Analyzing Temasek case

The KPPU decision on Temasek Hoding cross ownership remains the hot issue. The decision sparking controversy will have long impact noting that Temasek filed legal suit to the legal authority considering that the decision has many weaknesses. If thoroughly observed, many weaknesses as addressed by Temasek seem to be baseless. For instance, Temasek executive director stated the company did not hold any share from Telkomsel and Indosat. At a glance, the statement was right. This is based on assumption that Temasek did not own shares of the two cellular operators directly. Temasek through SingTel and STT as the Temasek subsidiaries, had 35 percent of Telkomsel and 41.9 percent of Indosat shares. Temasek rejection against the consideration stating not to impose tariff that inflicted losses to customers appeared to be illogical. It was proved that the return on equity (ROE) of Telkomsel, which was owned by Singtel 35 percent, was 55 percent. Thus the leading cellular operator here generated net profit of Rp11.182 trillion. The KPPU decision will create not only the conducive and fair competition among operators but also trigger the tariff cut down and quality improvement in telecommunication. Abdul Salam Taba Alumnus School of Economics The University of Newcastle, Australia