Major telecom companies predict fast growth

Major telecom companies predict fast growth

The Jakarta Post, Jakarta

Indonesia's two largest telecommunications companies, PT Telkom
and PT Indosat, project that telecommunications revenue will see
a twofold increase in 2010.

PT Telkom's president director Arwin Rasjid forecast that over
the next five years, revenues in the telecommunications industry
would range between Rp 141 trillion (US$14.37 billion) and Rp 181
trillion, from last year's revenue of Rp 48 trillion.

"This excludes revenue in the handsets business, which records
sales of 10 million units per annum," he said on Monday at a
seminar held by the Indonesian Chamber of Commerce and Industry's
Committee for Telecommunications and Information.

Arwin said by 2010, fixed-line subscribers would almost double
from that of 2004, while mobile phone subscribers and Internet
users would triple.

At present, there are about nine million fixed-line
subscribers or about 4.8 percent of the population, while
cellular subscribers total 35 million or 14 percent, and Internet
users total 16 million or about 7.4 percent of the population.

His projection was based on the rapid growth shown in the
cellular industry.

"Only within 12 years, the number of cellular subscribers has
reached 35 million, the most rapidly growing market in Southeast
Asia," he said.

However, cellular market penetration here remains low compared
to the Indonesia's neighbor Malaysia, which has penetration of 19
percent in fixed lines, 63 percent in cellular phones and 48
percent for Internet users out of its 23 million population.

Indosat's president director Hasnul Suhaimi said the rapid
growth started after the prepaid system was first introduced in
1998, boosting the number of cell phone subscribers by 73.5
percent last year.

"The growth was also influenced by cheap handsets and
competitive prices offered by cellular operators," he said at the
seminar.

But the two firms' top officials agreed that Indonesia's
market penetration remained low even in the Southeast Asia
region, thus needed to be boosted.

Arwin pointed to Indonesia's geography that presented a big
challenge for telecommunications companies to develop their
infrastructure.

"As of last month, our division in the eastern part of
Indonesia could only cover 29 percent of regencies and 9 percent
of villages in the whole of the island of Papua," he said.

He hoped that fixed-line market penetration would be improved
through the implementation of the Universal Service Obligation
(USO), which is aimed at providing basic telecommunications
services to villages.

A report from the Ministry of Telecommunications and
Information says there are 38,837 villages nationwide that have
yet to receive basic telecommunications services.

Therefore, the ministry has issued Government Regulation
No.28/2005, obligating telecommunications operators to contribute
0.75 percent of their annual revenues to USO.

"It requires Rp 15 million to provide communications services
to one village, so it will need more than Rp 600 billion to cover
all of the villages. If USO could collect Rp 300 billion in a
year, we will cover all of Indonesia within three years," he
said. (006)