Telecom dispute may hurt public interest<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The likely collapse of the asset transfer deal between state
\ntelecommunications giants PT Telkom Tbk and PT Indosat Tbk may
\nhave scant impact on Indosat's expansion plan -- at the same
\ntime, however, it could cause true damage to the interests of the
\nmany people in Yogyakarta and Central Java in need of better
\nservice, a noted analyst said.<\/p>\n
According to Roy Suryo, residents of Yogyakarta and Central
\nJava have basically welcomed the deal, which would transfer
\nTelkom's assets in both provinces to Indosat, as they expect the
\nnew operator to provide improved service.<\/p>\n
\"Indosat's plan to engage in fixed-line telephone business
\nwill not end with the collapse of the deal; if the company fails
\nto take over Telkom's assets in Divre IV, it could set up its own
\nfixed-line networks.<\/p>\n
\"It's the Yogyakarta and Central Java people who will lose out
\nthe most if this deal falls through, because it will deny them a
\nchance to get better service from a new operator,\" Roy told The
\nJakarta Post on Friday.<\/p>\n
Divre IV denotes Telkom's operations in the Yogyakarta and
\nCentral Java provinces.<\/p>\n
Roy was commenting on the intensive campaigns being waged by
\nTelkom's Divre IV workers to foil the deal that will transfer
\nTelkom's Divre IV assets to Indosat. Thousands of these workers
\nrallied in Jakarta on Thursday to protest the deal.<\/p>\n
Telkom and Indosat signed a deal in May to end their cross-
\nownership of the country's telecommunications industry.<\/p>\n
Under the deal, Telkom will acquire Indosat's 35 percent stake
\nin the country's biggest cellular phone provider, PT
\nTelekommunikasi Indonesia (Telkomsel), while Indosat will get
\nTelkom's assets in Divre IV.<\/p>\n
Indosat is one of two operators licensed by the government to
\noffer international calling services, while Telkom has been
\nholding a monopoly over the country's fixed-line phone service
\nnow for decades.<\/p>\n
The deal will pave the way for Indosat to enter other areas of
\nbusiness besides the international phone business where it has
\nbeen facing stiff competition from Internet providers.<\/p>\n
Through the deal, the government hopes to create two strong
\ntelecommunications companies in anticipation of strong
\ncompetition when the government liberalizes the sector in 2003.<\/p>\n
The deal set several stipulations -- notably including an
\nagreement on labor standards -- for Telkom and Indosat to meet by
\nthe end of this month. If they fail to meet the deadline, the
\ndeal will be considered void.<\/p>\n
Given the strong opposition of the Divre IV workers to the
\ndeal, Telkom and Indosat may not be able to strike an agreement
\non labor matters, thus leaving the deal nullified.<\/p>\n
Roy said he believed that Indosat and Telkom's top management
\nare still committed to executing the deal, as they are aware of
\nthe benefits of the deal for both companies.<\/p>\n
But, he voiced suspicions that the demonstration was covertly
\nsponsored by Telkom's local management in Divre IV which fears
\nlosing their jobs, and the possibility of Indosat discovering
\nmismanagement practices during the audit process.<\/p>\n
\"The protesting Divre IV workers don't actually have support
\n-- even from Telkom's top management. So it's strange that
\nMinister of Communication Agum Gumelar seems to have given them
\nsome sympathy. Does the minister really understand the
\nsituation?\" Roy wondered aloud.<\/p>\n
He also expressed concerns over the actions of Divre IV
\nworkers, which he referred to as \"childish.\"<\/p>\n
\"For instance, they have threatened to will burn down all of
\nTelkom's facilities in Divre IV if it is transferred to Indosat;
\nthat's criminal ... do they think that the assets belong to their
\nancestors?\" Roy asked.<\/p>\n
Meanwhile, Indosat's finance director, Habimono Koesoetjono,
\ninsisted that the potential failure to acquire the Divre IV will
\nnot mean the end of Indosat's expansion plan into the fixed-line
\nphone business.<\/p>\n
\"Whether the deal goes through or not, Indosat has prepared
\nsteps. We shall go ahead because, in August of 2002, we shall
\nenter the fixed-line business,\" Habimono told The Post, without
\nelaborating.<\/p>\n
For Indosat, Roy said, it was cheaper to acquire the Divre IV
\nthan to set up its own network, since it no longer needs to work
\nat developing networks and a customer base; therefore, it would
\nget quicker returns on its investment.<\/p>\n
A failure to acquire Divre IV would not stop it from realizing
\nits expansion plan, but instead would only force it to invest
\nmore in the development of its own network.<\/p>",
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