Alcatel Shanghai Bell looking at RI investment opportunities

The largely underdeveloped telecommunications sector is offering investment opportunities to foreign firms. One firm that has expressed interest is Alcatel Shanghai Bell (ASB), a telecommunications equipment provider partly owned by the Chinese government. The Jakarta Post's Primastuti Handayani spoke to PT Alcatel Indonesia president director Jan Glinski and ASB Vice president of business development Olivia Qiu during the ASB executives' recent visit to Jakarta. The following is an excerpt from the interview.

Question: I have learned Alcatel is exploring the possibility of investing here. Can you tell me what kind of investment you would make?

Jan Glinski (JG): If we can backtrack a little bit, Alcatel has been here for about 30 years. We did not establish factories but we invested quite a lot in bringing technology here.

Right now, we'd like to make our Indonesian customers and the business community aware of the fact that we have -- which is not widely known here -- a very strong operation in China.

Alcatel Shanghai Bell is a 50-50 joint venture with the Chinese government. It's partly owned by the Chinese government and partly by Alcatel as a big multinational company.

In Indonesia, we have a number of successful partnerships.

We are also looking for an opportunity to emulate the model that we already have in China, in which the ASB could play a role.

Definitely, in the Asia Pacific, we consider Indonesia, after China, the second-most important market in terms of potential and growth and, therefore, we would like to continue our development here using the resources.

Earlier this year, the government held the Infrastructure Summit. Does Alcatel plan to take part in the infrastructure projects offered?

JG: Yes, we are looking at a number of projects, including the so-called Palapa project which is a fiber optic ring around Indonesia. We hope to discuss (that) further.

I understand the second edition of the summit will be in November.

Frankly speaking, what is needed is the government's promise of financial and legal certainty in Indonesia. Those sometime slow down the eagerness of foreign companies to invest in Indonesia.

Olivia Qiu (OQ): I just wanted to confirm what Jan said.

After China, Indonesia is the second-biggest market with only 5 percent mobile (phone) penetration. There is a lot of potential here.

What kind of obstacles stand in the way of investment here?

JG: One example is frequencies and licenses. The frequencies will be reintroduced and the telecommunications spectrum will be reallocated. This naturally has to be cleared before people are ready to commit a large amount of money for investment.

General issues like labor practices or labor policies make it not so easy in Indonesia to elastically deal with the workforce. Sometimes if you want to restructure, the cost of restructuring is very high because of the prevailing regulations.

But there is a constant improvement -- things are improving.

OQ: From the operator side, especially Chinese operators, the issue is that the competition in the market is very attractive, and it is very rapid already.

JG: An interesting case was that of China Mobile and China Telecom, which wanted to invest in Indonesia last year. But the speed of the development in the market in Indonesia was too fast for Chinese companies to follow.

So, in the end, Telekom Malaysia took the position. (Telekom Malaysia bought a 27.3 percent share in Indonesia's third-largest cellular operator PT Excelcomindao Pratama, which has the XL brand.)

Apart from the Palapa project, what other kind of projects are you interested in?

JG: I mentioned palapa because I believe in telecommunications there are only one or two projects (on offer).

The only thing to be considered is the universal service obligation (USO), which right now (information and communications) minister Sofjan Djalil has commented on several times.

But right now the government has to provide telecommunications and internet access for the entire community.

This is the challenge, therefore there's the obligation to provide USO, which is done either by satellite or submarine, of which Alcatel is the supplier for the submarine.

I stress Alcatel's position worldwide is in infrastructure, which is not only telecommunications infrastructure but also in data transmitting as well as security systems.

In the energy sector, companies like PLN, PGN and Pertamina have telecommunications service for their own branches and also services to monitor their work. Alcatel itself provides high technology in the energy sector.

Then you have the government -- as you know governments worldwide are more and more into e-gadgets, which provide more access to citizens.

One example was the recent incident of the President's (Susilo Bambang Yudhoyono) text messages. What we are trying right now, with the presidential office, is to offer our technology. Alcatel is the leader of a technology called contact centers.

Of course, the President can still give out his cell phone number but this is probably not the best way for the President to reply.

The best would be having compact center technology that can serve SMS, telephone calls, internet -- fax as well.

OQ: The call center could help him to answer the messages. But there's no system in the world that can support it.