Indonesian group wants to buy Telkomsel stake from SingTel

The Straits Times, May 22, 2007
By Salim Osman, INDONESIA CORRESPONDENT



JAKARTA - INDONESIAN tycoon Setiawan Djody has announced plans to buy back a 22.3 per cent stake in the country's largest mobile phone company, Telkomsel, from SingTel.

The stake was owned by KPN Media, a joint venture in which he was involved, before it collapsed during the Asian financial crisis.

He says he is confident of wrapping up the deal by year-end if SingTel agrees to his plans, and expects to spend about US$1.6 billion (S$2.4 billion) on the deal.

However, SingTel director of corporate communications Peter Heng yesterday would say only: 'This is pure market speculation. We are not in contact with Mr Djody.'

Mr Djody's announcement follows an aggressive campaign by Russian conglomerate Alfa Group to acquire Singapore firm ST Telemedia's 41 per cent stake in Indonesia's second-largest mobile phone operator, Indosat.

But he rejects suggestions that he is in cahoots with Alfa.

'I know the group because of the oil business. But I have nothing to do with them,' he added. He has business interests in Russia and chairs the Indonesia-Russia Friendship Association.

He said none of the money needed for the deal would come from Russia. He expects loans from Japanese and Middle Eastern banks to cover 70 per cent; Setdco Group, of which he is chief executive, would cover the remainder.

He explained that, before SingTel bought shares in Telkomsel, the Indonesian telco was 77.7 per cent owned by the state-owned Telkom. A joint company called KPN Media owned the remaining 22.3 per cent, with Dutch group KPN International holding 17.3 per cent, and its partner Setdco, 5 per cent.

When KPN Media collapsed during the 1997 crisis, its shares in Telkomsel were taken over by the government, before being sold to SingTel in 2001, for US$600 million.

Mr Djody said he was angry that the shares were sold to SingTel when he had made a higher bid of US$650 million.

A year later, SingTel raised its stake in Telkomsel to 35 per cent. Mr Djody says he is only interested in acquiring KPN's original stake.

He said the previous administration made 'a big mistake' by allowing SingTel and ST Telemedia to acquire large stakes in the Indonesian telecoms business.

SingTel is partly owned by Temasek Holdings, which also owns ST Telemedia, he noted.

He added: 'Now, Temasek has a 'monopolistic' position in the telecommunications business.'