Indonesia is set to rule on Monday on a probe into Temasek Holdings' business practices in the nation's mobile phone sector, which could see the Singapore state investment arm being fined or forced to reduce its holdings in the sector.
KPPU, the anti-trust agency, has been investigating whether Temasek -- which through its telecoms units has stakes in PT Telekomunikasi Selular, the biggest mobile operator, and in PT Indosat, the No.2 player -- used its position to reduce competition in the fast-growing market.
The agency, which is due to announce its findings at 0700 GMT, could impose a fine of up to 100 billion rupiah (US$10.7 million) on the parties being investigated, either collectively or individually. It could also force Temasek to sell all or part of its shareholding in Indosat.
Temasek's wholly-owned unit ST Telemedia has 75 percent of Asia Mobile Holdings, which in turn owns 40 percent of Indosat.
Telemedia bought the stake in 2002 for $634 million, a 50 percent premium from the market price at that time.
The stake is now worth $2.2 billion.
Tjandra Lienandjaja, an analyst at BNP Paribas Peregrine in Jakarta, said the verdict might not be as harsh as many had earlier expected.
"The speaker of the parliament has urged the KPPU to make a more realistic ruling, since the government was the one who gave the approval for the sale," of Indosat in 2002, he told Reuters.
Both Temasek and ST Telemedia have denied any wrong doing.
"I hope KPPU will come with a fair and objective judgment," Temasek's lawyer Todung Mulya Lubis told reporters last week.
With just 75 million subscribers out of a total population of 226 million, penetration of Indonesia's telecoms market lags that of other markets such as Malaysia.
In the conclusion of its advance investigation released in September, KPPU said that Temasek has violated article 27 of a law on anti-monopoly practices and uncompetitive behavior, which had resulted in lower competitiveness and excessive pricing.
While a ruling that forces Temasek to sell all or part of its Indosat holding might scare off foreign investors, rivals are jumping at the prospect of getting their hands on the stake.
Among the Indonesian firms eyeing Indosat are PT Global Mediacom, Para Group, and PT Bakrie Telecom, bankers and executives familiar with the situation said.
In addition, Altimo, the telecoms investment arm of Russian billionaire Mikhail Fridman, has already stated its desire to buy Temasek's Indosat shares in a bid to enter the Indonesian market.
Local rivals such as Bakrie Telecom, which is controlled by the family of Chief Social Welfare Minister Aburizal Bakrie and has less than 3 million users, also want to expand market share.
Temasek and ST Telemedia have repeatedly denied any wrongdoing and said they would fight any price-fixing charges.