Telkom plans regional expansion in 2007

Telkom plans regional expansion in 2007

Rendi A. Witular, Jakarta

State telecommunication firm PT Telekomunikasi Indonesia
(Telkom) is planning to acquire several telecommunication
companies in the region as part of its strategy to become a
leading regional player, company management said.

Telkom president director Kristiono told The Jakarta Post the
firm would have the capability to acquire several
telecommunications firms in Southeast Asia in 2007, after it had
completed its major network expansion in the domestic market.

"We may head for regional expansion in 2007 after sufficiently
meeting the telcom needs of the domestic market. With 220 million
people here, there is still huge room for local expansion," said
Kristiono after attending a meeting with lawmakers last week.

Currently only about 9.5 million of the country's 215-million
population have access to fixed telephones, including fixed-line
and fixed wireless phones, with Telkom accounting for 9.3 million
of that total.

The country's cellular industry, which has had spectacular
growth during the past several years, has now about 21 million
cellular subscribers, up from 18 million last year. This rapid
growth in the local market has led international consultancy firm
Gartner Inc. to predict Indonesia will likely have 42 million
cellular subscribers by 2007.

The government has urged local phone operators to build 10.7
million fixed telephone lines by the end of 2008. This year
alone, the operators are obliged to build at least 1.4 million
lines.

Kristiono said the regional expansion would be centered in
countries that were still lagging behind in the cellular business
but had a potential market.

"We haven't decided the fund for the expansion nor the firms
that we are after. But we will certainly target countries that
lag behind in their cellular business development," he said.

Telkom's newly appointed president commissioner Tanri Abeng
said the company would probably acquire telecommunication firms
in Vietnam and Cambodia because of their low telecommunications
penetration and promising economic growth.

"I think Telkom has the financial capability to acquire one or
two firms in those countries," Tanri said.

"But the acquisitions can only be done after we have completed
our major expansion at home, which we expect to happen in the
next two or three years," he said. The acquisitions could also be
made by Telkom's cellular subsidiary, he said.

The Bandung-based Telkom owns the country's largest cellular
operator, PT Telekomunikasi Selular (Telkomsel), which controls
52 percent of the Indonesian market.

As of the first quarter of this year, Telkomsel had 10.74
million subscribers, up from 6.66 million for the same period
last year.

Telkomsel, which is 38 percent controlled by Singapore
Telecommunication Ltd., plans to invest US$600 million this year
to expand its network and boost its subscribers to 14 million.