Telecom industry 'needs $10b' in new investment
Telecom industry 'needs $10b' in new investment
JAKARTA (JP): The telecommunications industry will need a new
private investment injection of up to US$ 10 billion in the
Seventh Five-Year Development Plan period which starts in April
1999, a senior official said here yesterday.
Ministry of Tourism, Post and Telecommunications' secretary-
general Jonathan L. Parapak said at a PT Satelindo seminar on
financing the industry, that the new investment had to come from
the private sector.
"We need new investment in the Nusantara 21 information
network project, world-class telecommunications operators and to
implement the Personal Communications Network (PCN)," he said.
He said Indonesia should keep up with telecommunications
industry changes.
"The major prime mover of change is the progress of
technology. Digital technology creates convergence, cellular
technology creates mobility, satellite technology creates
instant global access."
"The global drive of deregulation, private sector
participation, privatization and initial public offerings also
causes change," he said.
He said that technological trends in the telecommunications
industry were global superhighway infrastructure,
telecommunications convergence with computers and broadcasting
and the global mobile personal communications satellite systems.
Indonesia is developing Nusantara 21, a high-tech information
and telecommunications network to connect the archipelago. It
will develop multimedia technology in several big cities and
wide-band super lanes by 2001.
It is also developing its other telecommunications networks
and infrastructure -- including fiber optics, submarine cables,
terrestrial gateways and satellites -- for both fixed
telecommunications lines and cellular services.
The government has targeted having at least eight million
phone lines, 6.7 million additional fixed-telephone lines and 1.3
cellular lines, in the Sixth Five-Year Development Plan period
ending March 1999.
There are five private firms responsible for
telecommunications network developments under joint operation
concessions with state-owned PT Telkom.
Four new multimedia firms and satellite operators are due to
start operating in the next few years.
Seven private mobile cellular telephone operators are running
three systems in Indonesia. The government has awarded five new
mobile cellular licenses to operate the Personal Handy-phone
system and the Digital Cordless System 1800. And it will offer
11 new mobile cellular licenses for the same systems next year.
PT Danareksa Finance president, Edgar Ekaputra, said
telecommunications operators could not survive in a liberalized
market without advanced technology.
"To develop strong telecommunications systems and support them
with advanced technology needs a huge amount of capital,"
Ekaputra said.
He said he thought Indonesia would add millions of fixed and
cellular telephone lines and three satellites between 1997 and
1999 and would spend up to $23.7 billion to finance the projects
until 2004.
Most private sector financing in the telecommunications
industry was in the form of equity placements, debts, equipment
vendor financing and equity funds, he said.
"Debt financing is not a popular alternative for
telecommunications operators. This is because of the nature of
telecommunications business which has high risks, huge capital
requirements and is technology intensive."
Equipment vendor financing was now possible because the strong
telecommunications industry growth allowed its equipment makers
to strengthen their financing capabilities so they could offer
favorable financing to telecommunications firms.
"The other alternative is equity or quasi equity from
institutional investors or investment funds," he said. (icn)