UPDATE 2-Qatar Telecom to pay $1.8 bln for Indosat stake

(adds ST Telemedia, Temasek statements, background)

Lin Noueihed and Melanie Lee

DUBAI/SINGAPORE, June 7 (Reuters) - Qatar Telecommunications QTEL.QA will buy Singapore Technologies Telemedia's entire stake in Indonesia's PT Indosat (ISAT.JK) for $1.8 billion, gaining 40.8 percent control of that country's second-biggest mobile phone firm, the two companies said.

The stake sale by ST Telemedia -- which is a unit of Singapore's sovereign wealth fund Temasek Holdings -- came almost a month after it lost an appeal in an Indonesia court against an earlier anti-trust ruling.

An Indonesian district court on May 9 ordered Temasek and its affiliates to sell its holdings in either PT Telekomunikasi Selular (Telkomsel) or PT Indosat Tbk (ISAT.JK), upholding an earlier ruling by the country's anti-trust body.

The Singapore state investor has denied engaging in anti-competitive behaviour, saying its affiliates owned minority stakes in both mobile operators.

Temasek said that the decision to sell the stake was entirely made by the board of ST Telemedia.

"Any decision in respect of their stake in Indosat is determined solely by the independent boards and managements of STT and its associates," said Myrna Thomas, managing director of corporate affairs, Temasek Holdings in a statement on Saturday.

Qatar Telecom (Qtel) will buy the stake from Asia Mobile Holding, a subsidiary it jointly holds with Singapore Technologies Telemedia, the statement said, adding this transaction will not affect ST Telemedia and Qtel's investments in other markets.

ST Telemedia said it will no longer have any involvement in Indosat, although Indonesia's Supreme Court is still to hear an appeal filed by Temasek, Asia Mobile Holdings and ST Telemedia against the anti-trust ruling.

The statement said that Asia Mobile Holdings will continue to own a stake in StarHub Ltd (STAR.SI), Singapore's second largest telecom firm, and Shenington Investments Pte Ltd, a holding company with telecommunication assets in Cambodia and Lao PDR.

HIGH GROWTH MARKET

With this deal, Qtel becomes the single-biggest shareholder of Indosat in a fast-growing market.

"We believe that Indonesia is a high growth market for telecommunications and that Indosat is very well placed to compete in that market," Chief Executive Nasser Marafih said in the statement.

Qtel Chairman Abdullah bin Saud al-Thani told Doha-based Al Jazeera television by telephone that the Qatari firm was now the largest stakeholder.

Qtel said last year it was looking to buy Asian and Arab operators and licences and expand its fixed-wireless and corporate enterprise data as it pushed out of Qatar.

The firm's shares rose 5.33 percent this year to last week's close, underperforming the benchmark .QSI, which is up almost 26 percent this year. Qatar's stock exchange was closed on Saturday.

State-controlled or affiliated Gulf Arab telecom operators have been expanding abroad as their home markets mature, spending billions of dollars on acquisitions from Indonesia to Africa.

Indosat said on Friday its subscribers rose 22 percent to 30 million in the first five months of the year, putting the company on track to meet its 2008 target.

Qtel posted a record profit in the first quarter after buying a Kuwaiti operator and adding mobile phone users in its home market where the energy-based economy is surging. (Additional reporting by Ola Galal) (saeed.azhar@reuters.com; Reuters Messaging: saeed.azhar.reuters.com@reuters.net; +65 97530494))