Telkom shareholders approve controversial deal
JAKARTA (JP): Shareholders of state-owned telecommunications company PT Telkom approved on Thursday the sale of some of the company's assets to PT Indosat, despite protests from the company's employees.
In an extra-ordinary shareholders meeting held in its office on Jl. Gatot Subroto, South Jakarta, minority shareholders representing 1.69 billion shares approved the proposed US$1.5 billion transaction to end the company's cross-ownership with Indosat in several joint ventures.
Other minority shareholders holding 15.8 million shares rejected the deal, while the shareholders of 1.14 million shares abstained.
Although the government controls a majority 66.19 percent stake in Telkom, the deal must be approved by independent shareholders in order to prevent a conflict of interest.
Telkom chief commissioner Bacelius Ruru said that the transaction was approved by only 50.1 percent of the total independent shares but it would still be valid as the number of minority shareholders attending the meeting exceeded the quorum
Telkom and Indosat agreed late in March to a series of transactions worth $1.5 billion, designed to end their cross- ownership of several companies.
However, the sale of Telkom's fixed telecommunication operation in Central Java and Yogyakarta to Indosat has sparked protests from its employees.
Under the deal, Indosat will take over Telkom's operation in the region, which is currently jointly managed by PT Mitra Global Telekomunikasi Indonesia under a joint operation scheme, or KSO.
Telkom's Central Java and Yogyakarta employees, as members of the Telkom Workers Union (Sekar), rejected the deal and began a four-day strike on Tuesday to protest the sale. They fear massive layoffs will occur as a result of the transfer of assets to Indosat.
About 2,000 of Telkom's employees from Central Java and Yogyakarta staged massive protests near the venue of the shareholders meeting on Thursday.
Telkom president Muhammad Nazif said after the shareholders meeting that the shareholders' approval of the proposed transaction would pave the way for the company to become a world- class operator.
Regarding the dispute between the company and its Central Java and Yogyakarta employees, Nazif said Sekar still have an opportunity to change the outcome of the deal, through the government, until the closing date of the transaction on Jan. 31, 2002.
"As long as the government holds the majority of shares in Telkom, our friends in Sekar can voice their aspirations through the government's voting rights," he said, explaining that, by itself, the employees' vote in the company would not hold much weight as they only held 0.24 percent shares.
Furthermore, the completion of the transaction involving the Central Java and Yogyakarta operation was subject to several prerequisites, Nazif said.
This includes the approval of Telkom's partner, Mitra Global, and Indosat's satisfaction of all disputes relating to the liabilities of Telkom in the Central Java and Yogyakarta operation.
It is also subject to the government granting Indosat a license to own and operate a fixed-line and fixed-wireless public switched voice telecommunications network in the Central Java region.
Indosat's shareholders, who held a similar meeting later in the evening, also approved the company's plan to take over Telkom's Central Java and Yogyakarta operation.
Telkom's shareholder meeting also approved the proposed acquisition of 90.32 percent of shares in Telkom's Kalimantan KSO operations run by PT Dayamitra Telekomunikasi, as the first step towards finalizing the disputes between Telkom and its KSO partners.
The shares were owned by PT Intidaya Sistelindomitra (38.71 percent), Cable and Wireless Plc. (25 percent), and PT Mitracipta Sarananusa (26.61 percent).
Nazif said Telkom was currently negotiating purchase of the remaining 9.68 percent of shares, held by TM Communications (HK) Ltd (Tomen).
"The proposed acquisition of the KSO VI (Kalimantan) region has been approved and will become the foundation for finalizing the other KSO regions," he said.
Telkom's share price on the Jakarta Stock Exchange lost Rp 50 to close at Rp 2,425 despite the landmark approval of its transactions with Indosat. (tnt)