STT sells Indosat to Qtel, but KPPU could dispute it

9 Jun 2008

Singapore Technologies Telemedia (STT) has announced plans to sell its 40.8% holding in Indonesian telecoms group Indosat to Qatar Telecom (Qtel), according to local press reports. STT and Qtel have already set up a joint-owned subsidiary, Asia Mobile Holdings, which controls the Indosat stake, but the competition watchdog, Indonesian Business Competition Supervisory Commission (KPPU), is understood to be unhappy at the deal, saying it could breach a recent Jakarta district court ruling which required a buyer to acquire no more than 10%. A report in The Jakarta Post newspaper says that under the proposed deal, STT would relinquish its involvement in Indosat when Qtel pays USD1.8 billion to acquire Asia Mobile Holdings’ entire stake in Indonesia’s second largest telco.

Last month, the Central Jakarta District Court threw out Temasek’s appeal to have an anti-trust ruling overturned, fined the holding company USD1.6 million and ordered it to sell its stake in either of the country’s largest mobile operators – Telkomsel and Indosat’s Satelindo unit – within a year. However, Temasek’s legal representative, Todung Mulya Lubis, said the company would file an immediate appeal to the Supreme Court, accusing the court of ignoring the Indonesian government’s decision to privatise Indosat. Todung was quoted by The Jakarta Post as saying: ‘The divestment in Indosat was done by government request because it needed revenue. The court should have respected the government.’ Temasek and the other companies implicated claim that the government and KPPU were ‘fully aware of the Temasek-linked company in the Indonesia telecommunications market’ when Indosat’s divestment was taking place, and intends to defend itself against what it sees as an ‘unjust ruling’.

In a statement, the president of the Indonesian stock exchange, Erry Firmansyah, has said that Qtel must now offer to buy the rest of Indosat’s shares. The president said that any investor that acquires a 25% stake or more in a publicly listed company must offer to buy the remaining shares from other shareholders, as per Indonesia’s Capital Market and Financial Institution Supervisory Agency rules.

Indonesia, Indosat Ooredoo (incl. IM2), Ooredoo Qatar