Telstra Corp. may buy out Excelcomindo

Telstra Corp. may buy out Excelcomindo

Leony Aurora, The Jakarta Post, Jakarta

Telstra Corp., Australia's giant telecommunications company, is
reported to be negotiating to purchase the third largest mobile
phone operator in Indonesia, PT Excelcomindo Pratama, for A$3
billion (US$2.3 billion).

However, Rudiantara, a director at Excelcomindo, declined to
comment on the report made by the Australian newspaper on Monday.

"First, I have no comment on that. Second, ownership is a
shareholders' matter," he told The Jakarta Post.

Telstra officials also refused to comment on the speculation,
although its chief executive, Ziggy Switkowski, had named
Indonesia as one of the countries it had interest in, said the
Australian.

The paper also reported that executives from Telstra had
visited Excelcomindo offices in Jakarta.

Commenting on the matter, Rudiantara simply said,"We have
regular contact with Telstra, as we do with our other regional
partners, regarding international roaming arrangements."

If it were to acquire Excelcomindo, it would be Telstra's
first foray into Asia since its failed investment in the Reach
cable joint venture with Hong Kong's PCCW, which it was forced to
write down to zero value a year ago.

Excelcomindo holds 16 percent of the domestic cellular market
in Indonesia. As of 2003, there were 2.9 million subscribers of
ProXL, its mobile service. This number is expected to rise to 4
million this year.

Unconfirmed reports previously claimed that Telekom Malaysia
and a China-based telecommunications company also had shown ample
interest in acquiring Excelcomindo.

It has been a trend of late for international players to enter
Indonesia to get in on the fast-growing mobile services sector.

Singapore Telecommunications Ltd, or Singtel, has purchased a
35 percent stake in PT Telkomsel, the largest cellular phone
operator in Indonesia, with 65 percent of the market share.

In addition, Singapore Technologies Telemedia has acquired a
controlling stake in PT Indosat, which provides services under
the banners of Satelindo and IM3.

Only 8 percent of Indonesia's 220 million strong population
use mobile phones but that still translates into nearly 20
million people (roughly the population of Australia, or 6 times
that of Singapore) and it is expected to grow rapidly. This is
among the lowest penetration rates in Asia, thus providing ample
room for growth in the future.

In 2003, the number of subscribers of all mobile phone
operators in Indonesia combined reached just over 18 million.
However, the three operators project this number to increase to a
combined target of 26 million subscribers this year alone.

The unlisted Excelcomindo is controlled by PT Telekomindo
Primabhakti with a 60 percent stake. The rest is controlled by
Nynex Indocel Holding Sdu. with 23.1 percent of shares, Asia
Infrastructure Fund Ltd. (12.7 percent) and Japan's Mitsui & Co.
(4.2 percent).