Wed, 02 Aug 2000

Telkom, Indosat to lose exclusive rights sooner

JAKARTA (JP): The government formally announced on Tuesday the termination of exclusive rights awarded to state owned domestic telephone provider PT Telkom Indonesia and international telephone operator Indosat ahead of initial schedules.

Director-General of Post and Telecommunications Sasmito Dirdjo said that the government would lift Telkom's monopoly over local and domestic long distance call services in 2002, ahead of the original schedules of 2010 and 2005 respectively.

He said Indosat's monopoly in the international telephone service, which it shared with its subsidiary PT Satelindo, would be ended one year earlier in 2003 from the initial schedule of 2004.

Sasmito, however, fell short of explaining why the government had to terminate Telkom's monopoly ahead of Indosat's. He added that both companies will be allowed to provide domestic and international call services.

"The government will award Indosat with a provisional license to provide local and domestic call services this month to allow it to prepare the infrastructures. It will start commercial operations in 2003 after we grant the final approval in August that year," he told a news conference.

He said Telkom would be awarded a provisional license to operate international telephone calls also this month, but could only start the commercial service after it received the operational license in August 2003.

He said the early termination of the monopoly awarded to state-owned telecoms companies was also meant as a response to the new Telecoms Law No. 36/1999.

The law, which will be effective in September this year, calls for the elimination of all monopolistic practices in the country's telecommunications sector. The law also allows other companies either local or foreign to enter the country's telecommunication sector without having to collaborate with Telkom or Indosat.

Sasmito said other companies could enter the local and domestic call service also in 2002 or the international telephone service in 2003, as long as they could afford to pay a certain amount of money as compensation to Telkom or Indosat.

If no companies are interested in entering the market at the time when the monopoly is abolished, it will be the government's responsibility to pay Telkom and Indosat in cash or in some other form as a trade off, he said.

He said an independent consultant would be appointed to assess the potential loss to be suffered by Telkom and Indosat due to the government's policy.

But he added that the government would actually prefer to give Telkom and Indosat new licenses instead of cash money.

He also said that no compensation would be given to Satelindo despite the fact that it would also lose the exclusive rights as international telephone operator when its parent company Indosat gave up its monopoly in 2003.

"The international telephone call license is originally awarded to Indosat, not Satelindo. Besides, Satelindo is not a state-owned company," he said.

He said compensation for the early termination of the monopoly would instead be given to five partners of Telkom in the Joint Cooperation Scheme (KSO), which were authorized to operate local telephone service in five regions on behalf of Telkom from 1996 to 2010.

He said Indosat, which now controlled some stakes in two KSO partners -- PT Mitra Global Telekomunikasi Indonesia (30 percent) and PT Pramindo Ikat Nusantara (13 percent) -- was expected to pull out and sell the stakes to Telkom or other companies.

During the press conference, Sasmito said that the government might delay the implementation of new telephone rates until next year.

The government earlier planned to raise the local fixed-line telephone rates by 21.67 percent in July the latest. It also planned to further increase the rates by 15.60 percent next year and 8.22 percent in 2002. But the new rates had yet receive approval from the House of Representatives.(cst)