Cellular phone growth to slow down<\/p>\n
By I. Christianto<\/p>\n
JAKARTA (JP): The currency crisis, which has seen the value of
\nthe rupiah drop almost 60 percent against the U.S. dollar since
\nJuly, will affect the growth of the mobile phone industry in
\nIndonesia.<\/p>\n
The rupiah's sharp depreciation will not only limit new
\nsubscribers but also make cellular expansion more expensive.<\/p>\n
Cellular service providers, like most other companies, are
\nfacing difficulties in paying back their offshore loans.<\/p>\n
The director of Telkomsel, Ardin Ichwan, said the government
\nhad urged service providers to put the brakes on expansion.<\/p>\n
\"We were told to improve capacity, coverage and service but
\nnot to expand our infrastructure as it will require much more
\ninvestment,\" he said.<\/p>\n
There are seven cellular telecommunications suppliers in
\nIndonesia, offering three different systems -- Advanced Mobile
\nPhone System (AMPS), Nordic Mobile Telecommunications (NMT) and
\nGlobal System for Mobile Communications (GSM).<\/p>\n
At the end of September there were 1.04 million cellular phone
\nusers in Indonesia. They subscribe to GSM, which is run by
\nSatelindo, Telkomsel or GSM-XL; AMPS by Komselindo, Metrosel or
\nTelesera; and NMT by Mobisel.<\/p>\n
The government has forecast there will be two million users of
\nmobile phone services by March 1999, the end of the Sixth Five-
\nYear Development Plan.<\/p>\n
New providers<\/p>\n
To support its plan, the government has granted licenses to
\nfive more companies to develop two new cellular technologies: the
\nDigital Cordless System (DCS-1800) and Personal Mobile Phone
\nService (PHS).<\/p>\n
The five companies comprise PT Selnas and PT Indophone which
\nwill operate DCS-1800 nationwide; PT Primasel which is to operate
\nPHS in East Java; PT Indosel which will operate DCS-1800 in
\nGreater Jakarta; and a consortium of state-owned PT Telkom, PT
\nIndosat and PT Inti, which will operate PHS in Greater Jakarta.<\/p>\n
Selnas is 10 percent owned by Telkom and 90 percent owned by
\nPT Cellnet Nusantara, a private firm controlled by businessman
\nSudwikatmono, one of President Soeharto's close relatives, and
\nSiti Hutami Endang Adiningsih, the President's youngest daughter.<\/p>\n
Telkom has a 35 percent stake in Indophone which is 65 percent
\ncontrolled by PT Nusantara Ampera Bakti (Nusamba). Nusamba's
\nshareholders include timber tycoon Bob Hasan, who is also the
\ncompany's chief commissioner; businessman Sigit Hardjojudanto,
\nSoeharto's eldest son; and the Supersemar, Dakap and Dharmais
\nfoundations, all chaired by Soeharto.<\/p>\n
Indosat controls 65 percent of the shares in Indosel, while
\nTelkom and Inti control 5 percent and 14 percent respectively.
\nOther shareholders include PT Bangun Nusantara Persada and
\nKopindosat.<\/p>\n
However, the five new cellular companies, which are scheduled
\nto start trial operations mid next year, will likely face
\ndifficulties due to the economic turmoil.<\/p>\n
Investments in the cellular sector are not cheap. The new
\ncellular suppliers, though they are ready to invest in
\ninfrastructure and offer reasonable packages to the public, will
\nbe hard pushed to attract new customers because people will think
\ntwice about using their services when the economy is unstable.<\/p>\n
Delay<\/p>\n
The currency crisis has forced the government to delay the
\nappointment of 11 new cellular providers to supply DCS-1800 and
\nPHS regionally in six areas of the country.<\/p>\n
Minister of Tourism, Post and Telecommunications Joop Ave said
\nthe government decided, after a series of assessments, to
\npostpone the announcement of the winners, which was scheduled for
\nSeptember.<\/p>\n
The rupiah turmoil has affected a wide range of businesses
\nincluding the prospective suppliers of mobile phone services,
\nJoop said.<\/p>\n
\"Even if we announced the winners, they (the new cellular
\nsuppliers) would not have money to start the projects.\"<\/p>\n
The 11 licenses include six regional licenses for DCS-1800
\noperations in Sumatra, West Java, Central Java, East Java,
\nKalimantan and eastern provinces and five regional licenses for
\nPHS in Sumatra, West Java, Central Java, Kalimantan and the
\neastern islands.<\/p>\n
The country was to have a total of 23 service providers by
\nnext year, offering six different systems and with Greater
\nJakarta and East Java as the key markets.<\/p>\n
Ardin said the target for cellular users must be reviewed as
\nthe five new service providers would not start on schedule and
\nthe granting of 11 additional licenses had been delayed
\nindefinitely.<\/p>\n
The government also needs to consider a possible weakening in
\nthe public's purchasing power.<\/p>\n
Cellular users will probably grow at slower rate compared to
\nprevious years.<\/p>\n
Under the government's plan to license more service providers,
\ncoupled with the decreases in handset prices, the high growth of
\ncellular telecommunications services until 2000 is to be
\nmaintained.<\/p>\n
Telecommunications analysts previously believed that cellular
\nservices were likely to grow in the coming years at rates higher
\nthan those projected by Merrill Lynch of the United States.<\/p>\n
Cellular telecommunication services here grew 41 percent in
\n1993, 80 percent in 1994, 127 percent in 1995 and 90 percent last
\nyear.<\/p>\n
The company predicted, however, that growth might decline to
\n76 percent this year, 38 percent next year, 37 percent in 1999
\nand 31 percent in 2000.<\/p>\n
But the predicted slowdown was not because of economic woes as
\nthe report was issued long before the crisis began.<\/p>\n
It simply showed that the rate of market penetration of
\ncellular services in Indonesia would remain the lowest in the
\nregion -- which is estimated at 0.2 percent in 2000 -- compared
\nto 38.1 percent in Hong Kong, 27 percent in Singapore, 18.2
\npercent in South Korea and 11.3 percent in Malaysia.<\/p>\n
Table: Number of cellular users<\/p>\n
Operator System Sep 30, 1996 Sep 30, 1997<\/p>\n
--------------------------------------------------<\/p>\n
Excelcomindo GSM -- 111,989<\/p>\n
Komselindo AMPS 90,958 114,000<\/p>\n
Metrosel AMPS 22,102 37,178<\/p>\n
Mobisel NMT 22,907 30,847<\/p>\n
Satelindo GSM 190,000 368,113<\/p>\n
Telesera AMPS 6,158 6,642<\/p>\n
Telkomsel GSM 130,682 372,698<\/p>\n
--------------------------------------------------<\/p>\n
Total 462,807 1,041,467<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/cellular-phone-growth-to-slow-down-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }