Telkom regional office plans strike

The Jakarta Post Semarang

Employees of state-owned telecommunications firm PT Telkom's Central Java and Yogyakarta regional offices will strike on Monday to protest plans to transfer the unit to state-owned telecommunications company PT Indosat, according to a labor union chief.

Chief of Telkom Divre IV workers union Syahrul Akhyar said on Sunday that the strike would continue until the government formally scrapped the asset transfer plan.

"We apologize to all Telkom customers because we will not be able to provide optimal service (during the strike)," Syahrul told The Jakarta Post.

Divre IV covers Telkom's operations in the Yogyakarta and Central Java provinces.

Telkom and Indosat reached an agreement in May last year to swap assets in a bid to end their cross-ownership of the country's telecommunications industry.

Under the plan, Telkom will sell the Divre IV unit to Indosat, one of two operators licensed by the government to offer international call services. The deal will pave the way for Indosat to enter the fixed-line telecommunications business besides the international phone business where it had been facing stiff competition from international providers.

Meanwhile, Telkom will acquire Indosat's 35 percent stake in the country's largest cellular phone provider, PT Telkomsel.

The government hopes the transaction will strengthen the two state-owned telecommunications companies in anticipation of strong competition when the telecommunications sector will be liberalized in 2003.

However, employees of Telkom Divre IV have protested the plan. Last week, some 3,000 employees staged a peaceful demonstration in Jakarta to urge the government to abandon the plan.

The massive protests by Telkom workers have raised concerns that the asset transaction could collapse.

Some analysts believe that both the top management of Telkom and Indosat were committed to concluding the deal as it would benefit the two companies, while the management of Telkom Divre IV rejected the plan due to fears of a reshuffle and an audit that would reveal past corrupt practices.

Late last year, massive protests by workers of state-owned cement giant PT Semen Gresik managed to delay the government plan to sell a controlling stake in the company to Mexico's Cemex SA de CV.