Indosat, the nation’s second largest telecommunications company, is considering spinning off its CDMA (code division multiple access) unit, StarOne, to make the company more competitive.
President director Harry Sasongko said on Tuesday that Indosat was currently conducting an internal assessment to gain momentum as the sector has shown an upward trend with most of the nation’s 230 million people having access to a mobile phone.
“The spin-off is just an assessment. This is part of an ongoing process in the company’s internal activity for StarOne,” he told reporters at his office in Jakarta.
“We continually assess and see profitable opportunities, such product marketing strategies to win a place for our products in the market,” Harry added, as quoted by Antara news agency.
The telecommunications sector led the nation’s sectoral economy in 2010, growing by 13.5 percent, higher than Indonesia’s overall 6.1 percent economic growth in 2010.
A constant slide of subscribers from StarOne has reportedly hampered Indosat’s overall growth, which was dominated by its cellular business. The telecommunications giant’s plan to spin-off its StarOne business unit has been under consideration since 2008.
“We will finalize a decision as soon as the assessment is done,” Harry said, adding he expected the best possible result after the assessment.
Indosat’s net profits plunged 63 percent to Rp 531 billion as of September from Rp 1.45 trillion a year earlier as a stronger rupiah increased the costs of hedging.
Indosat, listed on the New York Stock Exchange and the Indonesian Stock Exchange, is 65 percent owned by the Qatari state-controlled Qatar Telecommunications (QTEL).
On Tuesday, an extraordinary Indosat shareholders meeting agreed to appoint a new commissioner: State-Owned Enterprises Ministry deputy for business services Parikesit Suprapto.
Hanz C. Motiz was also appointed the new director for the telephone company, and was expected to replace Stephen Edward Hobbs as of April 30.
— JP/Esther Samboh
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