Telkom Snares 6m Subscribers In Q1 as Excelcomindo Struggles

Telkom Snares 6m Subscribers In Q1 as Excelcomindo Struggles

The nation’s largest telecommunications operator, Telekomunikasi Indonesia, announced on Monday that it grew its cellular clientele by up to six million people in the first quarter, while third-largest cellular operator Excelcomindo Pratama said its user base fell by about one million over the same period.

The increase suggests that Telkom’s subsidiary, Telkomsel, is winning the war in the competitive cellular phone market.

“Our cellular users rose by five to six million, although our fixed wireless [or CDMA] customers fell by about 300,000 to 400,000 users,” said Rinaldi Firmansyah, Telkom’s president director.

CDMA service is cheaper than the more widely used GSM service, with the former offering basic calling and messaging services, without more expensive add-ons like Internet browsing.

Rinaldi said the company’s fixed-line customer base also declined, although he did not disclose specific numbers.

By the end of 2008, Telkom had more than 86.6 million customers — 8.7 million fixed-line users,

12.7 million CDMA customers and 65.3 million GSM users.

86.6 million Telkom customers last year

Telkom, Rinaldi said, was budgeting capital expenditures of about $2 billion in 2009, versus $2.5 billion spent last year.

“Although the number is about the same, we expect the portion of capex drawn from our revenue to decline over the next few years,” he said.

The company plans to finance some of the expenditures through vendor financing, including two major Chinese vendors, Huawei and ZTE, from which it will draw about $100 million each.

This month, Telkom said it had secured a $1 billion vendor financing deal with Huawei, scheduled to be signed in May, although Telkom will only use about

$100 million this year.

Vendor financing can be defined as a loan given by one company to another that is used to buy goods exclusively from the company providing the loan.

In terms of the outlook for the telecommunications industry, Rinaldi said there was a movement “from a voice-based communications business to a non-voice-based business.”

As a result, he said he expected that capital expenditure would remain high during the next few years, as operators build third-generation technologies and Internet infrastructure.

Telkom’s rival, Excelcomindo, saw its customer base fall by one million users in the first quarter to about 25 million.

But Hasnul Suhaimi, Excelcomindo’s president director, said it expected to reach its target of 30 million subscribers by the end of the year.

“We’re trying to increase our number of higher-quality users, which would increase our [average revenue per user],” he said.

Hasnul said the company was cutting back on prepaid SIM cards to discourage “high-churn” customers who buy new cellphone numbers because they are cheaper than top-up vouchers.

“Now we are reducing the number of SIM cards, which will drive up their price to the same level as vouchers,” Hasnul said.

The company has budgeted $300 million for capex this year, he said, and added that the company was still considering external financing options for it.

~ by telcoindustry on May 6, 2009.

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