STT gives its commitment to develop fixed lines
STT gives its commitment to develop fixed lines
A'an Suryana, The Jakarta Post, Jakarta
Singapore Technologies Telemedia (STT) will not change state-
owned telecommunications company PT Indosat's business plan to
develop fixed telephone lines in the country, an official has
said.
The Singapore telecommunications giant will also keep its
promise to the Indonesian government to build additional fixed
lines.
"We'll honor Indosat's commitment," said Gita Wiryawan, an
official at Goldman Sachs, which advised STT in last week's
purchase of a 41.9 percent stake in Indosat.
Although STT's entry into Indosat should help improve
telecommunications-related services in the country, there are
some who question the Singaporean firm's commitment in developing
fixed lines here as the company is likely to focus on the more
lucrative domestic cellular market.
Critics have said that Indonesians need more fixed lines
rather than cellular lines.
STT was the winning bidder of the Indosat stake, paying out Rp
5.6 trillion (US$610 million) in the government's largest
privatization program so far this year.
According to the sale and purchase agreement of the
transaction, STT, through Indosat, is required to develop some
759,000 wireless fixed lines by 2010.
Meanwhile, Indosat also has a program to install 1.2 million
fixed lines by 2005.
Indosat, Indonesia's second largest telecommunications firm,
controls two cellular companies, namely PT Satelindo and PT
Indosat Multi Media Mobile (IM3).
Together with PT Telkomsel, a subsidiary of the country's
largest telecommunications company, PT Telkom, the three control
about 80 percent of the domestic cellular market.
Another Singaporean firm called SingTel has a 35 percent stake
in Telkomsel.
Both STT and SingTel are controlled by Temasek Holdings, the
Singaporean government's investment arm.
This corporate structure has raised concerns that the purchase
of the Indosat stake by STT could lead to a monopoly by Temasek
in the domestic cellular market.
But STT president Lee Theng Kiat said in a media statement
released on Tuesday that there would not be a monopoly because
the pricing of service in the Indonesian cellular industry was
still regulated by the government.
He added that the Indonesian government continued to hold a
controlling 65 percent stake in Telkom.
Elsewhere, Gita said that STT started making payments for the
Indosat stake on Tuesday.
Currency traders said earlier that the Indosat transaction
would help strengthen the rupiah's exchange rate against the U.S.
dollar this week as STT would have to purchase the local currency
to pay for it.
Gita also said that STT officials would attend an Indosat
shareholders meeting on Dec. 27. He promised that the Singaporean
firm would not reshuffle management, but only create one or two
new posts in the company, which would filled by STT employees.
He also ruled out the possibility that STT would soon purchase
additional shares in Indosat, a publicly listed company, through
the stock market.
"At this stage, STT has no intention of increasing shares at
Indosat," he said.
Gita also said that STT would not sell its shares within three
years after the deal, as the Singaporean firm was bound in a
lock-up agreement with the Indonesian government.