ASEAN KEY DESTINATIONS
Indonesia says QTel limited to 49% Indosat stake
A plan by Qatar Telecom (QTel) to buy the remaining shares in Indonesia's PT Indosat Tbk will be blocked by a regulation limiting foreign ownership to 49 percent, Reuters quoted offiicals as saying Tuesday.
The limit throws into doubt plans by QTel to take over Indonesia's second-large mobile phone operator.
"The limit is in accordance with the telecommunication sector regulation that limits foreign ownership at 49 percent," said Fuad Rahmany, chairman of the capital market regulator, Bapepam.
Last month, QTel bought a 40.8 percent stake in Indosat from Asia Mobile Holdings for $1.8 billion. The Qatar firm already held a 25 percent stake in Asia Mobile, while Singapore ST Telemedia had the remaining 75 percent. The deal
effectively lifted QTel's stake in Indosat from around 10 percent.
Gatot Dewa Broto, a spokesman at Indonesia's communications ministry, said that there was a 65 percent limit for foreign ownership for mobile phone operators and a 49 percent limit for fixed-line telecommunication companies.
"But we consider Indosat a fixed-line operator so the limit is set at 49 percent. They had requested an exception but we refused since we are concerned it could become a precedent," Broto said.
Indosat's main revenue comes from its mobile phone business, but it also has a fixed-line operation.
When asked if QTel could be exempted from the 49 percent limit on foreign ownership if it tied up with a local company, Broto said the ministry would have to review the situation.
"We don't want to speculate. Even if it tied up with a local partner but it turned out that the ultimate shareholders are a foreign company then it would be meaningless," he said.
Indonesia's Bakrie Group plans to buy a 10-15 percent stake in Indosat in the open market, sources familiar with the deal said.
Bakrie Group is controlled by the family of Indonesia's chief social welfare minister Aburizal Bakrie.
Qatar's decision to buy Indosat and hold a tender offer for the remaining shares came during a legal tussle between the Indonesian anti-trust agency (KPPU) and Singapore's Temasek Holdings.
Temasek and its affiliates are currently appealing to the Indonesian Supreme Court over a decision by KPPU forcing them to sell stakes in either Indosat or PT Telekomunikasi Selular (Telkomsel) to unrelated parties.
Indonesia has a rapidly growing telecoms market where the number of mobile phone subscribers is expected to soar to 120 million by the end of 2008 from some 90 million last year. However, increasing competition among operators and the entrance of new rivals is expected to push margins down.
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