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November 23, 2007 |
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INDOSAT: Shareholder Violates Anti-Monopoly Laws, KPPU Says PT Indosat Tbk's largest shareholder, Singapore state investor Temasek Holdings, was found guilty by the Business Competition Monitoring Commission (KPPU) of violating Indonesia's anti monopoly laws, various reports say. On November 19, Tempo Interactive recounts, KPPU's commission assembly decided that the Singaporean government-owned investment organization violated Decree No. 5/1999 on Prohibition of Monopoly Practices and Unhealthy Business Competition. As reported by the Troubled Company Reporter-Asia Pacific on Oct. 29, 2007, KPPU said that Temasek Holdings violated the country's anti-monopoly laws through its ownership in two large mobile telecommunication operators. Temasek's subsidiaries own a 42% stake in Indosat and a 35% stake in Telkomsel, the TCR-AP noted. The TCR-AP said Indosat and Telkomsel dominate 80% of the GSM cellular phone market in Indonesia. Temasek Holdings had denied the charges of cross-ownership, maintaining that its subsidiaries have their own board of directors who make their own operational decisions. Reuters says that as a result of KPPU's decision, Temasek must sell its minority stake in either Telekomunikasi Selular or Indosat. Syamsul Maarif, KPPU commission assembly chairman, said the shares must be sold within two years at the maximum since the decision has legal grounds, Tempo relates. KPPU, Reuters notes, also ruled that Temasek's units should also pay IDR25 billion in fines. Furthermore, Mr. Maarif told Tempo that Temasek should also let go of the voting rights and the right to install a commissioner director in one of the companies to be released. Tempo points out that Mr. Maarif said that the KPPU found the fact that Temasek's cross ownership in Indosat and Telkomsel caused a loss for consumers in the cellular industry amounting to IDR14.7 trillion to IDR30.8 trillion during 2003-2006. KPPU also recorded the consumer’s loss reached IDR9.8 trillion to IDR24 trillion per year due to the high interconnection fee, the report adds. Temasek to Contest KPPU Ruling Temasek Holdings said it would challenge KPPU's ruling in an international court if needed, Reuters reports. Tempo also relates that Temasek's legal advisor, Todung Mulya Lbis, questioned KPPU’s opinion that Temasek’s business in Indonesia caused tens of millions of rupiah in losses. According to Reuters, Temasek said its purchase of shares in Indosat was approved by the Indonesian government in 2002 with full knowledge that Singapore Telecommunications, then about 60% held by Temasek, had shareholdings in Telkomsel. Davinder Singh, legal counsel for the Singapore state investment vehicle, told Reuters that Temasek had 14 days after it receives KPPU's written judgment to file an appeal, while the Jakarta district court had 30. Should Temasek fail in its appeal, it can take the case to Indonesia's Supreme Court and thereafter seek international arbitration, Mr. Singh added. Reuters points out that analysts said Temasek would rather sell Indosat than get SingTel to dispose of Telkomsel. Telkomsel is a more valuable investment, contributing about 20% of SingTel's net profit in the last quarter, the report says. About Indosat PT Indosat Tbk -- http://www.indosat.com/ -- is a fully integrated Indonesian telecommunications network and service provider and provides a full complement of national and international telecommunications services in Indonesia. The company provides international long-distance services in Indonesia. It also provides multimedia, data communications and Internet services to Indonesian and regional corporate and retail customers. The company's principal cellular service is the provision of airtime, which measures the usage of its cellular network by its customers. Airtime is sold through postpaid and prepaid plans. It provides a variety of international voice telecommunications services and both international switched and non-switched telecommunications services. MIDI services include high-speed point-to-point international and domestic digital leased line broadband and narrowband services, a high-performance packet-switching service and satellite transponder leasing and broadcasting services. * * * The Troubled Company Reporter-Asia Pacific reported on the Troubled Company Reporter-Asia Pacific reported on Oct 19, 2007, that Moody's Investors Service has upgraded Indosat Finance Company BV and Indosat International Finance Company BV senior unsecured foreign currency ratings to Ba2 from Ba3. The bonds are irrevocably and unconditionally guaranteed by PT Indosat. A TCR-AP report on June 7, 2006, stated that Fitch Ratings affirmed PT Indosat Tbk's long-term foreign and local currency Issuer Default Ratings at 'BB-'. The outlook on the ratings is stable. |
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