$250m allotted for telecoms project

$250m allotted for telecoms project

BALIKPAPAN, East Kalimantan (JP): PT Dayamitra Malindo, a
private firm awarded a contract to develop telecommunications
networks in Kalimantan, is to spend US$250 million on installing
237,000 telephone lines in three years.

The state-owned domestic telecommunications carrier PT Telkom
yesterday handed over the management of its telecommunications
networks throughout Kalimantan to Dayamitra under a transfer
agreement signed by Telkom's president, Setyanto P. Santosa, and
Dayamitra's president, Philip W. Green.

The transfer of the management was based on a 15-year joint
operation contract signed by the two parties last October.

Dayamitra is one of the five consortia elected last October to
develop telecommunications networks in five areas of Indonesia as
part of a government program to install five million telephone
lines within the current Sixth Five-Year Development Plan period,
which will end in March 1999.

Telkom, expected to receive a total revenue of Rp 15 trillion
(approximately $6.4 billion) from the five consortia within the
contract period, will install another three million telephone
lines in the greater Jakarta area and East Java. The management
of these areas will remain under its own control.

The handing over of the other four telecommunications areas --
Sumatra, Central and West Java, as well as eastern provinces of
the country -- was completed in January.

Dayamitra is 29.03 percent controlled by a Telkom subsidiary,
Intidaya Sistelindomitra, and 25 percent by Cable & Wireless of
Britain which last month replaced Malaysia Telekom as a
shareholder. The other parties with stakes in Dayamitra are PT
ALatieF Nusakarya, a subsidiary of the ALatieF Corporation, which
was established by Minister of Manpower Abdul Latief (24.19
percent), TM Communications of Hong Kong (9.68 percent), the
Indonesian tea producer cooperative Kopthindo (2.42 percent) and
the Singapore-based American International Group (9.68 percent).

Name

The presence of Cable & Wireless may encourage Dayamitra to
change its full name -- Dayamitra Malindo -- which was made to
reflect the participation of the Malaysian and Indonesian
parties.

Under the contract signed last year, Dayamitra has to install
new telephone lines by 1999 and manage them for 15 years along
with the existing fixed telephone lines already installed by
Telkom.

"I hope Dayamitra will be able to see through the installation
of 400,000 or even 500,000 new telephone lines by 1999,"
Secretary-general of the Ministry of Tourism, Post and
Telecommunications Jonathan L. Parapak said after witnessing the
signing of the hand-over agreement yesterday.

Telkom's general manager for Kalimantan, Bajoe Narbito, said
that there are currently 194,583 telephone lines and 122,063
subscribers in the island.

"The 549,101-square-kilometer Kalimantan currently has a
population of 10 million people. The phone density in the island
is 2.02 lines for each 100 people," he said, adding that Telkom's
1,600 employees in the island will join Dayamitra.

Setyanto said that his company will receive a minimum revenue
of Rp 130 billion (US$55.6 million) this year from Dayamitra as
compensation for the operation of its existing telephone networks
in Kalimantan, plus 30 percent of the profits to be gained from
their operation.

Dayamitra should have paid Rp 160 billion to Telkom if the
hand-over was made in January.

Dayamitra's chief commissioner, Tanri Abeng, said that his
company is able to conduct the project without any overseas
partners "but the government requires us to have a foreign
partner."

Cable & Wireless' representative director in Indonesia,
Reginald W. Ross, said that he was quite happy as his company was
finally qualified to partly own a telecommunications firm in
Indonesia after losing in three of the country's
telecommunications tenders.

Cable & Wireless has failed to acquire a stake in PT Satelindo
(which selected DeTeMobil of Germany to buy 25 percent of its
shares), and in PT Telkomsel (which selected PTT Telecom
Netherlands to acquire 17.28 percent of its shares). Cable &
Wireless, in cooperation with PT Elektrindo Nusantara, also
failed at a pre-qualification phase for the development of
telephone networks in Sumatra, which later went to PT Pramindo
Ikat Nusantara. (icn)