PT Telkom to enter joint ventures for more efficiency

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)