Will SingTel lose ground in Indonesia?

Indonesia’s Setdco Group intents to buy the 35 percent of Telekomunikasi Selular (Telkomsel) stake held by SingTel, local media reported citing Mr. Setiawan Djody, Chief Executive Officer of Setdco Group.

Setdco has reportedly sent an offer proposal to Temasek Holddings, SingTel’s parent with about $1.6 billion to fund the purchase. Djody said he was optimistic SingTel would let him get his shares back at least by the end of this year. However, if all negotiations failed, he would not hesitate going to court, he said.

Djody went on to say “I offered $650 million, which was around $50 million higher than SingTel's offer, but (even though) I could pay more, SingTel won the bid," regarding the 2001 tender given to SingTel.

In 2001, the Singaporean telecom giant bought 22.3 percent of Indonesia’s largest mobile-phone operator from Royal KPN NV for $601 million. Royal KPN was partially owned by Megacell Indonesia, a unit of Setdco. A year later in 2002, SingTel spent $429 million to increase its share in Telkomsel to the current 35 percent.

Earlier this month SingTel reported its first profit decline in two years as earnings growth slowed at its Indonesia Affiliate Telkomsel. Will SingTel give up its stake in Telkomsel, or will it put up a strong fight? If the case does go to court who has the upper hand?