Singapore Temasek to appeal Jakarta court ruling
Singapore entities, told to divest telco stakes, may go to Supreme Court now
(JAKARTA) An Indonesian court yesterday rejected an appeal by Temasek Holdings, Singapore’s state- owned investment company, and its affiliates against a ruling that it had breached the country’s anti-monopoly laws.
The Central Jakarta District Court upheld a ruling last November by state competition watchdog KPPU ordering Temasek and its affiliates to divest their stake in one of the two largest Indonesian telecom operators.
It also shortened the deadline for divestment to 12 months, from the two-year deadline set by KPPU.
Temasek has an indirect stake in PT Telkomsel through SingTel, which owns 35 per cent of the telco. Separately, Temasek’s wholly-owned subsidiary ST Telemedia holds a 40 per cent stake in Indosat, the second-largest telco, through its subsidiary Asia Mobile Holdings.
Temasek said it was ‘deeply disappointed’ with the decision and plans to appeal the ruling, it said in an e-mailed statement.
‘The facts are Temasek has no shares in Indosat and Telkomsel, and plays no role in their business decisions and operations,’ said Temasek’s managing director for strategic relations Goh Yong Siang in the statement.
ST Telemedia chief executive officer Lee Theng Kiat said in a separate e-mailed statement: ‘We will vigorously challenge through all available legal channels the court decision that was based on the groundless allegations of the KPPU.’
Mr Lee said that the court had not taken into account the arguments against KPPU presented by ST Telemedia, AMH and other independent witnesses. He said it was the Indonesian government that had invited ST Telemedia in 2002 to participate in a transparent bid for the Indosat stake. In fact, a minister in the former Indonesian government had admitted that, without a strategic investor, Indosat might not survive.
ST Telemedia paid a premium on Indosat’s shares and helped convert it into a competitive player. After a consultation meeting in 2003, KPPU itself had agreed that the deal was in the clear. ‘It is therefore absurd that after four years since the consultation meeting, the KPPU has decided to adopt a different attitude,’ said Mr Lee.
SingTel said it objected to the decision and was studying its options. ‘We will examine the court’s ruling in depth before deciding on our appeal to the Supreme Court,’ it said.
The court’s decision came as no surprise, but is likely to reinforce concerns among some international investors. ‘Indonesia needs to show more commitment to investors,’ said Christopher Wong, who helps to manage US$40 billion of assets at Aberdeen Asset Management in Singapore, including shares in Singapore Telecommunications, Indosat and PT Telekomunikasi Indonesia, Telkomsel’s parent.
‘The ruling is sending the wrong signal.’
KPPU ruled last Nov 19 that Temasek had breached antitrust laws by using its indirect stakes in Telkomsel and Indosat to fix mobile-phone calling prices.
The court yesterday also cut an earlier fine of 25 billion rupiah to 15 billion rupiah (S$2.23 million) and gave Temasek the option of cutting stakes in both companies by half. It also overruled KPPU’s decision to ask Telkomsel to cut prices by 15 per cent.
‘We consider that it is fair if they are given an option to reduce their shareholding in each of the companies,’ Andriani Nurdin, the judge who presided over the hearing on the telecommunications assets yesterday, said at the Central Jakarta District Court. — Reuters, AFP, Bloomberg
Source : Business Times - 10 May 2008
Singapore Property - Buy , Sell , Rent , Invest
Mindy Yong
(+65)91002985
mindy@mindyyong.com
OCBC, DBS expand Islamic banking operations »« Thailand govt faces key court ruling
