Cellular firms plan huge investment

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.