Telkom offers $400m fixed line project

The Jakarta Post, Jakarta

State-owned telecommunications company PT Telkom is offering private investors the opportunity to invest in one million fixed- telephone lines worth a total of US$400 million, a top company official says.

Telkom vice president for planning and control Djafar Sumantri told The Jakarta Post Tuesday that the project would be carried out via BOO (build, operate and own) and BOT (build, operate and transfer) systems, ending in 2005.

A report earlier said that the one million fixed telephone lines would be arranged in packages, each worth around US$5 million so that many local investors could participate. Large foreign investors would be unlikely to participate due to the relatively small investment package.

The report said that each investor would not be allowed to make an investment of more than $5 million.

According to the report, some 80 investors could be needed to develop the fixed line project.

Djafar said that the fixed telephone line project would cover all parts of the country except Jakarta and Surabaya.

Under the BOT system, PT Telkom would have right to possess the telecommunication infrastructure after the term of the contract expired.

While, under the BOO system the fixed lines would remain under the control of the private investor when the contract ended.

The report said that Telkom would use the BOT system in profitable areas.

Telkom is under pressure to develop more fixed telephone lines after previous projects with foreign telecom giants had mostly turned sour.