Private firms eye state-owned GSM project

Private firms eye state-owned GSM project

JAKARTA (JP): Several local private telecommunications firms have expressed an interest in acquiring a majority shareholding in PT Telkomsel, the state-owned digital cellular telecommunications operator, a telecommunications executive says.

"But I don't think it would be wise for the government to let private firms buy into Telkomsel, which will operate the Global System for Mobile Communications (GSM) cellular telecommunications nationally," Chairman of the Indonesian Telecommunications Association (Apnatel) Rahardjo Tjakraningrat said yesterday.

PT Telkomsel should, instead, be maintained as a state company capable of providing "competition to the private GSM operators in the country," Rahardjo said.

PT Telkomsel is owned by the state-owned telecommunications companies, PT Telkom and PT Indosat.

Rahardjo said that several widely diversified business groups had proposed that they acquire more than 50 percent of Telkomsel's shares.

However, when contacted for confirmation yesterday, executives at both of Indosat and Telkom said that not a single private firm had formally asked to buy Telkomsel, 51 percent of which is owned by Telkom, with 49 percent belonging to Indosat.

An Indosat spokesman said: "The Telkomsel project has been going well, as Indosat indicated in the prospectus for its initial public offering last year."

The establishment of Telkomsel, with an equity capital of Rp 300 billion, was approved by the Ministry of Finance last September.

But since aspects of the new company's legal and management structure are still being processed it cannot expand its GSM network.

GSM was launched in Indonesia by Telkom on Batam island, near Singapore, in 1992. The Batam project, valued at Rp 12 billion (US$5.5 million), has so far run successfully with an estimated 2,000 lines connected every year.

Meanwhile, PT Satelindo, which is 60 percent owned by PT Bima Graha, an affiliate of Bimantara group, 30 percent by Telkom and 10 percent by Indosat, launched its own GSM project in Jakarta last September.

According to Rahardjo, the government is likely to license more GSM operators in the coming years because the business is still promising and the country's frequency-span makes the granting of further licenses feasible.

"At least seven other telecommunications firms have proposed to operate GSM, but all of them have been disqualified," he said. (icn)