Fri, 08 Dec 2000

Govt asked to form team to review telecom merger

JAKARTA (JP): Legislators have urged the government to establish an interdepartmental team to review its stance on a proposal to merge telecommunication companies PT Telkom and PT Indosat.

Sadjarwo Sukardiman, the chairman of the House of Representative's Commission IV for infrastructure and transportation affairs, said on Thursday the establishment of the team would be needed to find a fair solution on the proposed merger.

"I have asked Pak Agum to establish a small team comprised of the coordinating minister for the economy, the minister of finance, the minister of transportation and telecommunications, and the national development planning board (Bappenas)," he told The Jakarta Post.

The team would report to a joint commission, comprising Commission IV and Commission IX for financial and development planning affairs, Sadjarwo said.

"The team would report to Commission IV on technical matters, and to Commission IX on investment matters," he said.

Minister of Transportation and Telecommunications Agum Gumelar earlier said that the government would not condone the merger because it was against the government's blueprint for the development of telecommunications.

According to the blueprint, the government would support both companies into becoming full fixed service providers, revoke their exclusivity rights, and let both compete for the local telecommunications market.

"The plan was to raise both companies into full service providers, then sell one of them when its price was high enough," Sadjarwo said.

He said that the plan was unrealistic because it would take a long time and involve a lot of money to build two companies at the same time.

"When foreign companies start entering the market, both companies are more likely to collapse than have a higher value," Sadjarwo said.

The telecommunications sector is one involving high technology which changes rapidly, he explained, adding that it is not possible to catch up with other, more advanced companies, in a short time.

Sadjarwo said that the House urged the government to make a decision on what to do with Telkom and Indosat as soon as possible, either to merge the two companies, to stick to the original plan and let the companies have a temporary duopoly, or get one company to buy the government's shares in the other.

The government owns 75 percent interest in Telkom, and 65 percent in Indosat.

The idea of a merger between the two publicly-listed companies has been voiced many times before, especially by Telkom who argued that a merger would leave Indonesia with a strong telecommunications company that could take on any competition from foreign companies.

Telkom earlier said that it has set aside Rp 6.9 trillion ($726 million) to buy out the government's shares in Indosat.

Sadjarwo said the House would leave the decision to the government and the shareholders, but asks that no matter the decision, the country should benefit, that it should take the people's interest to heart, and that the people should be able to have easy access to communications wherever they are.

"Looking at the condition now, 97 percent of our population still do not have telephony access, that has to change," he said.

Sadjarwo said it was not impossible for Indosat to buy out the government's shares in Telkom, as opposed to Telkom acquiring Indosat.

"As we all know, Telkom still has a lot of problems, not least with its joint cooperation scheme (KSO) partners," he said.

Separately, Telkom president Muhammad Nazif reasserted the need for Indonesia to have a strong telecommunications company in the face of open competition.

He was quoted by Antara on Thursday as saying that even with the merger between Telkom and Indosat, Indonesia would still be far behind Telekom Malaysia Berhad and miles behind Singapore Telecommunications Ltd. (tnt)