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May 10, 2008

Court upholds ruling on Temasek

An Indonesian court on Friday upheld an earlier ruling by the country's anti-trust body ordering Temasek Holdings of Singapore and its affiliates to sell one of their two Indonesian telecoms units, reported Reuters.

Singapore state investor Temasek said in a statement on Friday it will appeal against the Indonesian court ruling which upheld the country's anti-trust body ordering Temasek and its affiliates to sell two of their Indonesian telecoms unit.

The anti-trust body, known as KPPU, ruled last year that Singapore's state investor Temasek and its affiliates were in breach of Indonesia's anti-monopoly law and ordered the sale of one or other of its telecoms stakes within two years.

Temasek and eight of its linked companies were deemed to have violated Indonesia's anti-competition law, by having cross-ownership in two of the country’s largest mobile phone operators - Telkomsel and Indosat.

Temasek owns 56 percent of SingTel, which has a 35 percent stake in PT Telekomunikasi Selular, or Telkomsel, Indonesia's biggest mobile phone operator.

Singapore Technologies Telemedia, which Temasek fully owns, controls 75 percent of Asia Mobile Holdings (AMH). AMH in turn owns 40 percent of Indosat, the country’s second biggest mobile phone operator, reported AFP.

Temasek and its affiliates, including Singapore's ST Telemedia, have consistently denied any wrongdoing. The judges also instructed the Singapore companies to release or reduce their shares in the two Indonesian companies in 12 months, which is a year earlier than the original KPPU ruling. But the court reduced the fine on each company from $2.8 million to $1.6 million.

Lawyers for Temasek Holdings and Singapore Technologies Telemedia said the companies plan to appeal the decision.

They said the decision by the Jakarta court has sent the wrong signal to Indonesia’s would-be investors and raised the issue of legal certainty. But they are confident the Supreme Court judges will reverse the decision by the district court when the appeal by the Singapore companies is heard.

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