Telkom plans to enter cell phone market in 2001

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)