PT Indosat subsidiary IM2 has been fined 1.36 trillion rupiah ($136 million), and its former chief has been imprisoned for four years, for allegedly misappropriating 2.1-GHz spectrum.
Indonesia's Corruption Court handed down the sentence this week, Jakarta Postreported, over the objections of the telecom ministry and the industry.
As well as the four year prison term, former IM2 president director Indar Atmanto has himself been fined 200 million rupees.
The case was brought by NGO Indonesian Telecommunication Consumer (KTI). The body's chairman is currently in prison after being found guilty of extorting Indosat.
The case was taken up by the attorney general's office. The lawsuit alleged that IM2, which had been using Indosat's 2.1-GHz spectrum, had been illegally operating without its own license, due to an Indonesian law preventing companies from transferring frequency allocations to other companies.
IM2 using spectrum allocated to Indosat caused the government to lose out on 1.36 trillion rupiah in fees that it would otherwise have received, the case alleged.
Both Indosat and the telecom ministry have repeatedly argued that this regulation does not apply in this case, because it is a network provider and IM2 is a service provider, and because Indosat has secured the proper permits for its subsidiary.
Indar has pledged to appeal the verdict. The telecom ministry has expressed consternation on the verdict, noting that it will likely discourage investment in the telecom sector. The ministry also pointed out that such agreements are commonplace in the Indonesian telecom ministry.
Indosat is around 14% owned by the Indonesian government. Ooredoo Asia holds a majority 65% share.