Telkom, Indosat launch new GSM operator<\/p>\n
JAKARTA (JP): Indonesia's two state-owned telecommunications
\ngiants, PT Telkom and PT Indosat, launched a new company
\nyesterday to participate in the Global System for Mobile Phones
\n(GSM) cellular business.<\/p>\n
"We expect the new firm, called PT Telkomsel, to be operating
\nwithin the next seven months," the new company's President
\nDirector Kusmarihati Sugondo said at the launching ceremony at
\nthe Telkom building in South Jakarta yesterday.<\/p>\n
Telkomsel, which currently runs GSM operations on Batam and
\nBintan islands in Riau, was formed with a basic capital of Rp 650
\nbillion (about US$295 million). It is 51 percent owned by Telkom,
\nwhich has a monopoly over the domestic telecommunications market,
\nwhile the rest is owned by Indosat.<\/p>\n
Indosat is listed on both the Jakarta Stock Exchange and on
\nthe New York Stock Exchange. Telkom is scheduled to follow suit
\nby the end of this year, according to officials.<\/p>\n
Kusmarihati, a former senior staff member at Telkom, also said
\nyesterday that Telkomsel would soon look for a foreign investor
\n"for the sake of technology transfer."<\/p>\n
In Indonesian business circles there have been rumors that
\nNynex of the United States, France Telecom or PTT Netherlands are
\npossible partners for Telkomsel.<\/p>\n
Telkomsel is expecting to enter the GSM market in the Jakarta
\narea by next year, Kusmarihati said.<\/p>\n
Compete<\/p>\n
This means that Telkomsel will compete directly with PT
\nSatelit Palapa Indonesia (Satelindo), Indonesia's other existing
\nGSM operator, which also offers international telecommunications
\nservices and controls the Palapa-C satellites.<\/p>\n
To date Satelindo has controlled the GSM market for the
\ngreater Jakarta area and some of West Java. It has also secured a
\nlicense to operate in Surabaya, East Java.<\/p>\n
Satelindo, which started its GSM operations in September 1993,
\nis 45 percent owned by a subsidiary of the Bimantara Group, a
\nconglomerate chaired by one of President Soeharto's sons, 25
\npercent by DeTeMobil, a subsidiary of Deutsche Telekom of
\nGermany, 22.5 percent by Telkom and 7.5 percent by Indosat.<\/p>\n
The government has not yet stipulated limitations on the
\nnumber of GSM operators in the industry. It has said only that
\nall foreign investment in the telecommunications sector must
\ninvolve either local partners or "the governing body", an
\nexpression usually understood to refer to Indosat and Telkom.<\/p>\n
A foreign-investment consultant familiar with the GSM sector
\ntold The Jakarta Post yesterday that the government was seeking
\nto lure multinational companies to invest in Indonesia.<\/p>\n
"The extend of interest is incredible, although the
\nregulations are still somewhat vague," said the consultant, who
\nrequested anonymity.<\/p>\n
In the meantime, another informed source in the GSM sector
\ntold the Post yesterday that the government was processing the
\nproposal of yet another private consortium seeking to enter the
\nsector.<\/p>\n
The source, who also requested anonymity, said the consortium
\nwas made up of U.S.-based Bell Atlantic and PT Rajasa Hazanah
\nPerkasa, which is led by Hutomo Mandala Putra, President
\nSoeharto's youngest son.<\/p>\n
Despite the apparent surge in foreign interest, which is
\nlargely based on projections of economic growth and a fast pace
\nof infrastructure development, the immediate prospects of GSM are
\nunclear.<\/p>\n
Analysts noted that the sales of GSM handsets could be
\nhindered by their high prices, currently ranging between Rp 2
\nmillion and Rp 6 million in Jakarta.<\/p>\n
The main reason for such high prices is the fact that all GSM
\nhandsets are imported. In addition, their prices in the Jakarta
\narea are practically controlled by the sole operator, Satelindo.<\/p>\n
The prices of GSM handsets in Batam and Bintan, which are
\nlocated within a bonded area neighboring Singapore, are slightly
\ncheaper because imports into those islands are exempted from
\nduties and value-added tax.<\/p>\n
Selling GSM handsets had proven more difficult than expected,
\nSatelindo executives have revealed.<\/p>\n
Raymond Chatab, Satelindo's marketing director, said in
\nFebruary that his company had failed to meet the target of
\nselling 30,000 units by the end of last year.<\/p>\n
Raymond said that Satelindo expected to net only 60,000 GSM
\nsubscribers this year, far lower than the initial target of
\n100,000.<\/p>\n
In the meantime, Adi Rahman Adiwoso, Satelindo's commerce
\ndirector, said recently that his firm would cease to control the
\nprices of GSM handsets. Instead, it would allow the market to
\ndetermine prices in order to increase the number of subscribers,
\nhe said. (hdj)<\/p>",
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