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)