The millennium bug is bound to do strange things to telephone systems worldwide and in Asia, most firms are taking the threat seriously, a Reuters survey has found. At stake is customer satisfaction, reliable billing and cashflows and share value for investors at a time of deep economic turmoil.

Despite the region's financial crisis, major telephone companies have millennium programmes in place and most say their systems will be compliant sometime in 1999, according to the survey.

Others, such as Hongkong Telecom and Australia's Telstra, are aiming for the end of this year, while several new mobile operators in the region are already compliant.

Telstra, for example, says it expects to spend around A$500million ($298 million) through to mid-2000 on its compliance programme. Indonesia's Telkom was expected to spend$195 million during calendar 1999, according to Merrill Lynch's June global survey on the year 2000 bug, which is often called Y2K.

Many other major telecom firms have also set aside large sums to weed out the potentially chaos-causing bug, the Merrill report and Reuters survey found.

The millennium bug is not a virus but an old programming glitch that uses two numbers to identify years. This means the switch from 1999 to 2000 could be read as the year 1900. So, a telephone call straddling 1999 and 2000 could be deemed starting a century earlier and mean a very large bill.

The threat is very real not just to the companies but also clients.

On Wednesday, Hongkong Telecom said profits could suffer if clients failed to get rid of the millennium bug.

Telephones and fax machines could stall at the start of 2000 and while that would not affect operations of the giant telecommunications provider, it would threaten its coffers.

"Our clients must try to become Y2K compliant. If their telephones and faxmachines can't work, they won't be able to make IDD calls and that will affect our profits," said CL Chan, company's Y2K programme director, at a news briefing.

According to the Reuters survey, governments in all Asian countries contacted are aware of the problem. Task forces have been formed in most countries to guide companies and government departments needing to upgrade software and switching equipment. Some countries have issued decrees requiring compliance by a fixed date.

Taiwan, for example, requires all telecom companies to complete their re-programming by end-1998 and have the systems tested successfully by June 1999.

In China, the government says it can only urge awareness of the Y2K bug and that telecom equipment users were responsible for debugging their systems.

The government has set up a task force to coordinate a drive against the bug and has issued documents urging awareness.

"It's hard to say if the problem can be solved by the year 2000," a ministry of information industryofficial said.

"It is a tough job which has cost large amounts of labour and money."

Another ministry official said the millennium bug threatened to disrupt China's telephone network because the system was extensively computerised.

Senior analyst Howard Hsu sees a wider problem: a telephone company might be millennium compliant but a subsidiary might not.