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."