Cellular firms plan huge investment

Tony Hotland, The Jakarta Post/Jakarta

Investment in the country's cellular industry is estimated to reach more than US$1 billion in 2005, as operators move to capitalize on growing market demand due to the relatively low penetration of fixed-line telephones.

The two largest industry players -- PT Telekomunikasi Seluler (Telkomsel) and PT Indonesian Satellite Corporation (Indosat) -- are set to invest millions of dollars, mainly to build and upgrade their infrastructure.

"The market here is still very big. So for the coming years, there are still a lot of opportunities for business players. And as a mobile operator, our job and focus is to build infrastructure to be able to collect as many new subscribers as we can," Telkomsel business director Leong Shin Loong said on Tuesday.

Loong said Telkomsel, which has about 50 percent of the total market share, expected to invest some Rp 5 trillion ($548.84 million) this year.

"For next year, the figure will likely be up to Rp 6 trillion, and most of that will be spent on infrastructure," he said.

As of August, Telkomsel had some 13 million subscribers, with 3.4 million new subscribers registered since the beginning of the year. Its half-year profit rose by 37 percent from the same period last year to about Rp 1.94 trillion.

Indosat also plans to expand its infrastructure and facilities next year, with an estimated total investment of $500 million.

"We need to expand all of our facilities if we want to meet our target of securing between 32 percent and 33 percent of the total market share (from the current 30 percent)," said Indosat cellular marketing director Hasnul Suhaimi.

Indosat, with 7.5 million subscribers as of the end of August, has revised upward its full-year target of subscribers from 8.5 million to 9.5 million, Hasnul said.

The company scored a year-on-year 80 percent increase in profit for the January to June period to Rp 717.60 billion, largely the result of a 51 percent profit increase in its cellular division.

There are at least 25 million cellular telephone subscribers nationwide, a figure that is partly boosted by the low availability of fixed-line telephones. Only about nine million of the country's 220 million people have access to fixed-line phones.

According to the Indonesian Association of Cellular Telephone Operators, there will be about 28 million cellular subscribers by the end of the year.

That figure is projected to skyrocket to about 40 million next year, mainly spurred by the wider availability of cellular services and lower rates.