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.