Indosat to pump $46.4m into fixed wireless

Leony Aurora, The Jakarta Post, Jakarta

PT Indonesian Satellite Corp. (Indosat) will invest US$46.4 million this year to develop a fixed wireless service, which is to start operating in April.

Indosat CEO Widya Purnama said 250,000 lines of limited coverage phones would be established in Jakarta and Surabaya, with installment to commence this month.

"We will build the network with our own capital, since our plan to cooperate with Bakrie under a revenue-sharing scheme didn't pull through," said Widya on Wednesday.

In March 2003, Indosat signed a preliminary agreement with Mega Asia Consortium, comprising the Bakrie Communication Company, Tomen Corporation, PT Asiabumi Piramida and PT Saranainsan Muda Selaras, to develop a fixed wireless network. The two sides failed to reach an agreement on equity arrangements and ended the partnership in June.

According to Indosat's investment plan, capital expenditure will reach US$185 per line, much higher than the US$164 per line estimated by the consortium.

Widya said the lack of supporting regulations was an obstacle to building a fixed wireless network based on code division multiple access (CDMA) technology.

"Even so, we will go ahead with the construction," he said.

Indosat has been focusing on its cellular services, which contributed approximately 60 percent of its Rp 8 trillion (US$941.18 million) annual revenue in 2003.

The company completed a merger in the first week of January between subsidiaries PT Satelit Palapa Indonesia (Satelindo) and PT Indosat Mobile Multi Media (IM3), two cellular operators with a combined six million subscribers -- five million with Satelindo and one million with IM3.

"With this merger, we aim to reach an efficiency of 20 percent in five years," said Hasnul Suhaimi, Indosat cellular marketing director, during an event marking the six million-strong membership.

Cellular network development will make up 80 percent to 85 percent of Indosat's total capital expenditure of US$580 million this year, much more than its fixed wireless investment.

"We have set a target of between two million and 2.5 million new cellular customers," said Hasnul, adding that gross revenue was expected to increase by 27 percent from 2003.