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.