=DJ UPDATE:QTEL Gets OK To Up Indosat Stake Without Unit Spin-Off (Adds Telecommunications Ministry saying no immediate comment, background) JAKARTA (Dow Jones)-
Indonesia's official investment board has allowed Qatar Telecom (QTEL.DO) to increase its stake in PT Indosat (ISAT.JK) to 65% without having to spin off the fixed-telecommunications business of the local company, an official said Wednesday. "I have received a letter from the head of the investment board on behalf of the Indonesian government, which among others allows QTEL to own up to 65% of Indosat," Fuad Rahmany, the chairman of the Indonesian capital market regulator Bapepam said. "There's no issue on the spin-off (of Indosat's fixed-line unit) anymore." Indosat shares were up 1.8% early Wednesday at IDR5,450 as investors welcomed the news, while the broader market was up 0.4% Rahmany also said he has asked QTEL to soon launch a tender offer to buy another 24.2% Indosat shares from public shareholders. Bapepam Chairman Muhammad Lutfi could not be reached for confirmation. Meanwhile, an official at the Telecommunication and Information ministry said that the ministry couldn't give immediate comment on the development. The ministry in October allowed the Qatari company to increase its stake in Indosat, on condition that Indonesia's second-largest telephone operator in terms of customer base spin off its fixed-line unit in two years. That would have allowed Indosat to comply with investment rules, which limit foreign ownership in Indonesian fixed-line operators at 49% and cellular companies at 65%. Indosat in recent years entered the fixed-line business using CDMA technology. Analysts have said that spinning off Indosat's fixed-line unit will be difficult as its fixed-line and cellular business share the same network in several areas. Rahmany said in November that QTEL has agreed to pay IDR7,388 for each Indosat share it will buy from the public, the same price it paid when it bought a 40.8% stake in Indosat for a total $1.8 billion in June. This could mean QTEL may spend up to IDR8 trillion ($711 million) to increase its ownership in the Indonesian company to 65%
