Weaker rupiah could force halt to cellular expansion<\/p>\n
JAKARTA (JP): The weakening of the rupiah against the U.S.
\ndollar might force local cellular operators to halt their
\nexpansion projects.<\/p>\n
Vice chairman of the Indonesian Cellular Telephone Association
\n(ATSI) Rudiantara said here on Friday that many expansion
\nprojects planned for this year were likely to be postponed if the
\nrupiah continued to weaken.<\/p>\n
New investment for cellular network expansion was originally
\nestimated to increase to US$900 million this year, from between
\n$700 million and $800 million last year, as cellular operators
\ngeared up for the entry of two telecommunications giants into the
\nmobile phone market.<\/p>\n
State-owned telecommunications companies PT Telkom and PT
\nIndosat will join seven existing companies to vie for a niche in
\nthe cellular market this year.<\/p>\n
The two companies will compete with PT Telkomsel, PT
\nSatelindo, and PT Excelcomindo Pratama (ProXL) in the global
\nsystem for mobile communications (GSM) market.<\/p>\n
Other operators include advanced mobile phone system (AMPS)
\noperators PT Telesera, PT Metrosel, and PT Komselindo, and the
\nNordic Mobile Telephone (NMT) operator PT Mobisel which will soon
\nmigrate to the Code Division Multiple Access (CDMA) system.<\/p>\n
\"When the investment plans were approved at the end of last
\nyear, the conversion rate was Rp 9,000 to the U.S. dollar; now it
\nis over Rp 11,000,\" Rudi told The Jakarta Post.<\/p>\n
This, he said, would greatly effect the continuation of the
\nprojects, especially during the second half of the year because
\nthe estimated cost of the projects could surge by as much as 20
\npercent.<\/p>\n
In addition, the weak rupiah also affected the buying power of
\nconsumers, Rudi said, indicating that reduced buying power had
\ncaused the business to be less profitable.<\/p>\n
\"Can the mushrooming cost be covered by revenue from
\nadditional customers?\" he asked.<\/p>\n
Telkom allocated Rp 90.5 billion (about $8.2 million) for the
\nroll out of its cellular project which is expected to begin
\noperations in August on the DSC-1800 frequency. The company
\nexpects to attract 400,000 subscribers within two years of its
\nofficial launching and 495,000 in the third year.<\/p>\n
Indosat, which will also operate on the DSC-1800 frequency,
\nhas allotted 35 percent from the proceeds of the sale of bonds
\nworth Rp 1.5 trillion for its cellular business. The company has
\nalso indicated that it would begin the service sometime between
\nJuly and September.<\/p>\n
Excelcomindo said it would invest $175 million for the
\nexpansion of its cellular network, and a further $350,000 for the
\nmigration of its existing GSM-900 frequency to DCS-1800.<\/p>\n
Mobisel will invest $200 million to shift its existing NMT
\nsystem to the more advanced CDMA-450 system sometime in
\nSeptember.<\/p>\n
A recent decision by the Jakarta administration to temporarily
\npostpone further base transceiver station (BTS) construction
\nlicenses, would also alter some operators' expansion plans in the
\ncapital.<\/p>\n
Indosat's president Hari Kartana said earlier that of the
\noriginal 500 BTSs to be constructed, only 200 have so far been
\nbuilt and 40 are operational.<\/p>\n
Telkom said it needs to construct 452 BTSs, with 127 located
\nin Jakarta. So far it has constructed 140 of them, Kompas daily
\nreported.<\/p>\n
Rudiantara, who is also the director of Excelcomindo, said the
\npostponement would certainly effect the expected launch time of
\nboth Indosat and Telkom, and would further undermine the
\ncompanies' cashflow.<\/p>\n
However, existing operators which have so far been operating
\nthe GSM-900 frequency were little affected by the
\nadministration's decision, as their networks were already firmly
\nestablished.<\/p>\n
Excelcomindo's general manager for engineering M. Danny
\nBuldansyah earlier said that there were two ways for the company
\nto increase its customer capacity -- by adding more BTSs or by
\nupgrading existing BTSs to the DCS-1800.<\/p>\n
He said to be able to serve more customers, the company would
\nneed to add some 105 BTSs in Jakarta to raise the total to 400 by
\nthe end of the year.<\/p>\n
\"But land acquisition has become increasingly difficult, so if
\nit fails, we could always add capacity by upgrading existing BTSs
\nto DCS-1800,\" Danny added.<\/p>\n
Between January and March this year, cellular users in
\nIndonesia increased by 485,000, which brings the total to 4.2
\nmillion users, Rudi said.<\/p>\n
By the end of the year, cellular users are expected to reach
\n5.2 million, compared with 3.7 million in 2000, he said.<\/p>\n
\"Examining the first quarter new users, it looks as though
\nthis target could be achieved, but again it would depend largely
\non the economic situation,\" Rudi said.<\/p>\n
For the second half of this year, cellular operators will have
\nto concentrate on optimizing between network quality and
\nsubscriber capacity, he said.<\/p>\n
Rudy explained that with the expected limitations on
\ninvestment, operators had to choose whether to maintain the
\nnumber of customers and increase the quality of the network, or
\nto increase the number of subscribers at the expense of quality.<\/p>\n
\"Operators need to balance both needs carefully,\" he added.
\n(tnt)<\/p>",
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