The government of Indonesia has performed a surprising volte face which will allow Qatar Telecom to increase its stake in the country’s second largest telecoms operator, Indosat, to 65%, having earlier insisted it would not allow it to own more than 49%. Under local telecoms laws adopted in 2007, foreign firms are allowed to own a maximum 49% of a fixed line firm and 65% of a mobile operator. Although Indosat operates a fixed line business, it is primarily a cellular operator and QTel has argued it should therefore be allowed to hold the higher shareholding. The government’s U-turn has been received cautiously by market watchers who note it sends conflicting messages on Indonesia’s policy re: foreign direct investment (FDI). While on the one hand it encourages foreign ownership of major telcos, it also leaves a number of key issues unresolved. In making the announcement, Sri Mulyani Indrawati, the chief economics minister, declined to explain the change or whether any conditions were attached to the new classification of Indosat. However, she did say that regulations governing the deal would be clarified soon, The Financial Times reports. QTel is understood to be ‘cautiously very pleased’ and intends to seek majority ownership as soon as the authorities permit it.