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).