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)