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)