Telkom, Indosat asked to cancel shareholders meet

Telkom, Indosat asked to cancel shareholders meet

JAKARTA (JP): The House of Representatives asked the
government on Tuesday to postpone the shareholders meetings of
state-owned telecommunication companies PT Telkom and PT Indosat.

A House deputy speaker, A.M. Fatwa, said the shareholders
meetings, scheduled for Thursday, should be postponed until after
the House and the government had discussed the two
telecommunications giants' plan to terminate their cross-
ownership.

The House and the government were scheduled to discuss the
matter on Tuesday (yesterday) but the meeting was postponed due
to the absence of Minister of Finance Prijadi Praptosuhardjo.

"In the absence of the minister of finance, as the major
shareholder (of both companies), a discussion on the cross-
ownership could not take place because we needed his authority,"
Fatwa said.

Prijadi was unable to attend the meeting because he was in
Honolulu, Hawaii, to attend a meeting of the Asian Development
Bank.

Fatwa said House Commission IV for infrastructure and
transportation affairs and Commission IX for financial and
development planning affairs would dispatch a formal letter to
the government on Tuesday night asking for the postponement of
the shareholders meetings.

Minister of Transportation and Communications Agum Gumelar
said the government, as well as the senior executives of Telkom
and Indosat, would discuss the House's proposal as soon as they
received the letter.

He said the House had also proposed an alternative to
postponing the shareholders meetings: holding the meetings as
scheduled but removing from the agenda any discussion on joint
ownership.

"(This is especially true) of the business transaction between
Telkom and Indosat concerning Telkom's KSO (joint operation
scheme) region in Central Java ... the level of (sensitivity) of
the other transactions are not as high," Agum said.

Telkom's employees in Central Java and Yogyakarta have
protested the company's plan to turn over the region's assets to
Indosat as part of a series of transactions to terminate the
joint ownership between the two companies.

The employees, gathered in the Telkom Workers Union, fear the
acquisition by Indosat will result in massive layoffs.

Some 3,000 Telkom employees in Central Java and Yogyakarta
began a four-day strike on Tuesday, and plan to hold a
demonstration in Jakarta on Wednesday.

The spokesman for the Central Java and Yogyakarta chapters of
the union, M. Ismail, said the workers would demonstrate in front
of the office of the Coordinating Minister for the Economy, the
Ministry of Finance, the Ministry of Transportation and
Telecommunications and the Jakarta Stock Exchange.

A legislator from Commission IX, Sofyan Usman, said the House
realized there would be consequences to postponing the
shareholders meetings.

"Not the least of which would be a fall in foreign investor
confidence in Indonesia. But we must not sacrifice the interests
of the public," he said.

In a bid to terminate the joint ownership between Telkom and
Indosat, the two companies agreed in February to a series of
transactions totaling US$1.5 billion.

Telkom will acquire Indosat's 35 percent interest in cellular
company PT Telkomsel for $945 million and pay Indosat an
additional $346 million in cash.

Indosat will acquire Telkom's 22.5 percent interest in
cellular company PT Satelindo for $186 million, Telkom's 37.66
percent interest in PT Aplikanusa Lintasarta for $38 million and
the assets and the operation of the Central Java KSO region run
by PT Mitra Global Telekomunikasi Indonesia for $375 million.

The transactions are subject to the approval of shareholders.
(tnt)