Govt may launch massive reorganization of Telkom<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
State-owned telecommunications company PT Telekomunikasi
\nIndonesia (Telkom) will likely undergo massive reorganization,
\nincluding a shakeup of the board of directors and a revision of
\nthe management structure.<\/p>\n
While the reorganization is set to be decided during the
\ncompany's annual shareholder meeting on Friday, sources at the
\nOffice of State Minister of State Enterprises implied that
\nTelkom's current president director Kristiono would not likely
\nsurvive the changes.<\/p>\n
The reorganization plan was launched on the back of a recent
\nprobe by the government's inter-departmental corruption team,
\nwhich discovered a number of irregularities at the publicly
\nlisted company, most of which may include massive losses to the
\nstate.<\/p>\n
"The recent probe by the anticorruption team has forced the
\nstate minister's office to reconsider the position of a number of
\ndirectors. But the final decision will made by the President,"
\nsaid a senior official at the state minister's office, who
\nrequested anonymity.<\/p>\n
The government has a 51 percent stake in Telkom, the country's
\nlargest telecommunications company, while the remaining 49
\npercent is held by public investors.<\/p>\n
The official said there were currently four candidates that
\ncould likely replace Kristiono, all of whom career were Telkom
\nexecutives. Kristiono has led Telkom since mid 2002.<\/p>\n
The official named Telkom's cellular subsidiary PT Telkomsel
\npresident director Kiskenda Suriahadja and former president
\ndirector of Telkomsel Bajoe Narbito as top candidates.<\/p>\n
Before serving as executives with Telkomsel, both Kiskenda and
\nBajoe had served as heads of Telkom's regional division for
\nGreater Jakarta -- a strategic post for a Telkom executive since
\nthe division contributes between 40 percent and 50 percent of
\nTelkom's operational revenues.<\/p>\n
Two other strong candidates are Woeryanto Soeradji, Telkom's
\ndirector for human resources and business support, and Garuda
\nSugardo, Telkom's former business development director and the
\ncreator of the Telkom Flexi service.<\/p>\n
Telkom Flexi uses the code division multiple access (CDMA)
\ntechnology.<\/p>\n
The selection of candidates from Telkom's internal resources
\nhad been confirmed by State Minister of State Enterprises
\nSugiharto last week.<\/p>\n
He said the government would prioritize candidates with a long
\ncareer in Telkom since an outsider would be "inefficient" as he
\nor she would have to adjust to Telkom's working environment.<\/p>\n
"The candidates for the new directors will be taken from
\nwithin the company. I think there is little chance for an
\noutsider to make it," said Sugiharto, refusing to name the
\nstrongest candidates for the board of directors.<\/p>\n
Aside from reorganizing the management, another source with
\nthe state minister's office said the government would also change
\nthe company's management structure by adding two directorates;
\nthe directorate for investment and the directorate for
\ninfrastructure.<\/p>\n
But the government will scrap directorates for service
\nbusiness and network business and replace them with directorates
\nfor retail services and corporate accounts.<\/p>\n
Sugiharto, however, refused to confirm the changes in the
\ncompany's structure.<\/p>\n
Reorganization at Telkom has long been a sensitive issue
\ninvolving numerous vested interests as the firm contributes the
\nlargest amount of revenue to the state compared to other state
\ncompanies.<\/p>\n
Last year, Telkom recorded a net profit of Rp 6.12 trillion
\n(US$637 million) from an operational revenue of Rp 33.94
\ntrillion. In 2003, Telkom recorded a profit of Rp 6.08 trillion
\nfrom an operational revenue of Rp 27.1 trillion.<\/p>\n
The government also wants to be very careful in making changes
\nin the company, since the company has a significant role in the
\nJakarta stock market -- with the largest market capitalization.<\/p>\n
A serious problem in the company, such as corruption, will not
\njust cause massive losses for the state and the public in
\ngeneral, but will also negatively affect the movement of the
\nJakarta Composite Index.<\/p>\n
At present, Telkom has some 15 percent market capitalization
\nin the domestic bourse, meaning that a decline in Telkom's share
\nby a single digit would also drive the index down by 15 percent.<\/p>",
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