PT Telkom begins privatization program

PT Telkom begins privatization program

JAKARTA (JP): The state-owned domestic telecommunications
provider PT Telkom will begin today handing over the management
of its telecommunications networks in five regions to the private
firms that won 15-year joint operation contracts.

A source at Telkom said yesterday that its telecommunications
networks in Sulawesi, Irian Jaya, Maluku and Nusa Tenggara will
be handed over to the contractor today in Ujungpandang, South
Sulawesi, those in West Java on Jan. 5, those in Central Java on
Jan. 9 and those in Kalimantan on Jan.10.

A source at Pramindo Ikat Nusantara, one of the private firms,
told The Jakarta Post here yesterday that it would receive
Telkom's networks in Sumatra on Jan.8.

Pramindo will take over the management of 600,000 existing
fixed telephone lines and will install 516,487 new telephone
lines in Sumatra.

Telkom signed the contracts last October with five
Indonesian-foreign joint ventures, which will install a total of
2,256,487 telephone lines and operate them along with existing
lines.

Besides Pramindo, the joint venture companies are PT Aria West
International, which will be responsible for installing 500,000
lines in West Java, PT Mitra Global Telekomunikasi Indonesia,
which will install 400,000 lines in Central Java, PT Daya Mitra
Malindo, which will install 237,000 lines in Kalimantan, and PT
Bukaka Singtel which will be responsible for installing 403,000
lines in the country's eastern region covering Sulawesi, Maluku,
Irian Jaya and Nusa Tenggara.

The five projects are part of the government's program to
install five million telephone lines within the current Sixth
Five-Year Development Program (Repelita VI) which will end in
March 1999.

Each of the joint venture companies is responsible for
operating and managing telephone installations in its contract
area for 15 years starting this month. They are each given three
years to install the number of new lines specified in their
contracts.

Revenue

Telkom, estimated to receive a total revenue of Rp 15 trillion
(approximately US$6.5 billion) within the contract period, will
install the other three million telephone lines in the Greater
Jakarta area and East Java, the two regions remaining under its
management.

"Some 7,000 Telkom employees will join Pramindo. Meanwhile,
Telkom's regional division office in Medan, which is responsible
for telecommunications in Sumatra, will be called a KSO unit,"
The Pramindo executive added.

The unit will continue the old billing system for the
existing line subscribers," said the executive who asked to
remain anonymous.

In addition to the KSO unit, the source added, Pramindo will
open an operational office in Medan, while Pramindo's
headquarters will remain in Jakarta.

"The project in Sumatra will start soon after the transfer of
management next week," the source said, but refused to give more
information as to when the project will start.

Pramindo is 59 percent owned by PT Astratel Nusantara, a
subsidiary of the Astra International group, and 35 percent by
France Cable et Radio, a subsidiary of France Telecom. The other
six percent is owned jointly by Primkopparpostel, the cooperative
of the employees of the Ministry of Tourism, Post and
Telecommunications, and PT Intertel Pratama Media.

Pramindo's project in Sumatra will cost an estimated $570
million.

According to the source, Pramindo is still negotiating with
prospective partners including Marubeni Corp. and Nichimen of
Japan, the International Finance Corp., an affiliate of the World
Bank, and the Commonwealth Development Corp. from Britain.

The joint operation contractors are required to ask the
government for permission if they plan to invite additional
shareholders. (icn)