Telkom hoped to sell 34.5m ADRs

Telkom hoped to sell 34.5m ADRs

JAKARTA (JP): Foreign securities companies expect the state-
owned domestic telecommunications company PT Telkom to launch its
second offering of 34.5 million American Depository Receipts
(ADR) on foreign markets this year.

"I think before October this year is the most appropriate time
for Telkom to offer the other 34.5 million ADRs of the 70 million
ADRs initially planned," president of PT Daiwa Indonesia
Securities, Mitsuo Kiyokawa, told The Jakarta Post over the
weekend.

One ADR equals 29 shares.

After October, Kiyokawa said, the markets will be very busy
with the initial public offerings and listings of international
companies.

He cited the example of the Italian and German
telecommunication companies, which plan to raise US$13 billion in
fresh funds from international capital markets, including the
Tokyo Stock Exchange.

According to Kiyokawa, many other infrastructure companies,
including those operating in telecommunications, will enter the
international markets.

Asked whether other foreign securities firms have the same
expectation, he said, "I think yes. They are waiting for the
second offering of Telkom."

The Indonesian government, the shareholder of Telkom,
initially planned to sell 70 million ADRs on the New York Stock
Exchange (with share listing), the London Stock Exchange
(listing) and the Tokyo Stock Exchange (public offering without
listing).

But then it decided to reduce the total international offering
to only 34.5 million ADRs, of which 11.5 million ADRs were
offered through the New York market, 11.5 million ADRs in London
and 11.5 million ADRs in Tokyo.

On the domestic market, Telkom cut its offering price to Rp
2,050 (90 U.S. cents) from the Rp 2,800 initially planned.

Securities analysts attributed the radical move to the dull
market sentiment during the offering period.

"They preferred to wait until the international market has
recovered. It's an excellent strategy," a director of the Jakarta
Stock Exchange, Mas Achmad Daniri, said.

However, Setiawan Sulistiono, a member of Telkom's Team for
Investor Relations, told the Post over the weekend that up to now
the government has no plan to float the other 34.5 million ADRs
on foreign markets.

"There is no such plan in the near future," he said.

Unsuccessful

Kiyokawa was of the opinion that Telkom was not successful in
terms of fund raising. "It failed to come to the expectation," he
said, adding that the allocation of the shares on the foreign
markets was not quite right.

He pointed out that on the New York and London capital
markets, the shares were actually undersubscribed. But in Tokyo,
despite the fact that Telkom made only a public offering without
listing, the shares were oversubscribed.

"The Japanese market is very strong. It can absorb about 10 to
15 million more of Telkom's shares," he noted.

Recently, the director for listing supervision of the Tokyo
Stock Exchange, Eisuke Nagatomo, told the Post that Japanese
investors were no longer parochial and concentrating on Japanese
stocks, but were becoming broad minded, displaying an interest in
Asian companies.

Due to this change in interest, the Tokyo Stock Exchange made
some amendments to the law last January to facilitate the listing
of foreign shares, particularly those from other Asian countries
that see a growing need for capital from abroad.

"The Tokyo Stock Exchange could actually create its own price
for Telkom shares if the company was listed on the market. But
since it is a public offering without listing it has to follow
the prices of the other foreign markets," he said. (13)