Telkom, Indosat asked to divest stake in same firms
Telkom, Indosat asked to divest stake in same firms
JAKARTA (JP) The government has asked state-owned
telecommunications providers Telkom and Indosat to divest their
investments in companies they jointly own.
Director General of Post and Telecommunications Sasmito Dirdjo
said on Tuesday divestment in such companies should become a
priority in their restructuring programs.
If the two companies have a stake in the same company, one
should withdraw to avoid a conflict of interest, he said without
elaborating.
At present, Telkom and Indosat have currently invested in six
similar companies: VSAT and banking network application provider
Lintasarta, telecommunications consultant firm Bangtelindo, VSAT
operator and maintenance provider for the oil industry
Patrakomindo, personal communications network provider Primasel,
mobile phone operator Telkomsel and another mobile phone operator
which also provides an international direct dial service,
Satelindo.
He said that the recommendation to not invest in the same
companies was part of investment guidelines which are now being
prepared for the two companies.
Telkom and Indosat have invested in so many companies, most of
which operate in the country's telecommunications sector, because
the existing law requires other companies to collaborate with
especially Telkom if they were to enter the country's
telecommunications industry.
The two companies are now so diversified, but many of their
investments do not generate fair returns, he said.
Telkom currently has at least eight subsidiaries and 13
affiliates, and Indosat about 29 subsidiaries here and abroad
operating in fixed line, mobile telecommunications, satellite
transponder leasing, international telecommunications, value
added services and other sectors.
Sasmito said Indosat and Telkom also asked for the
government's approval to expand their businesses into mobile
telecommunications services by strengthening their investments in
the existing subsidiaries.
Indosat is currently negotiating to acquire a stake in the GSM
mobile phone operator Excelcomindo Pratama, while Telkom is
planning to strengthen its position in its subsidiary Telkomsel.
Telkom and Indosat acknowledged that some of their
subsidiaries or affiliates had failed to contribute earnings to
the companies' books.
However, Telkom said in the nine-month period of 1999 it
received Rp 568 billion (US$81.1 million) in dividends from all
of its subsidiaries, a figure which is higher than the Rp 358
billion gained in the same period in 1998.
The company also enjoyed a net gain in equity income of Rp 86
billion in the first nine months, compared to a net loss of Rp 27
billion it endured in the same period last year.
Meanwhile, Indosat said in the nine-month period of 1999 it
received Rp 20.5 billion in dividends from affiliates, Rp 173
billion in net equity income from strategic subsidiaries and Rp
8.5 billion in interest earned from bonds issued by affiliates.
Telkom currently has an exclusive right to provide local fixed
line service nationwide until 2010 and domestic long distance
telecommunications services until 2005, while Indosat and its
subsidiary, PT Satelindo, control international long distance
services until 2004. (cst)