Government to lower telecoms construction target

Government to lower telecoms construction target

JAKARTA (JP): The government will lower the target for the
country's telecommunications development to a more realistic
level, bearing in mind that the country has yet to overcome its
economic crisis, a senior official has said.

Minister of Communications Agum Gumelar said on Thursday that
the government was in the process of reviewing the target of
building four million fixed telephone lines across Indonesia to
reflect both the public's purchasing power and the rupiah's
exchange rate.

"We are experiencing difficulties in reaching the target due
to the weakness of the rupiah exchange rate, finalization of
joint operation schemes (KSOs), and delays in the rate increase
plan," he said in a hearing with House of Representatives
Commission IV for infrastructure and transportation affairs.

Agum said that the four million target had been established
based on predictions of demand, the buying power of the public,
and costs of construction prior to the economic crisis.

"Because the crisis is not over yet, it would be reasonable to
lower the development target," he said.

The government had set a development target of four million
fixed telephone lines by 2004, of which state-owned
telecommunications companies (telcos) PT Telkom and PT Indosat
were expected to contribute 1.9 million and 1.5 million fixed
telephone lines respectively.

The remaining 600,000 fixed telephone lines were to be
constructed by satellite-based telco PT Pasifik Satelit Nusantara
(PSN) and various local operators such as Ratelindo.

Director general of Posts and Telecommunications Djamhari
Sirat said that Telkom and Indosat were no longer a wholly state
company but a public company.

"Investors would be angry if we insisted on a high target and
put the companies' financial positions in danger," he told
reporters outside the hearing.

Djamhari said that a target could be set, but how well it was
achieved was still largely dependent upon external conditions
like market demand, and the political and economic situation.

Separately, Telkom's director of operations and marketing
Komarudin Sastrakoesoemah said that the target should be flexible
and constantly reviewed in accordance with changes in market
conditions.

"A target should be a nominal one, so that if it is exceeded
it will be an achievement," he told reporters, adding that it
should be a realistic figure.

Komarudin said that Telkom's shareholders were always keeping
a close watch on how many phone lines were targeted by the
government and how many Telkom was expected to build.

"If they think the figure is realistic then the value of our
shares will go up because people will want to buy; on the
contrary, it will go down if shareholders believe the target is
unrealistic," he said.

Telkom was capable of building 1.5 million to 1.9 million
phone lines in three years provided that within that period the
government also increased telephone rates by at least 45 percent,
Komarudin said.

"Without the rate increase we could build only 160,000 phone
lines per year," he added.(tnt)