Indosat to set up new cellular phone venture

JAKARTA (JP): The country's international telecommunications carrier PT Indonesian Satellite Corporation (Indosat) plans to set up a new subsidiary which will operate an improved digital mobile cellular telecommunications system.

The company's president, Tjahjono Soerjodibroto, said here yesterday that the planned subsidiary, which will operate the Personal Communications System (PCS)/Personal Handy-phone System (PHS), would be established with funds to be raised from the sale of Indosat's shares in PT Telkomsel.

PHS is a new mobile phone system developed in Japan, while PCS in Europe. Both work at 1,900 megahertz.

Indosat recently announced its plan to sell 7.1 percent of its shares in Telkomsel, which operates a global system of mobile telecommunications (GSM) cellular telephones.

Telkomsel is currently 42.72 percent owned by state-owned PT Telkom, 35 percent by Indosat, 17.28 percent by PTT Telecom of the Netherlands and 5 percent by PT Setdco Megacell Asia.

The shares will be offered first to PTT Telecom and Setdco, owned by businessman Setiawan Djody, because Telkom has decided not to increase its equity in the company.

Because Telkomsel, which plans to start full GSM operation in Jakarta later this month, is now worth about $1.9 billion, while Indosat's offer is estimated to have a value of $47.5 million.

Indosat last year acquired 1.4 percent of the shares in Astel, a PHS operator in Japan.

Profit

Indosat yesterday also reported a net profit of Rp 114.6 billion (approximately US$49 million) in the first three months of this year, 8.62 percent up from the same period in 1995.

Tjahjono said Indosat's earnings per share were Rp 110.7, or $0.47 per American Depository Receipt, up 8.7 percent from the corresponding period of last year.

"The first quarter's results are based on the performance of our international telecommunications core business," he said.

"Indonesia's strong economic growth and consistent improvement in customer services were the real engines behind this. Our new ventures in international telecoms support businesses have also got good prospects."

He said the company's international telephone traffic rose 18 percent from 114.1 million minutes in the first quarter in 1995 to 134.7 million minutes in the first quarter of this year.

The 18-percent increase in international telephone traffic is a little higher than the 17.1 percent rise in 1995.

Tjahjono said that Indosat's operating revenues rose 16.45 percent to Rp 278.1 billion in the first quarter from Rp 238.8 billion in the same period of last year because of a 14.8-percent rise in international telephone revenues and a 42.3-percent increase in other telecommunication service revenues.

The company reported yesterday that it had signed agreements with four other telecommunications operators in the Association of Southeast Asian Nations (ASEAN) to set up a one-stop shopping service for multinational companies.

The company is currently evaluating a potential joint venture with a Kazakstan firm to provide telecommunications services in that country.

Indosat plans to invest $5 million in the 1996-2000 period in this project.

Indosat, whose shares were floated in New York and Jakarta in October 1994, reported a net profit of Rp 459.4 billion in 1995, a 59 percent increase over 1994.

Indosat's shares closed at $36.125 per ADR in New York on Tuesday and at Rp 8,350 on the Jakarta Stock Exchange yesterday. (icn)