Temasek’s woes deepens: Indonesia may probe mobile price-fixing complaint

Harry Suhartono and Sara Webb
15 Dec 06

Indonesia’s anti-monopoly agency may investigate whether the country’s top mobile operators used their dominant market position to fix prices and block rivals.

A complaint received by the agency specifically targets Singapore state investment arm Temasek [TEM.UL], which owns stakes in both PT Telekomunikasi Selular (Telkomsel) and PT Indosat . The allegations, denied by Indosat, follow pressure from Indonesian politicians on Singapore to divest its stakes in the country’s telecoms industry and as other potential telecoms groups have expressed an interest in investing in the sector.

Senior officials at the Business Competition Supervisory Commission (KPPU) told Reuters on Tuesday a complaint had been filed against Temasek and its units, Singapore Telecommunications and ST Telemedia, for suspected violation of Indonesia’s competition law.

“There has been a complaint,” Pande Radja Silalahi, one of the KPPU commissioners, said, adding: “The team from KPPU has been trying to clarify the report.

“We have not determined whether it involves price fixing or other problems. At this stage, we’re in the clarification process, but if we found an indication we will set up the investigation team.”

KPPU officials declined to say who filed the complaint.

“It is secret. The law does not permit us to reveal that,” Silalahi said.

State-owned Temasek has been aggressively expanding across Asia in a bid to boost returns on its S$129 billion investment portfolio. It invested heavily in Indonesia in the wake of the Asian financial crisis in the late-1990s, buying stakes in telecoms and banks.

Its wholly-owned ST Telemedia owns more than two-fifths of PT Indosat, Indonesia’s No. 2 telecoms firm, while SingTel owns around a third of Telkomsel, the country’s biggest cellular operator, which is majority-owned by government-controlled PT Telekomunikasi Indonesia (Telkom) .

Telkomsel and Indosat together have about 80-90 percent of the cellular market.

“We are aware of the complaint,” said Indosat spokeswoman Adita Irawati. “We have said before we would not engage in anti-competitive behaviour. Naturally, we are competing with Telkomsel so there’s no way we are behaving that way.”


Singapore’s investment in its neighbour’s telecoms sector had previously come under attack from Indonesia’s Vice President Jusuf Kalla.

With Indonesia’s economy set to grow 6.1 percent next year, some big domestic and international investors are interested in investing in areas such as the consumer sector and commodities, which Indonesia has in abundance.

Russia’s Alfa Group, which has interests in telecoms and banking, earlier this month said it plans to invest up to US$2 billion in Indonesia, and is particularly interested in the telecoms sectors, according to a report in Bisnis Indonesia.

The complaint, a translation of which was seen by Reuters, recommends that in order to prevent violations of Indonesia’s competition law, Temasek should be forced to divest its stakes.

It said that “cellular tariff fixing has occurred between Indosat and Telkomsel since 2003 up to today,” citing “anti-competitive” behaviour including the similarity in the two firms’ mobile charges.

It also says the two Indonesian firms may have blocked a new entrant, Bakrie Telecom — which is controlled by the family of Indonesia’s Chief Social Welfare Minister Aburizal Bakrie — from expanding in the market.

“Having declared that Indosat and Telkomsel are competing against each other, it is peculiar to see Indosat had the same tariff structure with its so-called competitor Telkomsel,” the complaint says.

“One may then raise the question on whether there is any (tacit) co-ordination in determining the above tariff.”

Telkomsel and Temasek officials could not be reached for comment.

Temasek, headed by Ho Ching, wife of Singapore Prime Minister Lee Hsien Loong, attracted strong criticism after its $3.8 billion purchase of Thailand’s Shin Corp. in January — a deal that led to the overthrow of then Prime Minister Thaksin Shinawatra whose family controlled Shin.

Shin shares have since fallen about 40 percent, giving Temasek a paper loss of about $1.5 billion.

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