Telkom may start overseas expansion next year to help boost revenue<\/p>\n
Rendi A. Witular, The Jakarta Post\/Jakarta<\/p>\n
Despite a huge untapped market domestically, PT Telkom plans
\nto expand its overseas market next year to help achieve greater
\nrevenues.<\/p>\n
Telkom president director Kristiono said the company might
\nacquire smaller telecommunications firms abroad next year, as it
\ncould no longer expect higher revenue growth from the local
\nmarket due to stiff competition with other players in the sector.<\/p>\n
\"We cannot depend anymore on \"organic growth\" to support our
\nbusinesses. In order to grow by more than 25 percent, we need to
\nshift to non-organic growth by acquiring smaller firms overseas,\"
\nsaid Kristiono at a media gathering on Monday.<\/p>\n
Kristiono said the regional expansion would be centered in
\ncountries that were still lagging behind in the cellular business
\nbut had a potential market.<\/p>\n
\"We haven't decided the (size of) funds (needed) for the
\nexpansion nor the firms that we are after. But we will certainly
\ntarget countries that lag behind in their cellular business
\ndevelopment,\" he said.<\/p>\n
Telkom finance director Rinaldy Firmansyah said that the
\ncompany was currently eying two overseas firms for acquisition,
\nwith the funds for the plan to be allocated from the company's
\ncapital expenditures in next year's budget.<\/p>\n
Publicly listed Telkom has previously said it would allocate
\nsome Rp 14 trillion (US$1.55 billion) in capital expenditures for
\n2005, in which some 50 percent of the allocation would be spent
\non expanding its cellular businesses.<\/p>\n
Kristiono and Rinaldy, however, refused to elaborate further
\non the plan, saying that the management was currently still
\nstudying the targeted companies.<\/p>\n
But Telkom president commissioner Tanri Abeng said the company
\nwas currently in negotiations with the companies, which were
\nlocated outside Southeast Asia, possibly in India, China and
\nLatin America.<\/p>\n
\"There is indeed a plan for acquisition. Currently, the board
\nof management is still negotiating with several companies. But at
\npresent, we cannot name the companies yet,\" said Tanri, who is a
\nclose friend of Vice President Jusuf Kalla.<\/p>\n
Telkom's plan for overseas expansion next year, would be
\nsooner than it had initially planned. In a previous report,
\nKristiono said the company would have the capability to expand
\nabroad in 2007 after it had completed its major network expansion
\nin the domestic market.<\/p>\n
Currently, only about 4 percent of the country's 220-million
\npopulation have access to fixed telephones, including fixed-line
\nand fixed wireless phones. Telkom controls some 97 percent of the
\ndomestic fixed-line business this year, or about 9.5 million
\nusers.<\/p>\n
The government has urged local phone operators to build 10.7
\nmillion fixed telephone lines by the end of 2008. This year
\nalone, the operators are obliged to build at least 1.4 million
\nlines.<\/p>\n
Critics have said that the low penetration of fixed lines,
\nmostly in rural areas, is primarily because Telkom is reluctant
\nto implement its public service obligation as mandated by the
\ngovernment due to the low proceeds gained in the fixed-line
\nbusiness, while the investment needed is quite large.<\/p>\n
Next year, Telkom is obliged to install 400,000 fixed lines.<\/p>\n
Telkom shares ended unchanged at Rp 5,000 on the Jakarta Stock
\nExchange on Monday.<\/p>",
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