Indosat given option to buy 'TPI' shares

Indosat given option to buy 'TPI' shares

JAKARTA (JP): Publicly listed international telecommunications
provider, PT Indosat, agreed yesterday to buy convertible bonds
worth Rp 150 billion (US$45.4 million) issued by PT Cipta
Televisi Pendidikan Indonesia (TPI).

Indosat's president, Tjahjono Soerjodibroto, said after
signing the deal that, with the purchase of the five-year bonds,
Indosat had an option to own up to 30 percent of TPI, a private
broadcasting station owned by President Soeharto's eldest
daughter Siti Hardiyanti Rukmana.

"This is the impact of the convergence (of telecommunications,
broadcasting and computer fields). We hope to fulfill each
other," he told reporters about the deal.

He said his company would prepare interactive multimedia
services through a series of expansions in multimedia businesses
already completed.

"This is a new spectrum which includes production house,
distribution, broadcasting and customer services," he said after
signing the agreement with Siti Hardiyanti Rukmana who is
popularly called Tutut.

"TPI has a bright future. Just like an airplane, TPI's load
factor is now just 20 percent and has the chance to increase the
rate," he added.

At present, Indosat partly owns PT Datakom Asia, a holding
company controlling a pay-television provider and a satellite
operator; Suginami, Japan-based cable television station; PT
Multi Media Asia, a multimedia satellite operator and PT YTC, a
multimedia production house.

Tutut said that TPI would use the funds from Indosat to
develop relay stations in some areas in the country, to improve
its programs and services and to pay some of its liabilities.

Professionalism

"Indosat buys the bonds not because it empathizes with TPI and
not because I'm the daughter of President Soeharto. This is about
professionalism and the prospective future of TPI," she said.

TPI is one of five private television stations. The company
has so far suffered from financial problems. Sources said that by
the end of August, TPI would have Rp 406 billion total assets and
debts of Rp 151 billion.

Tutut admitted yesterday that TPI's management is now under an
improvement plan.

TPI's director Ishadi S.K. said that TPI planned to float its
shares on the domestic stock exchanges in 2000.

He said that about 35 percent of the broadcasting station
would be sold to the public during the initial public offering
(IPO).

After the IPO, TPI will be 30 percent owned by Indosat, 35
percent by the public and the remaining 35 percent by Mbak Tutut,
he said, adding that at the time of the share flotation, TPI's
total assets would reach Rp 700 billion.

In an attempt to make TPI a better station, Tutut also signed
yesterday an agreement with the Australian-based Seven Network
Ltd., a company which owns several studios and facilities in
various cities in Australia.

The agreement stipulates that the Seven Network, which owns
Channel-7 in Australia, will supply TPI with broad ranging
management expertise and technical services.

Chief operating officer of Seven Network Asia, Doug Fraser,
said that TPI would become the most competitive television
network in Indonesia. "We will be working together as an integral
part of TPI's management team to assist with launching the
network into a new broadcasting era in Indonesia."

Ishadi said his company would benefit from the cooperation
with the 40-year-old Seven Network, which will become the host
broadcaster for the Sydney 2000 Olympic games.

Minister of Information R. Hartono, who witnessed the signing
yesterday, said the broadcasting law which was signed by
President Soeharto on Sept. 29, allows broadcasting stations to
cooperate with overseas stations for mutual symbioses. "Other
stations intending to make similar plans must ask permission from
the government."

Hartono said that under the new law, television stations were
allowed to sell their shares to the public. "But they are still
required to have government approval." (icn)