Govt to pay compensation to Telkom, Indosat

Govt to pay compensation to Telkom, Indosat

The Jakarta Post, Jakarta

The government has finally decided to pay cash compensation to
state-owned telecommunications firms PT Telkom and PT Indosat for
the early termination of their exclusive rights, Minister of
Transportation Agum Gumelar said on Thursday.

Agum said that the government would pay Rp 478 billion
(US$57.59 million) in compensation to Telkom, whose monopoly over
the domestic fixed line business ended last year rather than 2010
as originally planned.

Speaking to reporters after a meeting with Minister of Finance
Boediono, he said that the government would also provide Rp 178
billion in compensation to Indosat. The company's exclusive
rights over international call services end this year, instead of
2005 as originally scheduled.

Agum said that the compensation would be paid out of the
current state budget.

The termination of Telkom's and Indosat's exclusive rights is
part of the government's liberalization drive in the domestic
telecommunications industry. The program will open the way for
Telkom to run international telecommunications services, and for
Indosat to operate a fixed line business.

The publicly listed Indosat is now 41.9 percent controlled by
Singapore Technologies Telemedia, which bought its stake last
year.

The government owns around 15 percent of Indosat, but still
has a controlling 51.2 percent stake in publicly listed Telkom.

The compensation package was supposed to have been announced
last year, but was delayed as a result of a fierce debate over
the size of the package. Indosat was unable to roll out its local
fixed line business nationwide until the government provided the
compensation package.