Cellular industry to invest US$1b
Tantri Yuliandini, The Jakarta Post, Jakarta
The country's cellular phone operators will invest at least US$1 billion this year to expand their networks to cope with growing demand, the Association of Indonesian Cellular Operators (ATSI) says.
The figure covers only the investment planned by the country's top five operators, ATSI vice chairman Rudiantara told The Jakarta Post over the weekend.
There are 16 cellular operators in the country, including the top five of PT Telkomsel, PT Satelindo, PT Excelcomindo Pratama, PT Natrindo of the Lippo Group and PT Indosat MultiMedia Mobile (IM3), which is the newly established subsidiary of state-owned telecommunications firm PT Indosat.
Rudiantara said the five operators invested approximately $900 million last year.
Of the total, some $700 million had been invested by Telkomsel, Satelindo and Excelcomindo.
The other $200 million was invested by IM3 and Natrindo, which operates in East Java.
"The $700 million was investments generated internally, while $200 million was from the companies' shareholders," Rudiantara said.
He said that if all went as planned this year -- including the planned initial public offerings (IPOs) of Telkomsel and Satelindo -- the expansions of the companies' cellular networks may total more than $1 billion.
If Satelindo's IPO goes through it will likely invest $160 million this year, while Telkomsel may invest $500 million following an IPO, Rudiantara said.
Rudiantara, who is also director of Excelcomindo, said that the company would invest between $150 million and $175 million this year, adding that IM3 planned to invest another $200 million.
"This means that this year we are looking at about 2.5 million in added capacity from cellular operators, which would bring the total number of subscribers to about 8.5 million," he said, adding that he estimated there were six million subscribers at the end of last year.
The total number of subscribers could well exceed the 8.5 million figure if investment cost per subscriber falls from its current $400 per subscriber, Rudiantara said, quickly adding that a higher number would not necessarily represent all productive subscribers.
"They would probably include subscribers that only bring Rp 75,000 ($7.20) in revenue. Do companies want this kind of subscriber?" he said. He was responding to reports that cellular subscribers may reach 11 million this year.
Rudiantara also said that two interesting phenomena would occur in the cellular business this year, one was that the number of cellular subscribers in the country would exceed that of fixed-line telephone subscribers, which were expected to increase to 7.4 million this year compared to 6.66 million in 2000.
The other phenomenon was that revenue from cellular subscribers would equal that of fixed-line telephones, whether from domestic local, long distance or international calls, he said.
"Last year, from a total of Rp 25 trillion in revenue from the Indonesian telecommunications industry, some 40 percent was from cellular services," Rudiantara said, adding that this year the figure was expected to increase to Rp 30 trillion, of which 50 percent would come from cellular services.
In 2002, voice services would still dominate cellular usage, despite the introduction of general packet radio service (GPRS) that was expected to make data transmission faster and cheaper, he said.
Of last year's Rp 10.5 trillion revenue from cellular services, only 8 percent was generated from nonvoice services such as short message service (SMS), Rudiantara said.
"This year we expect nonvoice to increase to about 12 percent, of which only 1 percent would come from GPRS. Quite insignificant," he said.