Telkom eyes international market for expansion

Telkom eyes international market for expansion

The Jakarta Post, Jakarta

Indonesia's largest telecommunications company, PT Telkom, is
considering an expansion of its business to the international
market.

Telkom chief executive officer Arwin Rasyid said as his
company's market capitalization was one of the highest in the
region, making it worthwhile to consider elevating its market
value by exposing itself to a bigger market.

"Telkom's market cap is bigger than companies in Malaysia and
the Philippines, but it's far smaller than Singapore's SingTel,"
he said at a breakfast gathering with the media on Wednesday.

"Singapore, which has only four million in population, has a
market cap almost triple that of Telkom. That is because SingTel
has expanded its business worldwide."

Therefore, Arwin, who was appointed as the company's CEO in
June, said Telkom should enter the international market to pursue
the same achievements as SingTel.

He said his company was looking for possibilities to expand
its business in Africa and South America.

"We have had conversations with the president of Gambia and
also established contacts with Ecuador and Venezuela," said the
former banker.

Arwin said as an international enterprise, Telkom should look
for such opportunities, which proved to have increased the
earnings of foreign telecom companies.

Telkom is listed on the New York and London stock exchanges,
as well as in Jakarta and Surabaya.

He believes that the company has the ability to expand
globally because its cash flow "remains excellent" and it has the
technology.

"Telkom's earnings before interest, tax, depreciation and
amortization look likely to increase to Rp 24 trillion (US$2.5
billion) this year, with an assumption of a profit margin of, at
least, 60 percent of sales," he said. "The company also aims to
triple its market capitalization of about Rp 115 trillion in five
years."

Aside from financial ability, the Bandung-based firm also had
solid technology infrastructure that could be a selling point for
expansion, he said.

Telkom chief operating officer Garuda Sugardo said that in
October it would launch a new satellite and install fiber optic
cables from South Sulawesi to Papua.

"The operation of the new satellite and cables will accelerate
our expansion to the eastern part of Indonesia," he said.

Arwin also said that the company's strategic partnership with
SingTel had facilitated the transfer of knowledge that was vital
for international expansion.

SingTel owns 35 percent of Telkomsel, a Telkom subsidiary that
provides cellular services.

Garuda said that since Telkom was focused on developing
content and application of cellular services, buying SingTel's
shares back was not necessary.

"The content and application development is based in
Singapore, Hong Kong and the United States, so SingTel's
participation is still important. Anyway, with 65 percent of
ownership, we dominate the decision-making," he asserted. (006)