Indosat reviews its investment in 'TPI'

Indosat reviews its investment in 'TPI'

JAKARTA (JP): Publicly listed international telecommunications
provider PT Indosat is mulling whether to carry through on its
option for a 30 percent stake in television broadcaster PT Cipta
Televisi Pendidikan Indonesia (TPI) when its five-year
convertible bonds mature.

Indosat president Tjahjono Soerjodibroto said on Wednesday the
company was still determining if TPI would be the appropriate
vehicle to develop Indosat's interactive multimedia services.

"Our primary reason for entering TPI was because we wanted to
develop a multimedia business. We still have to see whether TPI
can be developed. This is still being evaluated," he told
reporters at a journalist workshop.

Indosat bought five-year convertible bonds worth Rp 150
billion issued by TPI in October last year, with an option to own
up to 30 percent in the TV broadcasting unit controlled by Siti
Hardijanti Rukmana, the eldest daughter of former president
Soeharto.

Established in 1991, TPI is currently suffering a cash-flow
problem due to plunging advertisement spending amid tight
competition with four other private TV stations.

Tjahjono said various aspects -- including technology, market
and investment -- were under review to see if TPI would be useful
in expanding Indosat's multimedia operation.

An official at Indosat said TPI had never defaulted in paying
the 26 percent interest rate on the convertible bonds.

He added that the broadcasting firm's shareholders could take
recourse based on the agreement if the station failed to service
the interest or return the principal on maturity.

Tariff

Tjahjono also said the country's international telephone call
rates would have to be increased in the wake of the sharp plunge
in the rupiah.

He declined to disclose the timetable for the increase and how
large it would be, saying the plans were still being discussed by
the telecommunications regulator.

"We will consider the public's spending capability."

He said the plunge in the rupiah's value meant the country's
international call rates were the lowest in the world, and
Indosat would be in the position of subsidizing foreign telecom
operators if incoming calls were less than outgoing ones.

Tjahjono said that incoming calls were still higher, but the
situation would be reversed if the current cheap rates remained.

"The growth of incoming calls is declining," he said.

A collect call to the U.S. is charged at Rp 5,000, or 50 U.S.
cents (US$1=Rp 10,000), per minute by Indosat. With a settlement
cost of 52 cents per minute, Indosat has to cover the remaining
2.5 cents to be paid to the U.S. telephone operator. The subsidy
is greater if the interconnection tariff, plus circuit and
central costs, are taken into account.

The government increased the international call rates by 25
percent early this year to take into account the sharp
depreciation in the rupiah against the U.S. dollar. The rupiah
subsequently fell further in value. (rei)