Despite the gloomy economic times, Telkom (PT Telekomunikasi Indonesia Tbk) Indonesia’s largest InfoComm and network services provider, is planning to raise capital expenditure to $2.1 billion in 2009, from $2.0 billion in 2008. Telkom provides fixed wireline, fixed wireless (CDMA), cellular (GSM) as well as data & Internet and network interconnection services, both directly and through its associate companies and subsidiaries.
Telkom said that 70 percent of the money would be invested in broadband internet connection, as it faces stiff competition in the traditional fixed and mobile phone sectors.Â This is in keeping with other fixed-line operators offering more services via their existing networks. The added competition, as more firms enter the mobile market, is also forcing down prices and operators are spending heavily on promotions, leading to lower average revenue per user (ARPU).
Telkom has 8.7 million fixed line subscribers mainly in cities but these are strategic customers that should be attracted to converged fixed-mobile services.Â For Telkom, the added â€˜stickinessâ€™ should help fend off aggressive mobile-only competitors and help increase ARPU. Telkom also controls 65 percent of PT Telekomunikasi Selular (Telkomsel), the largest mobile phone operator in the country with more than a 50 percent market share, said in the statement that its mobile phone subscribers rose 36 percent to 65.3 million in 2008, from a year ago.
Telkom is reported be looking for loans worth $756 million from local financial institutions for its expansion plans in 2009. It is understood Telkom may approach the likes of PT Bank Mandiri, PT Bank Negara Indonesia (BNI) and PT Bank Rakyat Indonesia (BRI) to cover as much as 40 percent of its entire $2.1 billion CapEx plan.
Telkom`s finance director, Sudiro Asno, said that Telkom would also obtain US$100 million in vendor financing funds from Chinese network vendor, Huawei, out of a commitment of up to US$1 billion.Â He said that Huawei was one of the companyâ€™s partners in the development of Telkomâ€™s infrastructure network.
With less than 8 per cent of Indonesiaâ€™s population with access to the fixed line broadband Internet access it is easy to see why the investment is warranted.