Indosat to spend up to Rp 15t for expansion

JAKARTA (JP): State-owned international call operator PT Indosat said on Thursday it would spend up to between Rp 11 trillion (US$1.2 billion) and Rp 15 trillion to finance an expansion program in the next five years.

Indosat president Hari Kartana said the company would soon issue rupiah-denominated bonds to partly finance the expansion projects.

"The funds (for the investment) would come from among other sources, bonds in rupiah and from a strategic partner, whom we hope will also bring some expertise," Hari said in a hearing with the House of Representatives' Commission IX, which oversees financial affairs.

He said that Indosat was planning to become a "Full Network and Service Provider" by 2005 when it would start mobile, wireless, fixed-lines and broadband Internet services.

Hari said the company would also adopt third generation (3G) wireless services that would allow mobile phones high speed internet access.

The expansion of the services, he said, would be implemented gradually.

Indosat said it planned to invest this year Rp 319 million for its existing international direct dialing (IDD) business, and Rp 202 million for the Internet and the multimedia sector.

Next year, the publicly listed state company would invest another Rp 6.74 trillion in five areas comprising of its existing businesses, mobile phone service, telecommunication infrastructure, domestic call service, and the Internet and multimedia.

In 2002, Indosat would spend another Rp 2.89 trillion, in 2003 Rp 1.45 trillion, in 2004 Rp 1.39 trillion and in 2005 Rp 1.13 trillion, the company said.

Hari said the investment plan reflected the changes in the telecommunication sector, which now emphasized on providing mobile multimedia services.

Indosat has said earlier that it would focus its future business on the mobile telecommunication sector.

According to Hari, the low market penetration of telephone lines and mobile phones, of around three percent and 1.5 percent respectively, offered Indosat high growth potential.

Indosat is holding monopoly rights in operating international calls, but the government plans to scrap Indosat's right by 2003. The company will, however, be allowed to operate domestic call services when PT Telkom ends its monopoly in 2002.

The government is now considering a merger between Indosat and state-owned local telephone operator PT Telkom as preparation for the open market.

But Hari said that Indosat preferred to remain separate from Telkom, leaving "two giants' in the local telecommunication market. (bkm)