France Telecom sees no reason to quit Indonesia

France Telecom sees no reason to quit Indonesia

JAKARTA (JP): France Telecom, a major shareholder of PT
Pramindo Ikat Nusantara, would like to continue its cooperation
with PT Telkom despite some "differences" with the state-owned
telecommunications operator, the company's chairman said on
Wednesday.

France Telecom chairman and CEO Michel Bon said he saw no
reason why the existing cooperation with Telkom should be ended.

"I do not see clearly why it (the cooperation) should be
finished; I think it has brought good things to Sumatra," Bon
said during a media conference.

But Bon, who is in Jakarta on an official visit, acknowledged
that low telephone rates in the country had become a major
problem for Pramindo.

Pramindo, which provides telephone services in Sumatra, is one
of five consortiums licensed by the government in 1996 to provide
telephone services under joint operation schemes, or KSOs, with
Telkom.

The other four consortiums are PT AriaWest International,
which operates in West Java; PT Mitra Global Telekomunikasi
Indonesia (MGTI) in Central Java; PT Dayamitra Telekomunikasi in
Kalimantan; and PT Bukaka SingTel International, which operates
in eastern Indonesia, including Bali.

Some of the world's largest telecommunications companies,
including America's AT&T, Britain's Cable & Wireless Plc.,
Australia's Telstra, Japan's Marubeni Corp., Sumitomo Corp. and
Itochu Corp, Singapore Telecom and Hong Kong's TM Communications,
are also involved as shareholders in the consortiums.

The KSOs were due to end in 2010 but because of ongoing
conflicts between Telkom and its partners, the government has
agreed to a proposal to revise the collaboration schemes.

Five options have been drawn up by Telkom and the government
to determine the future of the partnership arrangements.

The five options include revising the existing cooperation
schemes and allowing Telkom to buy out the interests of the
partners.

Bon said Pramindo could not yet decide on an option as the
government had not settled the question of pricing.

"The price question would have to be settled first if we want
to look at the next step," he said.

In response to the government's recent announcement it hoped
to increase telephone rates by 45.49 percent in stages over the
next three years, Bon said he would like to know how the
government would set the stages of the increase.

If Telkom were eventually to choose to terminate Pramindo's
contract, the company's operating debts would also have to be
considered, he said.

"Pramindo has debts in U.S. dollars and it is unclear how
Telkom could face such a debt, so let's see when it comes," Bon
said.

If the KSO problem has not been settled by the end of the
year, Pramindo will extend the deadline for resolving the
questions by three months, he said, adding that it would also
depend on the condition of the company.

"If Pramindo is desperate, then we will act desperately; if we
can go on for the next three months then we will," Bon said.

France Telecom owns 40 percent of the shares in Pramindo. The
other shareholders are Astratel (35 percent), Indosat (13
percent), Marubeni (8 percent), IFC (3 percent) and NMP Singapore
(1 percent).

Bon is in Jakarta to introduce Jean-Marie Gauthier, who will
replace Gilles Vaillant as managing director of Pramindo. (tnt)