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.