telecommunications sector.
"Our problem is that there is a regulatory standoff that had made investors uncomfortable and which the government must immediately resolve," he said on the sidelines of a discussion on telephone rates at the Directorate General of Posts and Telecommunications.
However, Agung admitted it would not be possible for the government to postpone the sale of the two telecoms giants because the government "was on cliff's edge" to finance the 2001 state budget deficit projected at 3.7 percent of gross domestic product (GDP).
The government had hoped to sell between 10 percent and 14 percent of its shares in the publicly listed Telkom and Indosat this year to help meet the Rp 6.5 trillion (US$760 million) privatization target.
The government's privatization of state-owned companies this year has so far not contributed to the target as the proceeds from the recent sale of pharmaceutical companies PT Kimia Farma and PT Indofarma were used for the companies' expansion programs.
The government owns 66.19 percent of Telkom and 65 percent of Indosat. The remaining shares are held by the public.
"On the business side, an investor needs to be certain of the volume (the number of telephone subscribers) and the rates to determine how much revenue it could earn and the costs it would incur," he said.
Agung said investors were baffled to see the telephone rate hike postponed as it was what the government had promised them, including to balance the cost of investment with the rates.
The government had initially planned to raise telephone rates by 21.67 percent this year as part of its three-year plan to raise the rates by 45.49 percent to attract investors to the sector.
It was postponed after the House of Representatives (DPR) called for a review of the proposed rate structure, which according to experts is misleading.
The government said earlier its special rate team -- especially assigned to review the controversial rate structure -- had concluded that a flat rate hike of 21.67 percent was the most reasonable.
The telephone rate hike is pending approval from the minister of communications and the DPR. (tnt)