Telkom, private firms to sign KSO contracts

Telkom, private firms to sign KSO contracts

JAKARTA (JP): PT Telkom, which plans to float its shares in
London and New York, will sign joint operation (KSO) contracts
tomorrow with private firms for the installation of two million
telephone lines in various provinces.

"The signing will be on schedule after the legal establishment
of the joint venture firms," Secretary-General of the Ministry of
Tourism, Post and Telecommunications Jonathan L. Parapak said
here yesterday.

The government has selected five consortia for the KSO
contracts: Pramindo Ikat consortium (to establish 460,000 lines
in Sumatra), the Tiga-A consortium (500,000 lines in West Java),
Mitra Global Telekomunikasi Indonesia (440,000 lines in Central
Java), Daya Mitra Malindo (237,000 lines in Kalimantan) and
Bukaka Singtel International (403,000 lines in Eastern
Indonesia).

Each of the consortia will be responsible for operating and
managing telephone installations in its contract area for 15
years starting next January. PT Telkom itself will operate only
telephone installations in the greater Jakarta area and East
Java.

The five projects are part of the government's program to
install five million telephone lines within the current Sixth
Five-Year Development Program (Repelita VI) which will end in
March, 1999.

Telkom will install the other three million telephone lines in
the greater Jakarta area and East Java. Based on the contracts,
Telkom will receive an estimated total revenue of Rp 15 trillion
(US$6.5 billion).

In a few days, Telkom, the state-owned domestic
telecommunications operator, will stage a series of overseas road
shows in conjunction with its plan to float shares on the New
York Stock Exchange (NYSE) and London Stock Exchange later this
year.

Parapak also said yesterday that the consortia should ask the
government for permission if they plan to invite additional
partners.

Each of the consortia is comprised of domestic cooperatives
and enterprises in addition to such foreign telecommunications
giants as Singapore Telecom, France Cables et Radio, Malaysia
Telecom, Australian Telstra, NTT of Japan and US West
International. However, some noted overseas firms, including
Japan's Itochu and Sumitomo, have expressed interests in joining
the projects.

Listing

Meanwhile Telkom's president Setyanto P. Santosa said
yesterday that Telkom will likely follow the model of Indosat in
its listing on both domestic and overseas stock exchanges. Last
year Indosat listed 25 percent of its ordinary shares on the NYSE
and other 10 percent domestically.

"Telkom will list a maximum of 10 percent of its shares
domestically. The other 25 percent will be divided among the New
York and London stock exchanges which will be decided by our
underwriters," he said.

He added that Telkom was listed with the U.S. Security and
Exchange Commission as of Oct. 17.

"We expect to raise about $2.5 billion from the public
offering," he said.

Indosat raised $800 million from the sales of its ordinary
shares in New York and around Rp 650 billion ($285 million) from
domestic sales.

Telkom will hold overseas public presentations next week in
Tokyo, Hong Kong, Singapore, Sydney and before moving on to the
U.S. and Europe. (icn)