Indonesian union plans suit against Temasek

26 Dec 06

An Indonesian union plans to file a lawsuit against Singapore state investment arm Temasek Holdings, accusing it of monopolistic practices in the country’s mobile phone market, a newspaper reported.

The Federation of State-Owned Enterprises Employees Union’s class action suit on behalf of Indonesian consumers would seek US$4 billion in compensation from Temasek, Singapore’s Straits Times said.

Temasek, which directly and indirectly owns large stakes in Indonesia’s dominant mobile phone companies, PT Telekomunikasi Selular (Telkomsel) and PT Indosat , also faces a complaint to an Indonesian competition regulator.

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

The newspaper quoted union president Arief Poyuono as saying that the legal action, to be filed in a Jakarta court on Tuesday, was in the interests of 60 million Indonesian cellphone subscribers who he said faced higher charges as a result of Temasek’s behaviour.

Temasek officials were not immediately available for comment.

Senior officials at the Business Competition Supervisory Commission (KPPU) told Reuters this month that a complaint had been filed against Temasek and its units, Singapore Telecommunications and ST Telemedia, for suspected violation of Indonesian competition law.

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.

It owns 56 per cent of SingTel, which owns around a third of Telkomsel, the country’s biggest cellular operator. Telkomsel is majority-owned by government-controlled PT Telekomunikasi Indonesia (Telkom).

Temasek, headed by Ho Ching, wife of Singapore Prime Minister Lee Hsien Loong, attracted strong criticism after its $3.8 billion purchase of Thai telecoms group Shin Corp. in January.

This deal was a factor in the later military overthrow of then Prime Minister Thaksin Shinawatra, whose family had controlled Shin

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