Telekomunikasi Indonesia will invest more in high-speed Internet services to counter market share gains by new entrants in the cellphone industry, including the Hong Kong billionaire Li Ka-shing.
The West Java company will spend $50 million this year to upgrade its network, Rinaldi Firmansyah, president director, said in an interview resently in Jakarta. He declined to provide a comparative number or a time frame for the investment. “Competition in the cellular business” is a concern, he said. “What we’d like to do is increase broadband sales.”
Telkom, as the No. 2 Southeast Asian cellphone company is known, expects to raise the number of its high-speed Internet users 13-fold to two million by 2010, the executive said. The data services unit’s sales tripled in the first half. By comparison, the mobile business rose 21 percent as competition drove down the costs of voice calls to as little as 150 rupiah, or 2 cents, a minute.
“They need to do more in the other divisions like data, Internet and multimedia,” said Felix Sindhunata of PT Mega Capital Indonesia. “They need to create products.”. The number of people using Internet services in Indonesia is forecast to rise 72 percent to 43 million by 2009, according the Indonesian Internet Service Provider Association. The country has a population of about 234 million people.
Shares of Telkom rose 6.4 percent this year, trailing a 25 percent gain in the benchmark Jakarta composite index. Telkom’s second-quarter profit rose 52 percent from a year earlier to 3.58 trillion rupiah, with the bulk of the gain coming from its cellphone business, as sales expanded 24 percent to 29.8 trillion rupiah.
First-half revenue from data services, comprising mostly high-speed Internet, tripled to 1.11 trillion rupiah. Revenue from cellphone services climbed to 11.4 trillion rupiah, accounting for about 38 percent of Telkom’s sales.
Hutchison CP Telecommunications, a unit of Li Ka-shing’s Hutchison Telecommunications International, started services in March 2007 and operates in four of Indonesia’s wealthiest islands, taking the number of operators in the country up to 10. Hutchison is seeking investments in Southeast Asia after the sale of its Indian unit to Vodafone Group for $11.1 billion.
Increased competition lowered average revenue per customer at Telkom’s cellphone unit, Telekomunikasi Selular, descending 8 percent to 78,000 rupiah, or about $8.40, during the first six months of this year. There are 8.5 million personal computers in Indonesia, but Telkom has just 150,000 high-speed Internet customers, Firmansyah said. “There is a big opportunity for broadband,” he added.
By contrast, about 80 million Indonesians, or 34 percent of the population, have a subscription for a mobile phone.
(Source: Internet World Stats)
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