Joko Ignites Flurry With Plan to Buy Back Indosat; Though Indosat is majority-owned by Ooredoo (Qatar Telecom), Indonesia still has red-white shares, which gives the country veto power that can be exercised in the national interest

Joko Ignites Flurry With Plan to Buy Back Indosat

By Carlos Paath on 08:20 am Jun 24, 2014

Jakarta. Communications and Information Minister Tifatul Sembiring said presidential hopeful Joko Widodo should first calculate the state’s funds before going ahead with his plan to buy back shares of telecommunications firm Indosat if he is elected the country’s next president.

“Do we [Indonesia] have the money to buy [back] Indosat? If we do, then please go ahead,” said Tifatul on Monday.

Tifatul added that Joko would need to consult with the State Enterprises Ministry if he wanted to go ahead with the plan.

“Regarding the plan, why not ask Dahlan Iskan [SOE minister] first?” he said.

Ramadhan Pohan, a Democratic Party politician and deputy chairman of House of Representatives Commission I, which oversees defense, foreign affairs and communications, accused Joko of trying to ignore the question addressed by presidential hopeful Prabowo Subianto on former president Megawati Sukarnoputri’s move to sell Indosat to a foreign investor.

Joko told Prabowo in Sunday evening’s presidential debate that Megawati was forced to sell one of the country’s strategic assets during her term because of unfavorable economic conditions of that time.

Pohan refuted Joko’s statement, saying the country had not been facing an economic crisis when Megawati approved the sale of the telecommunications company.

“Actually, our economy was on the rise at the time,” said Pohan. “Indonesia wasn’t in crisis anymore.”

Jakarta’s non-active governor clearly disagreed and during the debate asked Prabowo not to compare the state of the country’s economy a decade ago with its current condition.

“There was a financial crisis, our state budget was facing difficult [challenges]. Indosat had to be sold at that time. We should look at the clauses in the [purchasing agreement].

“We have to buy the company back in the future, regain its shares, make it ours. That’s why we have to push our economy’s growth to over 7 percent,” said Joko.

Iman Sugema, an economist from the Megawati Institute and a member of Joko-Jusuf Kalla’s campaign team, said Indonesia could acquire Indosat’s shares at a low price if Joko is elected president.

“If Jokowi is in power, Indosat can be bought at a cheap price. Indosat’s value highly depends on the policies made by the government,” Iman said, as quoted by on Monday.

He added that the repurchase of Indosat is one of Joko’s efforts to use satellites in improving the country’s national defenses in the future.

Though Indosat is currently majority-owned by Ooredoo (previously Qatar Telecom), Indonesia still has red-white shares, which gives the country veto power that can be exercised in the national interest.

It’s unfortunate that the government has not exercised the power of veto for the national interest, Iman said.

“It’s true that a majority of the shares is controlled by Qatar, but we still have the red white shares. The red white shares enable us to place our people in key positions and they have the power of veto to [defend] the national interest,” he said.

“Despite having the power of veto, the government has never taken advantage of it. That’s why, for national defense, Jokowi will carry out the buyback,” Iman said.

Telecommunications company Indosat’s shares increased more than 4 percent a mere day after Joko announced he might buy the company back if elected.

In Sunday’s presidential debate Joko said his administration may reacquire a majority stake of Indosat, if its shares were available at a reasonable price.

Indosat shares climbed 2.4 percent to Rp 3,800 on Monday.



About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (, a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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