TEMPO.CO, Jakarta - The proposal of the board of directors of state-owned Telekomunikasi Indoneia (Telkom) must be sharply and intensively reviewed. They are recommending that certain functions involving the budget and share transactions should not require the approval of the commissioners. The government, as the majority shareholder of Telkom, must reject these proposals.
The intention to initiate these changes was revealed during a joint meeting between the board of directors and the commissioners or governing board last March 23. The directors want certain restrictions on executive action be eased, not requiring the board of commissioners' approval, to a minimum of 20 percent of the value of corporate shares, or Rp17 trillion.
According to regulations, only a shareholders meeting can alter the contents of the corporate charter. This means that the decision is now in the hands of the State-Owned Enterprises Ministry, as shareholder in the company, representing the government. If this proposal is approved, the authority of the commissioners to oversee state-owned companies will be under-sized. Yet, oversight is the most important aspect of corporate good governance.
The changes to the company's rules and regulations, if they are approved, will also give much grerater authority to the executives in managing the company. The directors can for example, sell without restriction, its subsidiary Dayamitra Telekomunikasi or Mitratel. This company owns 4,000 telecommunication towers and is valued at about Rp9.8 trillion. So far, the plan to trade Mitratel for shares of Tower Bersama Infrastructure through backdoor listing has failed, because of the commissioners' lack of approval.
The new authority accorded to the board of directors, if approved, will make this trade/sale possible. In fact, this could enable Telkom to sell off all of its subsidiaries, without the approval of the commissioners. Telkomsel is the hardest to influence, perhaps because out of the many subsidiaries of Telkom, the asset of Telkomsel, at Rp17 trillion, has the highest value.
Telkom's Board of Commissioners should reject the proposal. SOEs Minister Rini Soemarno must also back the commissioners. They represent the interest of the shareholders in managing the company. To restrict their authority would be like tying the hands and legs of the shareholders themselves. Of course, they don't need to interfere in day-to-day management, but transactions involving big money, like that of Mitratel, cannot be left on its own. It must have the approval of the commissioners.
We should remember how the decision of the Megawati Soekarnoputri government to sell Indosat to Singapore-owned Temasek Holdings in 2002, was later questioned and regretted. It's not just about nationalism, as at that time, Indosat was performing well, but the government needed massive funding to cover its budget deficit. Indosat was seen as a very profitable telecommunications company.
Telkom is one of the state-owned companies that is healthy and continuously profitable. Besides a market capitalization of almost Rp300 trillion, last year, its revenue was Rp14.6 trillion. Minister Rini must ensure that such a potential is not ruined by corporate actions without the approval of its commissioners. To sell off the assets of a telecommunications company is like selling off the state's eyes and ears. (*)
