Telkom, Indosat to lose exclusive rights sooner

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)