A plan aimed at forcing Singapore-based sovereign wealth fund Temasek Holdings to relinquish one of its indirect shareholdings in Indonesia’s two largest mobile operators (Indosat and Telkomsel) has run into controversy as Temasek agreed to sell its stake in Indosat to Qatar Telecom, an affiliated company. Qatar Telecom agreed late last week to pay US$1.8 billion to buy the 40.8 percent stake in Indosat owned by Asia Mobile Holdings, a joint venture between Qatar Telecom and ST Telemedia (STT), a company controlled by Temasek. The move has triggered the need for Qatar Telecom to offer to buy the rest of Indosat’s shares, but critics claim the deal goes against a court ruling earlier in the year that attempted to force Temasek to divest one of its interests in either Indosat or Telkomsel for anti-trust reasons. Temasek has appealed to Indonesia’s Supreme Court against the ruling. Temasek also indirectly holds 35 percent of Telkomsel via its 56 percent-owned unit Singapore Telecommunications.
In a statement, ST Telemedia insisted it “will no longer have any involvement in Indosat,” but regulators were highly critical of the sale. “What ST Telemedia and Qatar Telecom did is clearly an insult to Indonesia’s law and legal proceedings,” Mohammad Iqbal, a commissioner at Indonesia’s Commission for Supervision of Business Competition, said in an interview with Bloomberg. “Qatar is an affiliated party with STT and Temasek as it has a stake in Asia Mobile.” Trading in Indosat’s shares was suspended indefinitely from Monday following Qatar Telecom’s announcement. According to Wireless Intelligence data, Indonesian market-leader Telkomsel had 51.3 mobile subscribers at the end of first-quarter 2008. Indosat was second-placed with 26.3 million.