Indosat hails joint venture plan with MGTI for C. Java

JAKARTA (JP): State-owned telecommunications company PT Indosat said it welcomed the idea of a joint venture with PT Mitra Global Telekomunikasi Indonesia (MGTI) to manage telecommunications services in Central Java and Yogyakarta.

Indosat's finance director Habimono Koesoebjono said the company supported the joint venture plan because it was easier to manage than the joint operation (KSO) system which MGTI now had with state-owned company PT Telkom.

However, the plan will have to wait until Indosat's acquisition of Telkom's rights and obligations in MGTI are finalized, he said.

MGTI is one of the five operators of joint operation systems with Telkom which were licensed in late 1995. The other four are PT AriaWest International for West Java, PT Paramindo Ikat Nusantara for Sumatra, PT Dayamitra Malindo for Kalimantan and PT Bukaka Singtel Indonesia for eastern Indonesian areas.

Indosat's acquisition of Central Java and Yogyakarta's telecoms operations was part of a US$1.5 billion transaction between the two state companies in May to end with their crossholdings in a number of telecoms businesses.

The deal involving Telkom's rights in the Central Java and Yogyakarta telecommunications regions -- also known as regional division (Divre) IV -- was valued at $375 million.

The other transactions include the sale of Indosat's 35 percent stake in cellular phone company PT Telkomsel to Telkom worth $945 million and Indosat's purchase of Telkom's 22.5 percent shares in cellular phone operator PT Satelindo for $186 million.

The finalization of the transaction is still subject to certain conditions, including the completion of the Telkomsel and Satelindo transactions, the granting of licenses for local and long-distance phone services to Indosat by the government, and the execution of interconnection agreements, Habimono said.

"We still have several conditions to meet, but we have time until the end of January next year," he said, without elaborating.

MGTI is 32.5 percent owned by PT Widya Duta Infotel, 30 percent by Indosat, 20 percent by Australia's Telstra Global Ltd., 15 percent by the United Kingdom's NTT Finance Ltd and 1.25 percent each by Japan's Sumitomo Corp. and Itochu Corp.

Earlier MGTI's president Sutrisman said its shareholders had agreed to continue its operations in Central Java and Yogyakarta with Indosat but under a new joint venture company. (tnt)