Cellular industry, promising with tight rivalry<\/p>\n
Debbie A. Lubis, The Jakarta Post, Jakarta<\/p>\n
The cellular business in the country will continue to enjoy
\nrapid growth this year and in years to come but only strong
\noperators will survive the competition in the long run, analysts
\nsay.<\/p>\n
The number of cell phone users has been growing at double-
\ndigit rates in the past few years, and is expected to continue to
\ndo so in the short-term.<\/p>\n
The number of cell phone users will easily surpass the number
\nof fixed-line customers.<\/p>\n
The Association of Indonesian Cellular Operators (ATSI)
\nrevealed that at the end of last year the industry served a total
\nof 6.57 million cell phone users, almost double the 3.67 million
\nusers the previous year.<\/p>\n
Just 567,000 people owned cell phones in 1996.<\/p>\n
It is believed that cellular phone users will soon outnumber
\nfixed-line customers, who, according to domestic telephone
\nmonopoly PT Telkom, totaled 7.2 million at the end of last year.<\/p>\n
Besides rapid growth, the cellular industry also enjoys better
\nrevenue per user than the fixed-line industry, Telkom said.<\/p>\n
Telkom said that average revenue per user at its cellular
\ndivision (Telkomsel) last year was Rp 287,000 (around US$28) a
\nmonth, more than twice the Rp 141,000 a month average of Telkom's
\nfixed-line users.<\/p>\n
With a total of 6.57 million subscribers last year, cellular
\noperators raked in a total revenue of Rp 10.5 trillion (about
\n$1.05 billion).<\/p>\n
ATSI chairman Rudiantara predicted that total revenue in the
\ncellular business would reach Rp 15 trillion this year.<\/p>\n
His figure was based on conservative predictions of the growth
\nof cell phone users this year.<\/p>\n
He said that most new subscribers would come from the pre-paid
\nservices, which should grow by between 75 and 80 percent this
\nyear.<\/p>\n
He also predicted that non-voice services, mainly Short
\nMessaging Service (SMS), would contribute 12 percent of the total
\ncellular business revenues this year, a slight increase from 8
\npercent last year.<\/p>\n
Despite the rapid growth of demand for cell phone services,
\nRudiantara predicted only three to four operators would survive
\nthe competition in the next few years.<\/p>\n
\"In the next two or three years, the existing cellular
\noperators will be crystallized into three or four,\" Rudiantara
\ntold The Jakarta Post.<\/p>\n
Crystallization and consolidation of businesses would
\neventually force uncompetitive operators out of the market, as
\nwas happening in Malaysia and the Philippines.<\/p>\n
Citing examples of consolidation, Rudiantara said that PT
\nIndosat Multimedia, that offers the Indosat MultiMedia Mobile
\n(IM3) services, was using the roaming facility belonging to its
\nsister company PT Satelindo.<\/p>\n
Also, Telkom merged its Global System for Mobile
\nCommunications (GSM-1800) operations with its cellular
\nsubsidiary, Telkomsel, he said.<\/p>\n
Small operators operating in a number of provinces using
\noutdated technology would be eventually forced out of the market,
\nRudiantara said.<\/p>\n
He predicted that only cellular operators with national
\nlicenses and the latest GSM technology would survive.<\/p>\n
They are companies like PT Telkomsel, PT Satelindo and PT
\nExcelcomindo Pratama (Excelcom). Together, the three operators
\ncontrol 95 percent of the market.<\/p>\n
As of the end of last year, Telkomsel had 3.25 million
\nsubscribers, Satelindo 1.76 million and and Excelcom 1.22
\nmillion.<\/p>\n
In addition to the three largest operators, Indosat also holds
\na national license. However, Indosat, with its IM3 service, is a
\nrelative new comer. It entered the market only last year and has
\n150,000 customers.<\/p>\n
Indosat-M3 director Hasnul Suhaimi was confident that his
\ncompany would quickly catch up with the three biggest operators.
\nIndosat Multimedia aimed to grab 5 percent of market share this
\nyear, with around 450,000 users.<\/p>\n
Indosat has invested a total of Rp 7 trillion in its IM3
\nbusiness.<\/p>\n
In addition to the four operators, four other operators have
\nbeen around since the mid 1990s, but they failed to gain ground.
\nThey are Komselindo, Metrosel, Telesera and Mobisel. Their
\nsubscribers range from 10,000 to 70,000 users.<\/p>\n
There are seven other companies licensed by the government to
\noperate at the provincial level. However, only one of them is in
\noperation: PT Natrindo, with its commercial name Lippo Telecom
\noperating in East Java.<\/p>\n
The other six license holders are PT Astratel for Sumatra, PT
\nAW (Aria West) for West Java, PT Inti for Jakarta, PT Mitra for
\nCentral Java, PT Primarindo for Kalimantan, and PT Kodel for Bali
\nand Sulawesi.<\/p>",
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