Govt claims USD135m losses from Indosat’s ‘misuse’ of 3G spectrum

16 Nov 2012

The Jakarta Globe claims that Indonesia’s second largest mobile operator Indosat has been misusing its 3G network, resulting in a loss to the government to the tune of IDR1.3 trillion (USD135 million). A spokesman for the Attorney General’s Office, Setia Untung Arimuladi, claims that the losses – which relate to the Indosat Mega Media (IM2) case – are based on an audited report complied by the Finance and Development Comptroller (BPKP) that was received by the Office on 9 November.

The case against IM2 came after local NGO the Indonesian Telecommunication Consumer (KTI) reported Indosat and its subsidiary IM2 to the West Java prosecutor’s office. Following an investigation, KTI alleges that the Indosat unit ‘never took part in the selection for the tender of the 2.1GHz cellular telecommunication band, also known as 3G [in 2006]. Therefore, IM2 had no rights in making use of the frequency’. The Attorney General’s Office has conducted an intensive review into the matter, Setia says, and is optimistic it will soon be ready to go to trial. In essence, KTI argues that by leasing out the frequencies from its parent company, IM2 benefited from lower tax rates – akin to a public company – despite being privately owned. Indonesia’s Ministry of Communication and Information Technology insists that Indosat was entitled to farm out its 3G frequency to IM2, but concedes the point that it was ‘unaware of the specific contract between Indosat and IM2 that was alleged to have led to the state revenue loss’. For its part, Indosat believes it has done nothing wrong.

Indonesia, Indosat Ooredoo Hutchison (IOH)