Being selective vital in 'wartel' business

JAKARTA (JP): Owners of telecommunication kiosks, locally known as wartel, have urged publicly-listed telecommunication firm PT Telekomunikasi Indonesia (Telkom) to be more selective in granting lines to new applicants.

Interviewed separately by The Jakarta Post on Tuesday, some wartel owners in Jakarta and Tangerang said Telkom had failed to conduct a market feasibility study before granting newcomers lines and permits.

"Many areas have more than one wartel but don't have enough potential customers," a kiosk owner, Sriyanto Tjokro Sudarmo, who is also the chairman of the Indonesian Association of Wartel Owners (APWI), said.

Another owner, Evi, said that after she opened her wartel on Jl. Palmerah Barat in West Jakarta early this year, another telephone kiosk opened only a few houses from her business a month later.

"If I had known that there would be a new wartel opening close to mine, I would have found another place," Evi said adding that her business was slow due to the close proximity of the neighboring wartel.

But officials from Telkom's 2nd regional division in charge of areas in Jakarta, Bogor, Bekasi, Tangerang, Serang, Krawang and Purwakarta told the Post separately that their office no longer needs to limit the distance between two kiosks because businesses are still able compete in free trade.

Asep Tatang, external public relations coordinator at Telkom's 2nd regional division office, said that until Nov. last year, Telkom policy ruled that the office would not grant a new wartel permission to open if it was within 500 meters of an existing wartel.

"But the policy has been lifted because we found that there were more than enough potential customers for one wartel in many areas," Asep said.

According to him, the decision was made based on regular market surveys conducted by his office.

The surveys, he said, are still carried out regularly to find out about potential customers in certain areas based on the addresses of new applicants.

Head of the Tangerang Telkom office, Harry John, shared Asep's remarks, saying that the decision to no longer adopt the distance restriction was also aimed at limiting the available space for scalpers in the business.

"One who lives next door to an existing wartel could apply for a new kiosk as long as he or she can meet basic requirements, such as identity cards, ownership documents for the place and an estimated calculation of the business, and whether there are lines available in the area," he said.

Telkom's Tangerang office, he added, even requires applicants to only open their businesses on their own properties, not on rented ones.

"Under the decisions, the brokers, who used to earn money by selling their permits, which they got by borrowing other people's KTPs (identity cards), face difficulties today in offering their licenses," said Harry, who is to be promoted to head of the Central Jakarta Telkom office next month.

"It's a free and promising business for everybody. So, there must be competition," he said.

According to Asep, his office has recorded -- until March this year -- 7,256 wartel with a total of 33,934 telephone lines in the areas under its supervision.

The number of kiosks, he added, is almost two times Telkom's estimated target of 3,813 kiosks for the period.

In Tangerang alone, the local Telkom has so far issued licenses to some 1,900 kiosks.

"We receive bulks of application forms every day, some of which we can not fulfill due to several reasons, particularly the absence of available installed lines," Harry said.

Business matters

But a staffer at Asep's office disclosed that the decision to abolish the minimum 500 meter distance was made based solely on business considerations.

"If we keep applying the policy, people will go to Ratelindo," a staff member, who refused to be named, said, referring to another telephone service provider.

A wartel owner, Widyanto, 35, however, said that it was unlikely to suffer losses from the changed business regulations.

"It's only a matter of time when you'll reach the break-even point and start earning (money)," Widyanto said.

Widyanto who, together with his business partners, already owns four telecommunication kiosks in West Jakarta said that they only had enough money to open one wartel when they started the business in 1997.

"Today we can earn a net profit of between Rp 6 million to Rp 7 million (per month) for one wartel," Widyanto said.

He suggested that anyone who wishes to get into the wartel business should firstly plan their business strategy carefully.

"The first thing you've got to have is a strategic location. All of our telecommunication kiosks are located at spots where people usually change their modes of transportation," Widyanto said.

Widyanto said Rp 17.5 million was needed to open a new wartel excluding the rental cost of the site.

With that money, wartel owners would be able to have four telephones with booths, one fax machine, and one computer unit to operate the system, Widyanto said.

In terms of income sharing, Telkom will take 50 percent of income under Rp 1 million, 60 percent of income between Rp 1 million and Rp 3 million, and 77.5 percent of incomes of more than Rp 3 million.

For international direct connections, wartel owners only get eight percent of the total income.

Sriyanto, from the APWI, said that his organization was trying to push Telkom to increase the wartel owners' share in international calls.

"The current rate is unfair to us," Sriyanto said. (08/bsr)