StarOne aiming for eightfold increase in customers

Leony Aurora, The Jakarta Post, Jakarta

Indosat's fixed-wireless phone provider StarOne aims to increase the number of its customers by eight-fold to 800,000 by the end of this year, a senior company executive says.

Director of fixed telecommunications and multimedia Wahyu Wijayadi told The Jakarta Post on Wednesday that within seven months of its operations, which started last May, StarOne had already attracted 100,000 customers.

"We plan to add five more cities to our portfolio," said Wahyu. He declined to specify which cities.

The fixed-wireless service that uses Code Division Multiple Access (CDMA) technology started gaining ground in the industry last year due to an aggressive sales campaign and low rates, which are almost equivalent to those of fixed lines.

The strong surge of customers turning to fixed-wireless phones has started a mini price war, with competing Global System for Mobile Communications (GSM) operators, cutting their rates.

"We will focus on quality," Wahyu said.

StarOne is the latest entry into the fixed-wireless sector with services in Jakarta and Surabaya and its surrounding areas of Malang and Pasuruan in East Java.

Other major operators in Indonesia are Telkom's Flexi service, which dominates the market with 1.5 million subscribers, PT Bakrie Telecom with its Esia service and Fren from Bimantara.

Fren, which had an estimated 500,000 users by the end of 2004, aims to get one million new subscribers this year and expand to Bali, Sumatra and Kalimantan. Younger but more aggressive Esia plans to attract 500,000 new customers to add its existing 250,000 with Rp 1 trillion (US$107.70 million) in capital expenditure this year.

In 2005, Indosat, the country's second largest telecommunications company with three cellular brands -- IM3, Mentari and Matrix as well as fixed-wireless StarOne -- intends to spend between $700 million and $1 billion, more than what it spent last year.

"It depends on the market," Indosat cellular marketing director Hasnul Suhaimi said.

Some 80 percent of the company's capital expenditure will go into Indosat's cellular division, Hasnul said.