Telkom will spend Rp 12b on capital next year<\/p>\n
Rendi A. Witular, The Jakarta Post\/Jakarta<\/p>\n
State-owned PT Telekomunikasi Indonesia (Telkom), the nation's
\nlargest telecommunication company, plans to spend at least some
\nRp 12 trillion (US$1.19 billion) for next year's expansions and
\noperations.<\/p>\n
Telkom president director Arwin Rashid told The Jakarta Post
\nrecently that more than 50 percent of the allocated capital
\nexpenditure (capex) would be spent on expanding the company's
\ncellular business and adding new equipment.<\/p>\n
"We have not come up with a definite figure yet, as it is
\nstill being arranged. But we will certainly allocate some Rp 12
\ntrillion for capex, which is more or less at the same amount as
\nthis year's allocation," he said.<\/p>\n
Arwin said this year's capex would be lower than the initial
\nallocation of Rp 13.7 trillion.<\/p>\n
Telkom cellular subsidiary PT Telkomsel has engaged in an
\naggressive expansion to take advantage of the country's untapped
\nmobile phone users, which are estimated to reach more than 50
\nmillion, or some 23 percent of the country's 220 million people.<\/p>\n
At the end of March, the company had 17.9 million users, or 55
\npercent of the market share.<\/p>\n
Telkom owns 65 percent of Telkomsel, while Singapore
\nTelecommunications Ltd. (SingTel), Southeast Asia's largest
\ntelecommunication company holds the remainder.<\/p>\n
"Growth in cellular business has outperformed other
\ntelecommunication businesses. Telkom will remain focused on
\nexpanding the cellular business, which is becoming more
\ncompetitive," Arwin said.<\/p>\n
Telkomsel expects its users to grow by more than 50 percent
\nthis year to around 25 million this year, and at least by about
\n30 percent next year. The company had around 16 million
\nsubscribers last year.<\/p>\n
Higher economic growth, which propelled stronger purchasing
\npower, is driving cellular demand in Indonesia and the country's
\n$258 billion a year economy is projected to grow by around 5.7
\npercent this year and 6.2 percent in 2006.<\/p>\n
In the fixed-line business, Telkom is targeting users to reach
\nsome 11 million this year, with at least 15 percent growth in new
\nusers next year.<\/p>\n
Currently, only about 4 percent of the country's population
\nhave access to fixed telephones, including fixed-line and fixed
\nwireless phones. Telkom controls some 97 percent of the domestic
\nmarket.<\/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, Telkom and smaller rival PT Indosat are obliged to build
\nat least 1.4 million lines.<\/p>\n
Critics have said that the low penetration of fixed lines in
\nrural area is because Telkom is reluctant to implement its public
\nservice obligations as mandated by the government. The business
\nis a high-investment one with lower returns than other sectors.<\/p>",
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"sponsor": "Okusi Associates",
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