RI moves closer to solving dispute
RI moves closer to solving dispute
Dow Jones, Jakarta
Resolution to a messy commercial dispute over a Central Java telecommunications operator that has been simmering since the 1997-98 Asian financial crisis may soon be achieved following divestment plans announced on Wednesday.
Foreign and Indonesian partners in the operator called PT Mitra Global Telekomunikasi Indonesia (MGTI) agreed to sell their stakes to a subsidiary of Saratoga Investama Sedaya, a local investment company.
Australia's Telstra Corp. Ltd., which owns a 20.4 percent stake in MGTI and agreed to sell its shares, said in a statement that Saratoga Investama will pay a total of US$266 million for all of MGTI. Telstra said it expects to complete its sale in three months.
PT Indosat, the country's second-largest telecom company, also will sell its 30.55 percent stake. MGTI's other major shareholders are Nippon Telegraph and Telephone Corp. (NTT )with a 15 percent stake and local companies, which hold close to a 35 percent combined share.
The deal appears to pave the way for an end to a long-running row between Indonesia's state-owned PT Telkom, and MGTI, which was one of five foreign-owned joint ventures set up in the mid- 1990s to offer telephone services.
Telkom allowed the companies to operate as a way of boosting infrastructure development in the country's provinces in return for handing over 30 percent of their revenue to the state-owned company.
However, the agreements soured after the Asian crisis when the rupiah collapsed, pushing down revenue in dollar terms and making it hard to pay for imported telecom equipment.
Over the past few years, Telkom has been able to reach agreements to buy out four of the joint ventures, but was unable to take over MGTI because of disagreements over valuation.
Ending the dispute is crucial for Indonesia, which hopes to attract foreign investment into the telecom sector in the years ahead as it continues to open the domestic market to free competition.
Telkom reportedly had valued MGTI at less than $250 million, a price the partners were unwilling to accept. More problems followed last year after Indosat announced a plan to take over MGTI itself. MGTI's workers went on strike to oppose the sale, fearing Indosat's management would cut back on staff, and this eventually scuttled the plan.
MGTI's new owner, Saratoga Investama, now will have to negotiate with Telkom over the future of the company, said Dina Arifani, a Telkom spokeswoman. Telkom still retains the rights to a share of the company's revenue, she said.
Saratoga Investama is a little-known investment company, which unsuccessfully bid for the government's stake in PT Bank Central Asia in 2001. According to local media reports, the company is linked to the family of William Suryajaya, the founder of PT Astra International, but analysts said they could not confirm this.