An influx of new foreign-backed competitors will not have an impact on PT Telkom's bottom line until 2008, a senior company executive said Tuesday (14/11/06).
The massive infrastructure investment needed to allow new telecommunications firms to compete adequately in Indonesia will delay any impact they might have on Telkom for a while, chief financial officer, Rinaldi Firmansyah was quoted as saying by Dow Jones Newswires.
"New (market) entrants should invest huge amounts in infrastructure... so in 2007 our performance won't be disrupted, but there will be some effect in 2008,” Firmansyah said.
The new competitors include Malaysia's Maxis Communications Bhd, which owns 51% of PT Natrindo Telepon Selular, and Hong Kong-listed Hutchison Telecommunications International Ltd, which owns 60% of PT Cyber Access Communications. Telekom Malaysia already owns 25% of PT Excelcomindo Pratama, Indonesia's third largest cellular operator by assets.
Telkom's strong domestic brand will help the company fend off the new market entrants, Firmansyah said. "Telkom is still a very strong brand, so it will be hard for new entrants to (successfully) brand themselves among (Indonesian) consumers."
He said he expects Telkom's total market capitalization to increase to $30 billion by 2010 from the current level of $20.7 billion.
Meanwhile, Firmansyah said Telkom may sell bonds or seek loans to help pay for Rp1 trillion in debt maturing middle of next year.
"We will make a decision two months before the debt matures," he said, according to The Jakarta Post. Telkom would also use its existing cash to repay the debt, he added.
Telkom should remain attractive in the eyes of investors after reporting a 62% rise in net profits to Rp9.22 trillion up to the end of the third quarter.
Telkom, through its Telkomsel subsidiary, currently controls 40% of Indonesia's third generation, high speed GSM-based mobile phone market, and has a total of 1 million subscribers, company president Arwin Rasyid said. It is targeting a 60% market share, he added.
Firmansyah, meanwhile, said revenue from the company's CDMA-based TelkomFlexi service may grow by up to 50% next year, with Telkom planning to spend more than Rp15 trillion on network expansion next year.