Telkom's workers rally against deal to end monopoly

The Jakarta Post, Jakarta

Thousands of employees of state telecommunications company PT Telkom Tbk from Yogyakarta and Central Java rallied here on Thursday in their strongest protest to date against the deal that will end Telkom's decades-long monopoly over the country's fixed- line phone service.

The workers, more than 3,000 in all, arrived in dozens of buses and cars before gathering at Monas park in Central Jakarta to protest the planned transfer of Telkom's assets in both provinces to Indosat, also a state company.

"The government is stubborn -- Telkom's employees as well as people in Yogyakarta and Central Java have clearly rejected the sale of Divre IV," Syahrul Akhyar, the head of Telkom's labor union in both provinces, said.

Divre IV denotes Telkom's operation in both provinces.

Carrying banners with slogans like "Once the other operator gets in, the Divre IV will turn into a sea of fire!" and "Telkom yes, other operator no!" the protesters met with Minister of Communication Agum Gumelar.

Agum said he sympathized with workers' concerns and would bring them into his discussions with top governmental officials.

The protesters then left for Bandung in the afternoon, where they planned to hold an even bigger demonstration outside Telkom's headquarters.

The workers have repeatedly voiced their objections since April of last year when Telkom and Indosat first announced their deal to end their cross-ownership in the country's telecommunications industry.

Indosat is one of two companies licensed by the government to operate international calls, while Telkom has been holding its monopoly on the country's fixed line telephone service.

Under the deal, worth US$1.5 billion, Telkom will receive Indosat's 35 percent interest in the country's biggest cellular phone operator, PT Telekommunikasi Indonesia (Telkomsel), while Indosat will take over Telkom's fixed line assets in Yogyakarta and Central Java.

The government said the deal was aimed at creating two strong state-owned telecommunications companies in anticipation of the tough competition that will come once the government liberalizes the sector in 2003.

The deal will pave the way for Indosat to enter the fixed line business, which is said to be a good alternative for the company now facing stiff competition from Internet providers in the international call sector.

Many, including the protesting Divre IV workers, suspected that the deal was part of a government strategy to add the value of Indosat before selling it to foreign investors.

Under the deal, signed in April 2001, Telkom and Indosat set Jan 31, 2002 as the deadline by which both companies must agree on all aspects related to the asset transfer.

The deal will be considered void should they fail to reach an agreement on all aspects of the asset transfer by the deadline.

They also must agree on the transfer of Telkom's employees in both provinces to Indosat.

With the workers continuing their protests, both could be unable to reach an agreement on labor matters by the deadline. This could prevent them from executing the deal.

Several analysts suspect that Telkom's management, which cannot afford to lose the company's monopoly on fixed line assets, was behind the demonstration.

Telecommunication analyst Roy Suryo speculated that Telkom's management was trying to foil the deal so that no outsider, such as Indosat, could audit its Divre IV operation.

"There is a fear that the audit process will find leaks and mismanagement in the old company," he said.