Indonesian Government Permits Qtel to Increase Indosat Stake

Indonesia's government has made a fairly large change to its policy on foreign ownership of telecoms operators - and is to permit Qatar Telecom (Qtel) to increase its holding in Indosat to 65 percent. Qtel recently paid US$1.8 billion for a 40.8% in the firm, and was seemingly restricted to a 49% stake by Indonesian law.

Qtel paid US$1.8 billion to buy Asia Mobile Holding, which was a holding company for a stake in Indosat. Previously, Qtel held one-quarter of Asia Mobile's stake, while three-quarters was owned by Singapore Technologies Telemedia.

Indosat holds a landline license, and hence the 49% restriction applied, whereas if the firm had been a mobile only operator - then Qtel could have increased its stake to 65% without any controversy.

Indonsesia's chief economics minister, Sri Mulyani Indrawati did not clarify if any conditions were applied when allowing Qtel to increase its investment.

Qtel told the Financial Times that the company was still awaiting details of the decision but was "cautiously very pleased".

Qtel has previously indicated that it would like to increase its holding past the 49% limit - if permitted by the government. Qtel has been reported as saying that it is willing to pay as much as $2 billion for the remaining 44.9% of Indosat shares - although that would take the firm to a 85.7% holding. The government owns a 14.3% golden share which can't be touched.

Posted to the site on 14th October 2008