STT commitment to develop fixed lines questioned
STT commitment to develop fixed lines questioned
A'an Suryana and Fitri Wulandari, The Jakarta Post, Jakarta
The purchase of a 41.9 percent stake in state-owned
telecommunications company PT Indosat by Singapore Technologies
Telemedia (STT) may not necessarily provide benefits to local
customers, as the Singapore giant was likely to focus more on the
lucrative cellular business here, an industry expert said.
Telecommunications analyst Roy Suryo said on Monday the
government must make sure that STT would honor its promise to
build more fixed telephone lines in the country.
He said that the Indonesian people were in desperate need for
more fixed lines rather than cellular lines.
STT was named the winning bidder for the government's Indosat
stake on Sunday. The company, which beat out Telekom Malaysia,
paid a total of Rp 5.6 trillion (about US$610 million) for the
stake, which marks the government largest privatization deal so
far this year.
The transaction is to be wrapped up before the end of the
year.
The government still owns a 15 percent stake in the publicly-
listed firm, while the remaining 43 percent is held by public
investors.
There have been hopes that the entry of STT to Indosat would
help the latter's ability to provide better telecommunication
services in the country.
According to the sale and purchase agreement, STT will have to
build 759,000 wireless fixed lines by 2010, but Roy said he that
he had received indications that STT is more interested in the
cellular business.
Indosat controls two cellular phone companies, PT Satelindo
and PT Indosat Multi Media Mobile. Together with PT Telkomsel,
the cellular unit of state-owned telecommunications company PT
Telkom, the companies control 80 percent of the domestic cellular
market.
SingTel, another Singapore telecom giant, owns a 35 percent
stake in Telkomsel. According to a report, both SingTel and STT
are controlled by Temasek Holdings.
Suryo said the commitment to build fixed lines was important
as there were only 7.2 million fixed lines available today to
serve the Indonesian population of over 210 million.
Indonesia has 9.2 million users of cellular phones.
"If the Singapore firm is not eager about building the fixed
lines, the public demand for more fixed lines would not be met,"
he said.
The government had previously set targets for Indosat and
Telkom to build 1.2 million and 1.9 million fixed lines,
respectively, in year 2002.
The two companies, however, had requested the deadline be
extended to year 2005, said Roy.
Separately, the Indonesian Internet Service Providers
Association (APJII) hoped the entry of STT to Indosat would raise
competition in the telecommunication industry.
APJII members depend much on Telkom in their business, as the
company provides them connection lines to the Internet.
"So far, Indosat has not dared to challenge Telkom's firm
footing in the local fixed lines business.
"We hope that the new owner will be brave enough to compete
with Telkom in this business, so that we can get cheaper
products," said Heru Nugroho, the secretary general of APJII.
Meanwhile, a monopoly watchdog said that it would monitor the
Indosat privatization deal to see whether it breached the anti-
monopoly law. "If we find it breaches the ruling, we would
investigate the matter and hand down the appropriate sanctions,"
said Iqbal, an executive at the Business Competition Supervisory
Commission (KPPU).
He was commenting on the fact that the deal would indirectly
hand Temasek control over the domestic cellular market.