Telkom's falling shares may not hurt govt

Telkom's falling shares may not hurt govt

Muninggar Sri Saraswati and Rendi A. Witular, The Jakarta Post, Jakarta

The government downplayed the recent decline in the shares of
state telecommunications company PT Telkom, saying it commonly
occurs when a publicly listed state firm deals with a corruption
investigation because investors get a shock.

"The decline is obvious, especially during the early stages of
such an investigation. But over time, the shares will go up again
when the investigation becomes clear and the case becomes
transparent. There's nothing to worry about," Vice President
Jusuf Kalla, himself a former businessman, said at his office on
Wednesday.

Telkom shares have lost 6.5 percent over the last two trading
days. The shares declined on Wednesday to Rp 5,000 from Rp 5,100
on Tuesday and from Rp 5,350 on Monday.

At present, the firm has some 15 percent market capitalization
in the domestic bourse -- the largest of any other listed
company.

The recent drop in the shares of the country's largest
telecommunications company, in which 51 percent of shares are
controlled by the government, resulted after the inter-
departmental anticorruption team revealed on Monday that it would
raise the investigation status from inquiry to prosecution.

The team coordinator Hendarman Supandji said the plan was
raised due to an early indication of corruption practices
allegedly committed by Telkom management, which has the potential
to cause state losses.

He hinted that his team had investigated graft involving an
amendment to the joint operating contract with PT Mitra Global
Telekomunikasi Indonesia (MGTI), conducted in January 2004.

The investigation has likely put Telkom's current group of
managers at risk of dismissal as the government plans to
reorganize the firm during its annual shareholders meeting on
Friday.

Kalla said the government has been looking at up to 30
candidates to take over the top post at Telkom and would name one
on Thursday during a meeting of the government's final assessment
team (TPA).

The assessment team, directly presided over by President
Susilo Bambang Yudhoyono, is tasked with selecting top executives
for state enterprises as well as top posts for the government and
military officials.

Four names -- Telkom's cellular subsidiary PT Telkomsel
president director Kiskenda Suriahadja; former president director
of Telkomsel Bajoe Narbito; Telkom's director for human resources
and business support Woeryanto Soeradji; and Telkom's former
business development director and the creator of the Telkom Flexi
service Garuda Sugardo -- have been tipped as the strongest
candidates for the post.