Monday, October 24, 2005

Indonesia cut Hutchison’s 3G

Indonesia government had asked PT Cyber Access Communications, a subsidiary of Hong Kong based Hutchison Communications Limited, to return 5 Mega Hertz out of its 15 MHz 3G license.
Basuki Yusuf Iskandar, director general for telecommunication at the ministry of information and communication, said he expects Cyber Access to return the 5 MHz this week saying the 15 MHz license is just too big for the company and would only put the company in trouble as it should pay bigger bandwith usage cost.
Cyber Access is one of two operator awarded 3G license last year with PT Natrindo Telepon Seluler (NTS).
Cyber Access has two licenses. One on 2G with 10 MHz and one on 3G with 15 MHz. This company was controlled by Charoen Pokphand Group Indonesia. In March 2005, Hutchison Telecom entered into an agreement to acquire 60% stake in Cyber Acess with cash consideration of US$120 million. CP Group Indonesia owns the remaining 40% shares. Both companies claimed to invest US$300 million to develop 3G services in Indonesia scheduled for commercial operation early next year.
Last year, government warned Cyber Access that it could lose its 3G mobille license if it failes to deploy the infrastructure immediately.
The company is required to develop 939 base stations by 2005, 1,557 base stations by 2006 and 2,018 base stations by 2007. But CAC shows no signs that it would fulfil the 939 base station obligation in 2005.
Last month legislator Ade Daud Nasution from Reform Crescent Party asked Communication and Information Minister Sofyan Djalil to review the 3G license awarded to Cyber Access and Natrindo Telepon Seluler (subsidiary of Lippo Group).
Ade Nasution said high-level lobbies were behind the license for Cyber and Natrindo. Nasution mentioned Taufik Kiemas (husband of former president Megawati Soekarnoputri) and Prayogo Pangestu (owner of Barito Group) were behind Cyber, while Akbar Tanjung (former house speaker) and Theo Sambuaga (commissioner at Lippo and member of House Commission I) were behind Natrindo.
Malaysia’s Maxis Communication had acquired 51% of Natrindo for US$100 million and agreed to lend US$150 million for four years. People criticized both Cyber Access and Natrindo for selling their shares before they managed to deliver 3G services saying they’re acting only as license brokers.
In May, government said it would withdraw all 3G licenses and reopen the bidding but failed to do so afraid of possible legal battle in international courts.
So, now government is asking Hutchison to give back the 5 MHz. Just like when Mobile-8 Telecom (a subsidiary of Bimantara) was asked to give back the bandwith.

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