Being selective vital in 'wartel' business

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)