Telkom asked to improve its performance further

JAKARTA (JP): The state-owned telecommunications provider PT Telekomunikasi Indonesia (Telkom) must further improve its performance to cope with fiercer global competition, noted economist Sjahrir said yesterday.

"I don't mean to frighten you. But there's no guarantee that Telkom will continue to hold its monopoly for its long-distance call service after its right expires in the year 2005," he said at a ceremony to mark the first anniversary of Telkom's initial public offering.

In 1995, Telkom secured a monopoly for long distance calls until 2005. Long distance calls are Telkom's largest source of income.

The government, Sjahrir cautioned, may license another company to provide a long-distance call service after 2005.

"One of your neighbors, Singtel of Singapore, which is very efficient but lacking a broad domestic base, is eying the Indonesian market," Sjahrir said.

He warned Telkom of the impact of a joint venture or another form of cooperation between Singtel and an Indonesian company like the strategic link set up recently by British Telecom and MCI.

British Telecom and MCI of the United States agreed recently to create a new company called Concert with an expected annual turnover of more than US$40 billion. The new company will become a major international challenger to U.S. telecommunications AT&T -- MCI's main competitor in the U.S.

Sjahrir also warned Telkom to gear itself up for operations in an era of fast global flows of capital and services: "Now is the era of tele-economy where the process of production and consumption becomes increasingly borderless."

Citing an example, Sjahrir said state-owned PT Indosat had faced competition since AT&T had entered the international call service market in Indonesia by offering credit card telephone services.

Telkom president Asman A. Nasution said the company had launched, early this year, a long-term program to meet its vision for the next century.

The program, called T-2001, aims to boost Telkom's performance to become a world-class operator by 2001.

The T-2001 program set 10 major targets, including phone-line installation in less than three days, a reduction in the rate of complaints to less than 0.5 complaint per 100 subscribers a month and increased telephone density from 1.6 percent to 7 percent of the population.

The company has one employee for every 80 telephone lines, compared to a ratio of 1:34 in 1991, but aims to increase its productivity to one person for every 225 lines by 2001.

Telkom floated 19 percent of its 9.33 billion shares on the New York, London, Jakarta and Surabaya stock exchanges and raised Rp 2.3 trillion ($981.2 million) from the domestic offering and $519.1 million from the overseas offering.

The company's initial public offering price was Rp 2,050 at the Jakarta Stock Exchange. The shares closed at Rp 3,925 yesterday. (icn)