Idea of merging Telkom, Indosat hailed<\/p>\n
JAKARTA (JP): Legislators welcomed on Monday the idea of
\nmerging two state-owned telecommunications operators, PT Telkom
\nand PT Indosat, as a strategy to survive the impending open
\nmarket competition.<\/p>\n
The outgoing chairman of House of Representatives Commission
\nIV for telecommunications, tourism and transportation,
\nBurhanuddin Napitupulu, said the merger would certainly enable
\nlocal operators to preserve their position in the country's
\ntelecommunications sector.<\/p>\n
\"It's a good idea to merge Telkom and Indosat. If they are
\nmerged they will become a solid and strong operator,\" he told The
\nJakarta Post.<\/p>\n
Another member of Commission IV, who is also the deputy
\nchairman of the United Development Party (PPP), Ali Hardi
\nKiaidemak, told the Post that he also supported the merger,
\nbelieving it was better to have one strong operator with fully
\nintegrated products and services than two operators with
\ndifferent fragmented operations.<\/p>\n
He said, however, a thorough study and preparation process
\nshould be made before merging the two firms. \"The terms of
\nreference in the merger deal must equally benefit both parties,\"
\nhe said when asked to comment on the suggestion made by a Telkom
\ntop official.<\/p>\n
Telkom operational director John Welly said on Saturday that
\nthe two state-owned telecommunications providers should be merged
\nto improve their competitiveness in facing competition from
\ninternational telecommunications giants.<\/p>\n
The chairman of the Indonesian Telecom Society (Mastel),
\nSukarno Abdulrachman said, however, a merger between the two
\nfirms would be a setback.<\/p>\n
\"I am not in favor of the idea of merging Telkom and Indosat.
\nEach company should stand alone as it is now,\" he said.<\/p>\n
He said Telkom and Indosat should not be too concerned in
\nfacing the open market competition because they would still have
\ntime to prepare themselves before new players directly enter the
\nmarket at the end of both companies' current exclusive rights.<\/p>\n
Telkom currently holds the exclusive rights to provide local
\nfixed line and fixed wireless telecommunications services
\nnationwide until 2010 and domestic long distance services until
\n2005.<\/p>\n
Indosat and its joint venture PT Satelit Palapa Indonesia
\n(Satelindo) hold exclusive rights for overseas long distance
\nservices until 2004.<\/p>\n
The new telecommunications law, which will be effective in May
\nnext year, however, allows an early termination of the rights
\nsubject to the agreement between Telkom or Indosat, the
\ngovernment and the new local or foreign players. The latter
\nshould compensate Telkom or Indosat for the premature ceasing.<\/p>\n
Sukarno said the better way to strengthen Telkom and Indosat
\nwas to let each company invite foreign giant operators to be
\nstrategic partners.<\/p>\n
\"That way, we can still have both companies exist but with
\nmore capital and stronger service capability to compete against
\neach other or new players,\" he said.<\/p>\n
Separately, Minister of Communications Giri Suseno
\nHadihardjono told journalists in Bandung that the government
\nwould no longer intervene in Telkom's policy and handling of its
\nbusiness relationships with the private sector.<\/p>\n
\"The government no longer needs to intervene in Telkom's
\nactivities,\" he said.<\/p>\n
Telkom president A.A. Nasution called on the government last
\nweek to stop interfering in his company's handling of its joint
\noperation scheme (KSO) with five private local and foreign
\npartners. (cst\/43)<\/p>",
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"sponsor": "Okusi Associates",
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