ST Telemedia swoops for control of PT Indosat

16 Dec 2002

Singapore Technologies Telemedia (ST Telemedia) has acquired a 41.9% stake in Indonesia’s second largest telecoms company PT Indonesian Satellite (Indosat) for USD631 million, reviving its privatisation programme and intensifying competition with its domestic rival Singapore Telecom (SingTel) [Singapore: TELE.SI]. ST Telemedia and SingTel, both majority owned by the government, now hold stakes in rivals that control around 75% of the Indonesian wireless market. The latter holds a 35% stake in the country’s largest cellular operator PT Telekomunikasi Selular (Telkomsel) which has about five million subscribers, while Indosat’s PT Satelit Palapa Indonesia (Satelindo) had 2.4 million as of 30 September this year. Whilst on the one hand it would appear strange that ST Telemedia has entered a market where its rival already has a foothold, analysts point out that Indonesia has enormous potential for mobile growth and represents a sound investment when compared with other markets in the region. Although only ten million, or 4.7%, of the country’s 212 million people have a mobile phone, growth rates of 50% per annum are predicted until 2006 at the earliest. ST Telemedia’s offer of 12,950 rupiah per share was 51% higher than the closing stock market price on Friday and substantially higher than the 12,000 rupiah share price target set by the government.