Telkom plans to enter cell phone market in 2001

JAKARTA (JP): State-owned, listed telecommunications monopoly PT Telkom says it will maintain its position as an operator of fixed-line telephones while at the same time developing new business in the mobile telephony market.

Company operations and marketing director Komarudin Sastrakoesoemah said on Friday that Telkom expected to inaugurate its new mobile telephone service in Jakarta and some cities in West Java by mid next year.

"In the short-term, both fixed and mobile services will play an equally significant role in Telkom's business. In the longer term, the mobile business may well become the most important contributor but at the same time we'll continue to operate the fixed line service," he told The Jakarta Post.

He said Telkom was hoping to sign up at least 400,000 subscribers in the first year of operation of its new mobile telephone service.

The government is expected to award new licenses to Telkom and another state-owned telecommunications company PT Indosat to operate mobile telephone services using the GSM-1800 format in August.

The awarding of these licenses is in line with the government's plan to transform Telkom and Indosat into full network and service providers before it liberalizes the country's telecommunications sector in 2002 or 2003. This will end the monopolies currently enjoyed by Telkom and Indosat.

Telkom currently holds a monopoly for the provision of domestic fixed-line telecommunications services nationwide until 2010 and domestic long distance services until 2005. Meanwhile, Indosat and its subsidiary Satelindo have exclusive rights to provide international telephone services until 2004.

Komarudin said Telkom would likely handle the new business itself rather than through its existing mobile telephone subsidiaries Telkomsel and Satelindo.

He said the company might consolidate its new mobile telecommunications business with Telkomsel or Satelindo, but only if Telkom would be the majority shareholder.

"Otherwise, we'll probably pull out, sell our stakes and use the funds to finance the expansion of our own mobile telephone business," he said.

Telkom currently owns a 42.7 percent stake in Telkomsel and about 22 percent of Satelindo.

Komarudin said the establishment of the mobile telephone business would reflect the transformation of Telkom from being a mere fixed-line operator into a full network and services provider.

He said that as a full network and service provider Telkom would use both wire and wireless networks to provide telephone, internet and multimedia services.

Telkom will first improve the fixed line network to enable it provide internet and multimedia services by adopting the broadband format and replacing existing cooper-based cables with fiber optic, he said.

As of the end of March this year, Telkom operated 6.18 million fixed telephone lines across the country. About 2.87 million of these were installed under joint operation schemes with five foreign joint ventures.

Local and long distance telephone services have been the biggest contributor to Telkom's revenues averaging no less than 70 percent per year.

"The future prospects for local and long distance telephone services using the fixed-line format is still promising. There are a lot of areas that still lack telephone lines and can't just switch to mobile telephony," Komarudin said.

Telkom, in which the government holds a 66 percent stake, has listed its shares on the Jakarta and Surabaya stock exchanges and the New York Stock Exchange for its American Depository Shares. (cst)