What unique situation does Telekom have to install? What effect will the current financial situation have on Telekom?

Interviewer: Welcome to the studio, Ms. Vogel. As President of Telekom you have been in a difficult position over the last few months of financial uncertainty in the region. How tough has it been?
Carol Vogel: I want to be positive and see the current situation as a challenge. The capital requirements of Telekom’s infrastructure are enormous. The recent currency turmoil is bound to slow down investment in the short term, but it is unlikely to reduce its total volume in the long term.
Interviewer: But isn’t it the case that some of your projects have been delayed?
Carol: Yes, but not cancelled. Our advisers are telling us that a temporary reduction in the number of new projects is net serious. We still have many ongoing contracts with foreign operators which do not come up for renewal until 2010.
Interviewer: But it appears that you have several major challenges in your effort to upgrade the telecommunications network in this country.
Carol: Yes, that is true. I see three major challenges. The first is the nature of our country. We are a country of several thousand islands: this presents a unique problem for the existing technology to deal with. Secondly, there is the question of affordability. We have a relatively low GDP per capita, $1,132 by the end of 1998. And finally funds—it costs between $1,00Oand $1,200 to put in a line.
Interviewer: Yes, I believe that there are fewer than three lines per 100 people.
Carol: There are plans which will go ahead to install 6 million lines by the end of the year which will improve this figure to around five lines for every 100 people. In the West the average is about 60 lines per 100 people.
Interviewer: So there is a long way to go. Is the government playing its part?
Carol: The government has been very supportive. By allowing the industry to become privatised there has been much progress. It acted very sensibly and compared to other countries in the region it has worked very well. Our relationship with the government and other telecommunications’ operators is good.
Interviewer: You are referring to the huge international group investors?
Carol: Yes. In 1995, five international groups committed themselves to the development of the telecommunications infrastructure in five regions of the country. Each group agreed to install a target number of lines and operate them for 15 years and then return them to Telekom.
Interviewer: And it looks as if the private sector development is also well-established in the mobile communications sector?
Carol: The number of subscribers has jumped to 562, 500 from 25,000 two years ago. There are three competing suppliers. Each of these three operations is a joint venture with ourselves. This is an area which is seeing major growth throughout Asia. We are glad to be part of it.
Interviewer: So in your view there is not too much to worry about?
Carol: There are plenty of issues that need to be resolved but I am sure that the good times will return and this can only mean that Telekom will prosper in the long run.