Call for Indonesia to buy back telco from Temasek

The Straits Times, February 20, 2007

By Salim Osman, INDONESIA CORRESPONDENT

JAKARTA - SEVERAL Indonesian MPs have reportedly called on their government to follow Thailand's example and try to buy one of the country's telecommunications giants back from Singapore's Temasek Holdings.

The afternoon daily Sinar Harapan yesterday quoted Mr Hajriyanto Thohari, the Golkar member on the parliamentary committee on security and international affairs, as saying the government should not hesitate to take over Indosat, the country's second-largest telecoms company.

'In the global era, it is common and inevitable that foreigners would buy over a business entity. But in the case of Indosat in particular, the government should have taken steps to buy back the shares,' he was quoted as saying.

The MPs were commenting on reports that Thai coup leader Sonthi Boonyarataglin wanted the return of Shin Corp, Thailand's largest telecoms company, to Thai ownership.

Temasek bought a controlling stake in Shin Corp from the family of ousted prime minister Thaksin Shinawatra in a controversial deal a year ago.

The 73.3 billion baht (S$3.3 billion) deal - the largest in Thai corporate history - gave Temasek control of satellite operator Shin Satellite, broadcaster iTV and Thailand's mobile phone company, Advanced Info Service.

In Indonesia, ST Telemedia, a subsidiary of Temasek Holdings, in 2002 paid US$631 million (S$967 million) for a 42 per cent majority stake in Indosat as part of a wider privatisation programme by the Megawati administration.

The Indonesian government holds 14.5 per cent, with the remainder in the hands of private investors.

Now nationalistic Indonesian politicians like Mr Hajriyanto, emboldened by the developments in Thailand, are arguing that Indosat, being a telecoms company, represents a strategic asset with implications for the country's sovereignty.

'Indosat must be returned to Indonesian ownership,' he said.

He said his parliamentary committee had suggested that the chief executive of Indonesia's largest telecoms company, Telkom, Mr Arwin Rasyid, take steps to buy back Indosat. Mr Arwin reportedly agreed and is waiting for the government's directive.

Three other MPs from the same parliamentary committee also expressed their support for a takeover, according to Sinar Harapan.

'The ball is now in the government's court. Does it have the political will to take over Indosat and other strategic assets?' said Mr Hajriyanto.

The MPs said they believe the public would support the move to take control of Indosat.