Indosat has new boss amid political parties' intervention

JAKARTA (JP): Shareholders of publicly listed international telephone operator PT Indosat approved on Thursday the appointment of Hari Kartana as new company president amid reports of intervention by political parties.

The shareholders also approved the appointment of Budi Prasetyo as director of corporate development, Garuda Sugardo as director of operations, Guntur Siregar as director of commerce and Habimono Koesoebjono as director of finance.

Indra Setiawan, the former president and all other former directors lost their jobs.

According to a company executive, the appointment of the new board of directors had been very much controlled by the country's major political parties, such as the Indonesian Democratic Party of Struggle (PDI Perjuangan), National Mandate party (PAN) and National Awakening Party (PKB).

He told The Jakarta Post that the political parties' intervention had caused some difficulty to the Office of the State Minister of Investment and State Enterprises Development in selecting the candidates for the five-member executive board.

"The new board of directors is pretty much a result of a compromise between these parties. However, we are glad that at least they have not picked the wrong people, although Hari and Habimono still need to prove their capabilities," the source said after the meeting.

Hari, who is currently the president of PT Patrakomindo, a VSAT-based telecommunications subsidiary of Indosat, said his priority was to help Indosat to shift from an international telephone operator to a fully integrated telecommunications provider.

"In order to become a full-service provider, Indosat will develop four new business cores, namely backbone infrastructures, mobile telecoms, Internet and multimedia," he told a media conference after the shareholders closed-door meeting.

He said Indosat decided to open the new businesses because the prospect of the international call business would subside in line with the rapid use of cheaper and better international call connections using the voice over Internet protocol technology.

He said it was important for Indosat to turn into a full- service provider if it wanted to survive the impending liberalization of the country's telecoms sector.

According to the new telecommunications law, which will take effect in Sept. 9 this year, Indosat and its joint venture company PT Satelindo will lose their current exclusive rights to provide international telecommunications services in 2005.

According to Budi, who is currently the company's general manager for investor relations, Indosat would start with the development of mobile telecommunications and Internet businesses.

"For mobile telecommunications, it may be more easier for Indosat to acquire one of the existing mobile operators. For the Internet, we are going to boost the performance of our Internet provider subsidiary Indosatcom," he said.

Indosat currently has joint ownership with Telkom in two mobile phone operators, Satelindo and Telkomsel.

Budi said the four new business fields were expected to develop well to contribute at least 40 percent to the company's income by 2005. Indosat currently obtains over 85 percent of its earnings from international call services.

When asked about the possibility of a merger with Telkom, Hari said such a strategy was so far considered as not being feasible for Indosat.

"Let the companies grow separately so that each can turn into a strong company and be able to compete in the impending global competition," said Hari, who along with the new directors will serve until 2005.

During the meeting, the shareholders also approved the appointment of Wisnu Marantika as new chief commissioner, replacing Jonathan Parapak.

The meeting also approved the payment of Rp 6.95 billion (US$926,666) in dividends for 1999, representing 50 percent of Indosat's 1999 net profit of Rp 1.39 trillion, or Rp 666 per share.

The company recently reported that its earnings per share in 1999 were Rp 1,341, or $1.9 per American Depository Share, based on an exchange rate of Rp 7,100 to the dollar.

Indosat has its shares listed on the Jakarta and Surabaya Stock Exchanges, while its American Depository Shares are listed on the New York Stock Exchange. (cst)