Vodafone and Orange shortlisted for Indosat

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Vodafone and Orange have emerged in a shortlist of companies interested in buying one of Indonesia's main telecommunications firms, which the government is selling to plug an increasing budget deficit.

Vodafone, Britain's biggest mobile phone provider, and Orange, which is owned by France Telecom, have written to the Indonesian Government expressing an interest in Indosat. Telekom Malaysia and Telstra of Australia are also interested.

"These (firms) have replied informally saying they are interested in buying," a government official confirmed.

He added that the government wanted to sell a 45 per cent stake in Indosat in two stages in June and October, but still needs parliamentary approval for the sale. The government owns 65 per cent of Indosat, which specialises in international telecommunications. Indonesia aims to raise 6.5 trillion rupiah (£449m) from privatising state-owned firms this year as it struggles to cope with a gaping budget deficit.

In 2003, Indonesia's new telecommunication law will end the exclusive rights in international and domestic phone services which Indosat and the national operator Telekomunikasi Indonesia currently enjoy.

Analysts said the news of the sell-off was positive although uncertainties remained from the country's past experience in disposing of state assets such as the faltering sale of the cement maker Semen Gresik. Mexico's Cemex has been trying to buy Gresik since 1998 but has been stalled by opposition from localswho fear foreign control.