Telkom finalizes initial public offering plan

JAKARTA (JP): State-owned domestic telecommunications operator PT Telekomunikasi Indonesia (Telkom) finalized yesterday its plan to go public later this year, concentrating on the offer of a major portion of its shares in the United States.

Minister of Tourism, Post and Telecommunications Joop Ave told reporters after an extraordinary meeting of Telkom's shareholders at his office yesterday that the meeting had accepted the company's financial audit report, which had been adjusted to the principles of the Generally Accepted Accounting Practices (GAAP) set by the United States.

"We found differences between the systems used by GAAP and the State Audit Agency (BPKP). We have to use GAAP system because we plan to list a major part of Telkom's shares in the United States," he said.

Joop, however, declined to give more details about Telkom's initial public offering on the New York Stock Exchange (NYSE). "It's up to the minister of finance to provide further information," he said.

Minister of Finance Mar'ie Muhammad said last month that Telkom was ready to float its shares on the New York and London stock exchanges as well as on the domestic capital market.

Joop said that the meeting had also agreed to adjust Telkom's basic guidelines, allowing its board of commissioners and its board of directors to perform their duties with greater flexibility.

"Telkom is entering global competition and it has to work and take decisions quickly," he said.

Analysts believe that the government still burdens state-owned firms with certain missions. They argue that state firms need more freedom in management and more qualified managers to make themselves competitive and efficient.

Meanwhile, Telkom's president, Setyanto P. Santosa, said yesterday that the company's management should be more flexible because it will be owned by the public.

Telkom will be the country's second state-owned company to float its shares internationally, after Indosat, the international telecommunications operator.

Last year, Indosat made its debut on the NYSE, netting US$799 million from the sale of 25 percent of its 1.03 billion ordinary shares. It also generated approximately Rp 650 billion from the sale of another 10 percent of its shares on the local market. Nearly $782.9 million of the proceeds of the stock divestment from Indosat was used to repay loans carrying interest rates of more than 10 percent.

The government has appointed global coordinators for Telkom's public offering, including three U.S. investment banks -- Merrill Lynch, Goldman Sachs and Lehman -- as well as S.G. Warburg of Britain.

Joop said yesterday that Telkom would have good prospects in the share offering later this year, even though two other telecommunications firms, from Spain and Holland, will also be launching second offerings on European and U.S. stock exchanges. (icn)