PT Telkom to enter joint ventures for more efficiency

JAKARTA (JP): The government plans to convert the existing joint operation schemes between state-owned telecommunications operator, PT Telkom, and private partners into joint ventures in order to improve efficiency, a minister said on Tuesday.

Minister of Telecommunications Giri Suseno Hadihardjono said the change in the partnership scheme would be included in a new telecommunications regulation, which is now being prepared by his office.

"In a bid to increase efficiency and competitiveness, we are currently working on the blueprint of the government policy on Telecommunications Sector Reforms in Indonesia," Giri told the House of Representatives Commission IV for communications, tourism, public works and housing.

"The new telecommunications guidelines will include the government's policy to gradually move from KSO status into a joint venture company," he added.

He said the directorate general of post and telecommunications had also set up a team to evaluate the implementation of the joint partnerships from their start in 1995 to the targeted end of the construction period at the end of March.

In 1995, Telkom appointed five joint-operation partners, consortia of foreign and local firms, to finance, build and operate 2 million telephone lines in five regions in the country until 2010 under the revenue-sharing scheme (KSO).

The number of telephone lines to be installed by the KSO partners was revised in September last year to 1.2 million lines due to the financial hardships triggered by the economic crisis.

The KSO partners pay Telkom a three-monthly Minimum Telkom Revenue (MTR), a fixed amount of Distributable Telkom Revenue (DTR) payments based on their revenues.

The rupiah's collapse against the U.S. dollar since mid-1997, had slowed down KSO projects and caused their foreign debts to swell.

Giri said as of January, the telephone lines installed by KSO partners reached 97.57 percent of the MOU target, which expires at the end of this month.

The five private partners of Telkom have urged the government to revise the current joint operations scheme which they claimed to be "flawed", and hindered them from becoming competitive and profitable companies.

Analysts, however, were concerned that the planned joint ventures would further burden Telkom as it would have to bear losses of the KSO partners and carry their huge foreign debts.

At Tuesday's hearing, House members called on the government to cancel all contracts with their KSO partners and then cancel the partnerships altogether.

Telkom President Asman Akhir Nasution said on Tuesday the government needed about Rp 4.2 trillion to pay off the KSO partners if their contracts were to be annulled. (das)