Tue, 20 Apr 2010

From: The Jakarta Globe

By Yessar Rossendar
Pay-TV and Internet provider PT First Media announced on Monday that it was unlikely to offer broadband wireless until the second half of the year on concerns that illegal freeloaders would clog its bandwidth for paying customers.

“WiMax [broadband wireless] is actually our priority program for this year,” Dicky Moechtar, the company’s corporate sales director, said after an extraordinary shareholder meeting on Monday. The launch, however, has been delayed by the discovery of illegal users, he said.

First Media discovered “freeloaders” using its wireless service after it receiving its license last year. It then asked the Ministry of Communications and Information Technology for help.

Gatot Dewa Broto, spokesman for the ministry, said on Monday that it was trying to catch the illegal users, but efforts to track the freeloaders was complicated by their “hit-and-run” method of never staying put on one frequency for too long.

“We’re still monitoring for illegal frequency users, but it’s not a problem that can be solved in two or three weeks,” Gatot said.

Illegal users face sanctions including fines.

First Media won a tender in July for government bandwidth, securing a license for a 2.3 GigaHertz frequency band to be used for its WiMax service. Once launched, the service will be available in Greater Jakarta, Banten and North Sumatra.

To support its WiMax operation, First Media plans to lease 900 base transceiver stations over three years, with 100 to be leased in 2010.

Dicky said First Media has around 500,000 subscribers for its fiber-optic Internet service. Once WiMax is available, subscribers can upgrade to take advantage of the cheaper service.

First Media said last year that the WiMax technology, including BTS towers, would require Rp 1 trillion ($111 million) in investment costs, but Dicky on Monday declined to reveal the price tag.

First Media held the shareholders meeting on Monday to approve a Rp 456 billion ($50.6 million) rights issue next month.

“Most of the proceeds will be used to refinance debts, while the rest will be used to develop our businesses, including WiMax,” said Irwan Djaja, the company’s finance director.

First Media had total debt of Rp 1.3 trillion at the end of 2009, with Rp 272 billion maturing this year.

It had 145,000 FastNet Internet subscribers and 124,000 pay-TV subscribers at the end of September last year. About 45 percent of the company’s revenue comes from Internet, 36 percent from pay-TV with ads and data services making up the balance.

First Media and the Jakarta Globe are affiliated companies of the Lippo group.

The company’s share price closed unchanged on Rp 950 on Monday.