STT beats out Telecom Malaysia for Indosat stake
Dadan Wijaksana, The Jakarta Post, Jakarta
Singapore Technologies Telemedia (STT) was named the winning bidder for the government's 41.9 percent stake in state-owned telecommunications firm PT Indosat, with the Rp 5.6 trillion (about US$610 million) sale price representing the largest sale to date in the government's privatization drive.
Mahmudin Yasin, deputy for privatization at the Office of State Minister for State Enterprises, said on Sunday a sale and purchase agreement had been signed by the government and STT and it was hoped the deal would be wrapped up before the end of the year.
STT, owned by the Singapore government, beat out Telekom Malaysia in the final round of bidding.
According to Yasin, STT offered a price of Rp 12,950 per share, which represented a 50.6 percent premium on Indosat's Friday closing price of Rp 8,600. Indosat is a publicly listed company.
"The price was in line with what we expected," Mahmudin said.
The relatively smooth sale of the Indosat stake should help the government regain some of its lost confidence from an earlier failed attempt to sell the stake.
The government attempted to sell an 11.32 percent stake in Indosat in May. However, the government was only able to sell 8.1 percent of the company at a lower-than-expected price because of a tepid response from investors. The sale raised about Rp 1.1 trillion.
This latest deal, which reduces the government's stake in Indosat to 15 percent, brings the total proceeds from this year's privatization program to more than Rp 8 trillion, exceeding the full-year target of Rp 6.5 trillion.
While obtaining cash from the privatization program is of great importance, with the money to be used to help plug this year's budget deficit, the program's role in helping to revive investor confidence in the economy is of equal importance.
The successful Indosat sale sends a signal that the country is committed to its reform agenda and not all investors are shying away from the country, according to observers.
"One of the main aims of the program is to promote a flow of investments into the country's strategic industries," State Minister for State Enterprises Laksamana Sukardi said.
Once strategic partnerships between local and regional firms are formed, this will help improve the performance of local firms to international standards, he said.
STT is one of the largest information-communication companies in Singapore. It is a subsidiary of the Singapore Technologies Group, which employs more than 54,000 workers worldwide.
Indosat is Indonesia's second largest telecommunications operator. Its business is segmented into cellular, fixed communication, multimedia, data and Internet services.
According to the sale and purchase agreement, STT will build 759,000 wireless fixed lines by 2010.