Cellular operators spend $800m to expand networks

Cellular operators spend $800m to expand networks

JAKARTA (JP): The country's seven cellular operators have
invested more than US$800 million this year to expand their
networks, the Association of Indonesian Cellular Operators (ATSI)
said on Saturday.

ATSI vice chairman Rudiantara was quoted by Antara as saying
this year's investment projects were mostly financed by the
company's own funds rather than bank loans or from other sources.

The seven cellular operators are Telkomsel, Satelindo and
Excelcomindo Pratama, which all operate the global system for
mobile communications (GSM) at 900 megahertz; Telesera, Metrosel
and Komselindo, which operate the advanced mobile phone system
(AMPS); and Mobisel, which operates under the Nordic mobile
telephone system (NMT).

Rudiantara said five of the operators -- Telkomsel, Satelindo,
Excelcom, Komselindo and Mobisel -- had significant success in
increasing the number of their customers over the year.

He said total cellular phone users increased by 1.3 million to
a total of 3.4 million users this year.

"About 80 percent of the new users are prepaid customers,
increasing the number of prepaid customers to more than 70
percent (of all users)," Rudiantara said.

The increase in customers, however, has not been balanced by
an increase in network quality, he said, adding that inefficiency
in infrastructure construction and limited frequency, especially
in Greater Jakarta, have taken its toll in further decreasing
network quality.

The entrance of two new players, PT Telkom and PT Indosat, who
will begin operating under the GSM-1800 network next year, will
certainly add to the already tight competition in the cellular
market.

Excelcom general manager for sales Madyana Abdulgani, however,
earlier said the entrance of Telkom and Indosat would not greatly
effect the company's market share.

He predicted the two companies would not be able to begin
operations right away because the investment needed to build a
GSM-1800 network was much higher than for a GSM-900 network, and
in the meantime existing operators would have already established
good customer bases.

Indosat's assistant manager for strategic development, Kun
Wardana, acknowledged that bringing the GSM-1800 network to
customers would be difficult, and that to overcome the problem
Indosat planned to cooperate with existing cellular operators to
incorporate their customer bases.

Indosat said it would spend about Rp 1 trillion to finance the
first phase of its cellular operation next year. Telkom has
allocated some Rp 90.5 billion to build parts of its cellular
infrastructure, and is expected to begin operations next year.

Telkom's head of investor relations, Setiawan Sulistyono, has
said the company's cellular service would be launched officially
in August 2001.

"For the first stage Telkom intends to install 200,000 lines
covering Greater Jakarta, Bandung and Bandar Lampung," he said.
(tnt)