Mitra Global to invest $724m in Central Java

JAKARTA (JP): PT Mitra Global Telekomunikasi Indonesia, a consortium which this week won a contract to install 400,000 telephone lines in Central Java, plans to invest A$1 billion (US$724 million) in the next three to four years in the project.

However, the consortium will start collecting revenues early next year as soon as it takes over the management of the existing telecommunications facilities in the province from PT Telekomunikasi Indonesia (Telkom), the state-owned domestic telecommunications company, Ross Abbott, general manager for Indonesia of Telstra Corp. of Australia, told The Jakarta Post Tuesday evening.

Telstra is a member of the consortium, which also includes PT Indosat, Nippon Telegraph & Telephone of Japan and PT Widya Duta Informindo, a local consultancy and contracting company.

Abbott said that under the contract, the consortium will construct new lines and modernize the existing system.

An industrial executive said that starting on Jan. 1 next year, the consortium would begin network construction, management of Telkom staff and collection of revenues from the operation of the existing system.

The consortium is among the four awarded contracts to build a total of 1.64 million telephone lines in Kalimantan, Central Java, Sumatra and West Java.

Based on the contracts, Telkom will receive an estimated total revenue of Rp 13.98 trillion (US$6.2 billion) from initial investor payments, guaranteed annual minimum revenues and a percentage of the distributable operation revenues throughout the operational period of 15 years.

Revenues

Abbott said that revenues were expected to flow in by early 1996 and would be shared with Telkom.

However, he said, his consortium had yet to negotiate with Telkom on the details of the contract specifications.

Abbott explained that the consortium would manage the existing system in Central Java, currently consisting of about 400,000 lines, "to bring it to world standard", besides the planned network.

The contract will involve the introduction of new systems and training of Telkom's staff -- consisting of some 3,500 personnel -- over the 15-year contract period.

He said that Telstra, which has a 20 percent stake in the consortium, plans to station a team of up to 35 experts in Indonesia in the next three years to establish the business and to train local Telkom professionals.

The industrial executive said that over the 15 years of cooperation with Telkom, the consortium will guarantee Telkom a minimum net revenue equivalent to the amount that Telkom would receive if it managed the existing lines.

If the revenue exceeds this amount, the executive said, the additional revenue would be shared between the two parties, with the consortium receiving 70 percent and Telkom the remaining 30 percent.

The executive said that by the end of the contract period, Telkom was estimated to be able to reap Rp 900 billion.(pwn)