Indonesia's telecom groups to name financial adviser
Indonesia's telecom groups to name financial adviser
SINGAPORE (Dow Jones): Five consortiums working to expand Indonesia's telephone service will soon jointly appoint a financial adviser to work on their proposals to restructure the country's telecommunications business.
Executives from the five met Friday in Singapore with four investment banks competing to be appointed. The four are Credit Suisse First Boston of Switzerland, Credit Lyonnais of France, Canadian Imperial Bank of Commerce and ABN-Amro Bank of the Netherlands.
An executive of one of the consortiums told Dow Jones Newswires on Sunday that a decision on the winner is likely before the end of August.
The five consortiums, each comprising Indonesian private investors and at least one foreign phone company, were hired by the Indonesian government in 1995 to expand and run phone service in five different regions of Indonesia. They have worked with the domestic state telephone company, PT Telekomunikasi Indonesia, which retained the sole right to install and run phone lines in Jakarta and the province of the East Java.
Among the foreign partners in the consortiums, known as KSOs, are France Telecom, MediaOne of the U.S., Telstra of Australia, Japan's NTT, Britain's Cable & Wireless and Singapore Telecommunications Ltd.
The KSOs have succeeded in substantially expanding the number of phone lines in Indonesia, but the country's economic crisis and political uncertainty have affected the business of the consortiums and PT Telkom, as the utility is known.
Also, the five KSOs and PT Telkom, as the utility is known, have had differences on operating and financial issues, leading the KSOs to want to change their partnership with Telkom when their current working agreement expires at the end of this year.
The Indonesian government has been making plans to reform the country's overall telecommunications business, including creation of a duopoly under which a new company could compete directly with PT Telkom in domestic service. A proposed new telecommunications law is currently under consideration by Parliament.
The KSOs have jointly prepared a preliminary proposal for the creation of a new company, tentatively called PT Constantinople, to enter the phone business. Under the proposal, the KSOs, Telkom's existing shareholders and the Indonesian government would be the original owners.
The KSO executive who was part of Friday's Singapore meetings said the financial adviser will help "push ahead plans to restructure Indonesia's communication business in concert with the government's blueprint for a duopoly."