Indonesia - price fixing investigation

Indonesia probe hits telecom shrs, sale lifts Excelcom

Shares in Indonesia's No.3 mobile phone operator, PT Excelcomindo Pratama Tbk EXCL.JK, jumped by nearly a third on Wednesday after a Middle East firm bought a stake, but news of a new anti-trust probe in the sector sent other operators sliding.

Emirates Telecommunications (Etisalat) ETEL.AD said on Tuesday it would by a 16 percent stake in Excelcom from Indonesia's Rajawali Corp for $438 million, a hefty 56 percent premium over Excelcom's closing share price on Tuesday.

Analysts see plenty of scope for growth in Indonesia's telecoms market, where penetration lags many other markets, with just 75 million subscribers in a population of 226 million.

But shares in rival local telecom firms fell after the anti-trust agency, KPPU, said it had launched a probe into alleged price fixing of tariffs for short message services (SMS).

Mohammad Iqbal, chairman of KPPU, told Reuters that the probe into pricing of text messaging covered all operators.

"We have launched a preliminary investigation which could take 30 days. It has been going on for a week or so," Iqbal said.

John Teja, head of Sales at Ciptadana Securities, said the probe cast a new shadow over the sector following a ruling last month over alleged price fixing in mobile phone calls.

"These investigations from KPPU basically raise more concerns on the outlook of the sector. This just adds more negative sentiment to the industry," he said.

Shares in Indonesia's second-biggest mobile phone firm, PT Indosat Tbk ISAT.JK, FELL as much as 5 percent on the news, wiping out more than $260 million of its market capitalization.

Meanwhile, shares of state-owned PT Telekomunikasi Indonesia Tbk TLKM.JK (Telkom), which controls the top mobile phone firm, PT Telekomunikasi Selular (Telkomsel), fell as much as 2.25 percent, erasing nearly $650 million of its market value.

Smaller players including Bakrie Telecom Tbk BTEL.JK dropped as much as 2.3 percent, while Mobile-8 Telecom Tbk FREN.JK fell 1.85 percent.

ETISALAT DEAL

But shares in Excelcom, which is a 67 percent owned unit of Telecom Malaysia (TLMM.KL: Quote, Profile, Research), soared around 30 percent at one point and were quoted up 16.3 percent at 2,675 rupiah by 0547 GMT. The broader market .JKSE fell 0.9 percent.

Etisalat, the second-largest publicly traded Arab telecom firm with operations in 16 countries, said it wanted to gain exposure to the fast-growing telecoms market in Indonesia, the world's fourth most populous country.

Rajawali said it received 3,592 rupiah a share for the stake, compared to a closing price of 2,300 rupiah on Tuesday.

Darjoto Setyawan, managing director of Rajawali Corp, told Reuters the firm would reinvest the sale proceeds in sectors such as plantations, national resources, property and cement.

Rajawali, founder of Excelcom, last year bought around a 25 percent stake in Indonesia's top cement maker, PT Semen Gresik Tbk SMGR.JK, after selling its controlling stake in Excelcom.

Excelcom is targeting up to 14 million mobile phone users in Indonesia by the end of the year, up from 10.5 million at the end of July, its president said in September.

The company had 13 million subscribers and a market share of 14 percent at the end of September, Etisalat said.

TEMASEK

The latest anti-trust investigation follows a ruling last month over alleged price fixing in mobile phone calls by the country's two biggest mobile phone operators. Telkomsel was ordered to lower its tariffs by at least 15 percent.

Indonesia also ordered the Singapore government's investment arm Temasek TEM.UL, which through its units has stakes in Telkomsel and in Indosat, to sell its stake in one of the two firms within two years.

Temasek, which was also fined for a breach of competition law, has said it will fight the ruling.