Telkom to slash 6,000 jobs by end of this year

JAKARTA (JP): After cutting the number of offices as a part of its restructuring program, the state-owned domestic telecommunications firm, PT Telekomunikasi Indonesia (Telkom), plans to scrap 6,000 jobs by the end of this year.

The company's president, Setyanto P. Santosa, said yesterday that the restructuring was actually an old program introduced in 1990.

"Since 1990 the management has known that a number of workers at certain levels can no longer keep up with Telkom's rapid progress. The company needs to compete on the market by hiring well-qualified personnel," he said.

He said that telecommunications operators, including Telkom, which plans to float its shares domestically and internationally, are trying to catch up with global technology.

"At present, 36.77 percent of Telkom's total 42,177 employees have only elementary backgrounds and are stuck with the same skills and careers," he said, adding that most of the employees targeted in the job reduction program are around 46 years of age and have been working with Telkom for 25 years.

According to Setyanto, Telkom will compensate those who participate in the program starting on July 1 to Dec. 31.

He said that Telkom provides early retirement compensation at about 80 times an employee's current salary level. "In this program, we are offering promising rewards. We are allocating a total of about Rp 300 billion (US133.5 million) in compensation."

Setyanto, who was attending a hearing between Minister of Tourism, Post and Telecommunications Joop Ave and Commission V of the House of Representatives yesterday, also said that Telkom will save about Rp 1.5 trillion ($667.5 million) by slashing the 6,000 jobs.

Telkom recently simplified its operational system and management. The company now operates just seven area offices, five less than before, and has just four directorates instead of six.

Telkom will likely continue the restructuring program, which is expected to improve efficiency and prepare it for the initial public offering of its shares.

Minister of Finance Mar'ie Muhammad said recently that Telkom's shares will be listed in New York and London in addition to the domestic capital market.

Setyanto said earlier that in 1991, 29 people were employed at Telkom to service each 1,000 telephone lines, while the current rate is 12 people for 1,000 lines. "The rate in developed countries is about four to five for 1,000 lines."

Joint operation

Meanwhile, Secretary-General of the Ministry of Tourism, Post and Telecommunications Jonathan L. Parapak said in yesterday's hearing that Telkom expects to receive a total revenue of Rp 50 trillion (22.25 billion) within the next 15 years from the joint operation contracts with private firms in developing two million telephone lines in the country.

The government announced recently that five consortia will be awarded joint operation contracts to manage telephone lines in Kalimantan, Sumatra and West and Central Java.

Parapak said that there will not be any competition between Telkom and the five consortia as "they will develop and install the telecommunications facilities for and on behalf of Telkom."

Meanwhile, Telkom's director John Welly said that the contracts will be signed later this year after the completion of the legal aspects.

The consortia are now preparing to legally establish the joint venture companies, he said.(icn)