Telkom may invest $1.2b in 2005 to meet demand

Telkom may invest $1.2b in 2005 to meet demand

Bloomberg, Jakarta

PT Telekomunikasi Indonesia, the country's biggest publicly traded company, plans to spend US$1.2 billion next year to expand its telephone networks, betting demand will increase as the new government lures more investment.

Telkom, as the operator is known, may invest half the money to almost triple capacity for fixed-line subscribers, including a fixed-wireless service, Finance Director Rinaldi Firmansyah said in an interview in Jakarta.

That would double the $600 million Chief Executive Kristiono said last month would be spent on the Bandung, West Java-based company's cellular network. Kristiono said Telkom aims to add 6 million mobile users yearly.

"With a new government in place, basically it will drive more investments," Telkom's Rinaldi said. "That means incomes will increase and, at the same time, demand for the entire telecommunications sector will increase."

Rinaldi declined to say how Telkom will fund its investment plan, which needs the approval of the company's board.

Telkom may sell as much as Rp 1 trillion ($108 million) in medium-term notes to pay some of its dollar-denominated debt, Bisnis Indonesia reported last month. The company had debt of Rp 12.7 trillion at the end of June, 54 percent of which was denominated in dollars.

"The new administration is market friendly," Rinaldi said. "If the economy grows, direct investment increases, and demand for telecommunication services will increase."

Telkom is aiming to add more than 500,000 new fixed-line users, as many as 2 million users of fixed line-wireless technology and at least 5 million new cellular users, Rinaldi said.

Telkom had 12.37 million mobile users, or a 53 percent share of the market, at the end of June, the latest figures available. It had 9.17 million fixed-line users, including 740,000 subscribers to its fixed-wireless technology, called TelkomFlexi, which uses code-division multiple access, or CDMA, technology.

"For fixed-wireless, Flexi, we have a waiting list to be serviced," Rinaldi said. "We're aiming for 1.5 million, maybe 2 million more next year."

He said demand for traditional fixed-line phone services is growing at 5 to 6 percent a year.