Indonesia has telecommunications growth prospects, Fitch says

Indonesia has telecommunications growth prospects, Fitch says

Soraya Permatasari, Bloomberg/Jakarta

Indonesia's telecommunications industry outlook remains positive, buoyed by an estimated 40 percent growth in mobile-phone subscribers this year, Fitch Ratings said on Monday.

Demand "should remain robust throughout 2006 and 2007," the rating company said in an e-mailed statement.

Competition among operators is intensifying because of increased foreign investment in local telephone companies, price cuts and large network investments by PT Telekomunikasi Selular (Telkomsel), PT Indosat and PT Excelcomindo Pratama, the three largest operators, Fitch said.

Telecommunications companies in the past four years spent about US$4.2 billion in Indonesia on cellular network expansion, which was funded by operating cash flow and debt, Fitch said. A similar amount will probably be invested by the end of 2006, with wider network coverage by all three leading operators, the rating company said.

Telkomsel and Indosat have together captured more than 80 percent of net subscriber additions.

Both Telkomsel and Indosat control more than four-fifth of the nation's mobile-phone market. Fewer than one in four of the nation's estimated 238 million people have phone access.

Fitch rated Telkomsel's and Indosat's long-term foreign- currency debts at BB-, or three levels lower than investment grade, and B+ for Excelcomindo, four levels lower than investment grade.