Indosat's new owner calls for fair play in telecommunications sector

Indosat's new owner calls for fair play in telecommunications sector

After acquiring a 41.9 percent stake in the country's second
largest telecommunication company PT Indosat from the government
in December last year, Singapore Technologies Telemedia (STT) has
a tough task ahead to boost the performance of the company in
competing with rival state-owned PT Telkom.

The Jakarta Post's Rendi A. Witular interviewed Ng Eng Ho,
vice president of Indosat and one of STT's representatives in the
company, on Indosat's preparations and strategy to compete with
Telkom when the government fully liberalizes the
telecommunications industry in August this year.

The following is the excerpt of the interview.

Are there any obstacles faced by STT representatives in managing
Indosat?

I think together with my Indonesian colleagues we are working
together very smoothly under the leadership of Widya Purnama
(Indosat CEO). Over the last two months we have been trying to
examine strategies and redefine responsibilities.

Every country has its own culture. For us, whether it is
Malaysia or Indonesia, we will have to try to understand the work
culture. We have to see how we can add value to the way things
are being done here in Indonesia. In Singapore the culture is a
bit more structured and we hope to be able to blend in with the
Indonesians' enterprising spirit.

The country's telecommunication industry will be fully
liberalized in August. How urgent do you think an independent
regulatory agency is for the telecom industry?

Most countries have an independent regulatory agency that is
set up to spell out policies as well as enforce fair play among
players in the industry. We are hoping that the government will
be able to do this quickly to allow fair play. Fair play means no
access blocking... We hope the agency can be set up immediately.

The government plans to install Director General of Post and
Telecommunications Djamhari Sirat, who is also a commissioner of
Telkom, as the chairman of the agency. Do you see the possibility
of a conflict of interest?
Well, I think we can expect him (Djamhari) to be able to perform
in his role. But it is of concern to us because there could be a
different perception. His role will be subject to a lot of
misinterpretation and controversy. It is not because he has not
acted independently, but because people might exploit the fact
that he is holding onto two positions.

What will happen if the body favors Telkom?
I think we will have to look at the decisions and if we feel that
they are not for the good of the industry, we will voice our
objections in a very strong way at the right forum.

Some of Indosat's employees, under the Indosat Workers Union
still reject the company's divestment to STT. How will it impact
your business here?

I think it is quite normal when there is a new
shareholder for the employees to be a bit apprehensive of what
changes the new shareholder might make. I think right now, I
would say the staff are getting acquainted with the new
directors.

And there are not many major changes in terms of the way the
company is being run.

I think, generally, there are small elements who still have
certain concerns. And I think over time, the management could
convince them... as long as it takes. We want to ensure Indosat
can grow in terms of business. And as we grow everybody will
benefit from it.

What will Indosat do to better Telkom

We want to be the provider of choice. We want to be able to
compete with Telkom by providing better service, quality and
responsiveness to customers' needs.

Our key focus will be in the cellular, international call, and
the multimedia and Internet (MIDI) service.

We are transforming Indosat to be more cellular-centric, but
the international call and MIDI are still an important part of
the business.

Will it mean that the international call, which have long been
Indosat's main business, will be sidelined?
International call will still continue to be an important
business for us in terms of cash flow.

What about fixed line?

For fixed line we have several initiatives in which we have
come out with a revenue sharing scheme with strategic partners.
They invest, fill the network and leveraging on some of the
backbone support and we do revenue share such as what we have
implemented for Jakarta and Surabaya to build 700,000 wireless
fixed lines.

We would like to focus on the two cities first before we move
on to others. It is important to get the project off the ground
in a good way, so that strategic investors are keen to join
again.

Can you describe the future of your revenue composition?
By 2005 our cellular business will contribute between 60 percent
and 65 percent, the remaining will be from the fixed line
(international call and domestic long distance) and MIDI
business.

Regarding the merger plan of your cellular units PT Satelindo and
PT Indosat Multi Media Mobile (IM3), how will it benefit Indosat?

We hope to be able to have both the mobile companies. Together
we can really optimize, especially for the backroom function. We
hope to be able to better penetrate the market with the two
mobile companies through segmentation.

The merger is expected to make our cellular business grow even
faster with the sharing of resources such as infrastructure,
people, systems and technology.

We have engaged both financial (with ING) and legal
consultants. They are starting to work and are looking at the
various issues, at various options of how we can do the merger.
Once they have made their proposals we will put it to the board
of commissioners. We have set a target for them in September or
October.