PT Indosat plans to offer domestic services by 2005
PT Indosat plans to offer domestic services by 2005
JATILUHUR, West Java (JP): State-owned international
telecommunications provider PT Indosat plans to offer domestic
call services in the next decade.
Company president Tjahjono Soerjodibroto said yesterday
Indosat was planning to offer a long-distance service by 2005 and
a local service by 2010.
He said this would let the company secure its business amid
intensifying global competition.
"Indosat faces several major challenges including the free
market and its regulations, rapid changing high technology, low-
cost oriented tariffing and the unbalanced call tariffs between
developed and developing nations," he told House Commission V for
communications, transportation, public works and tourism.
Tjahjono said telecommunications regulations would be
liberalized in line with the free trade trends set by the Asia
Pacific Economic Cooperation (APEC) forum, World Trade
Organization and regional trade arrangements such as the ASEAN
Free Trade Area.
Tjahjono said Indosat, which relied heavily on its
international telecommunications services, had the technology and
human resources to take advantage of liberalization in the
telecommunications industry.
He said existing regulations stopped Indosat, which is listed
on the Jakarta and New York Stock exchanges, developing domestic
services.
But he predicted the restrictions would be gradually
eliminated, and that Indosat would be able to offer long-distance
services by 2005 and local call services by 2010.
After it was reincorporated as a state-owned firm in 1980, the
company enjoyed a monopoly on overseas calls until January 1993.
Under decree No. 6/102/1995, the government granted exclusive
rights to run international telecommunications services until the
year 2005 to Indosat and PT Satelindo.
In 1995, the government also granted a 10-year monopoly on
long-distance calls to the state-owned domestic
telecommunications provider PT Telkom. Long-distance calls are
Telkom's largest source of income.
The decree on the international-call duopoly was released soon
after Indosat floated its shares on the Jakarta, Surabaya and New
York stock exchanges. The decree stipulates that the tariffs of
international telecommunications services are determined by the
minister of tourism, post and telecommunications. This applies to
both Indosat and Satelindo so they can compete in terms of
service rather than price.
The regulation on long-distance call services was released
shortly before Telkom listed on capital markets in Jakarta,
Surabaya, London and New York in October 1995.
There is no guarantee that Telkom, Indosat and Satelindo will
continue to hold their service rights after these privileges
expire in 2005.
Tjahjono said yesterday that through the basic "1+3" strategy
-- defined by a single core business complemented by three
strategic initiatives -- Indosat would continue to expand and
improve the scope and quality of its international
telecommunications services while seeking to participate in
domestic, regional and global telecommunications.
He admitted that Indosat did not originally have any
subscribers. "That's why we have to expand domestically,
regionally and to diversify into businesses like multimedia and
value-added services."
Indosat has stakes in 20 companies. Indosat's subsidiaries
include PT Telkomsel which runs Global System for Mobile
communications (GSM) cellular phones, which has 168,000
subscribers in 23 provinces.
Indosat also has stakes in PT Lintasarta, a data
communications operator; PT Patrakomindo, a petroleum satellite
communications provider; PT Mitra Global Telekomunikasi
Indonesia, the telecommunications concession holder for Central
Java; and PT Sisindosat, a value-added telecommunications
provider.
Indosat is 65 percent owned by the government, 32 percent by
overseas investors and 3 percent by domestic investors. The
company's shares closed yesterday at Rp 6,200, down Rp 75, on the
Jakarta Stock Exchange and at $26.75 per American depository
share on the New York Stock Exchange on Thursday. (icn)