Govt asked to form team to review telecom merger

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)