Court rules against Indosat

Telecommunications company PT Indosat could suffer trillions of rupiah in losses after Indonesia’s anti-corruption court found the company’s former president director, Indar Atmanto, guilty of irregularities relating to a contract between Indosat and its subsidiary IM2.

“Our potential losses are massive, to put things into context, our income last year was 23 trillion rupiah [Bt71.6 billion/US$2.3 billion] and around one fifth of that was from international businesses that are now questioning the clarity of the contracts,” Indosat president director and CEO Alexander Rusli said yesterday.

Alexander added that Indosat had also delayed some contracts worth at least US$300 million (Bt9.3 billion) due to the case.

The case rose to prominence early last year when the Attorney General said that IM2 had overstepped its authority by providing the public with the 2.1 GHz/3G broadband frequency following a deal with its parent company.

As a network provider, Indosat won broadband networks worth Rp160 billion through a government tender in 2006.

Indosat engaged in cooperation with IM2 in providing the 2.1 GHz/3G broadband services to the public.

Indosat is 65 per cent owned by Qatar Telecom (Qtel Asia); 14.29 per cent owned by the Indonesian government; 5.62 per cent by SKAGEN AS; and 15.09 per cent by the public.

An NGO called Indonesian Telecommunications Consumers (KTI) reported the practices of Indosat and its subsidiary to the AGO’s West Java office.

According to the AGO, the business deal violated the 1999 Telecommunications Law, the 2000 governmental decree on telecommunications providers and the 2006 Communications and Information Ministerial Regulation on the 2.1 GHz frequency band usage for mobile networks.

Under these provisions, mobile service providers should secure their own licence to provide 3G services.

The AGO earlier charged former president director of IM2 Indar Atmanto and former president director of Indosat Johny Swandi Sjam under the Anticorruption Law for non-procedural use of the 3G frequency, which caused about Rp3.8 trillion in financial losses to the state. Overall, the AGO has charged two individuals and two corporations in the case.