State owned PT Telekomunikasi Indonesia (Telkom), the country's largest telecommunication firm, expects 2009 revenue to grow by lower than 10 percent, emulating this year's trend, in part due to the tighter competition.
Telkom president director Rinaldi Firmansyah said Monday the cut-throat competition in the past few years has forced firms to continue to cut down tariffs, reducing earnings.
"The price competition has been so tight. It's difficult for us to make further rate cuts this year," said Rinaldi.
"So, we predict our revenue will increase by only a single digit this year."
During the January-September period last year, the company booked Rp 44.6 trillion (US$4.04 billion) in revenue, up by 2.18 percent from Rp 43.64 trillion in the previous year.
In 2007, Telkom booked Rp 59.4 trillion in revenues, a 15.99 percent increase from Rp 51.3 trillion in 2006.
According to Rinaldi, telecommunication operators here have cut their rates by an average of 70 percent since last year to attract more customers.
Indonesia is home to 11 GSM and CDMA-based cellular phone operators with PT Telekomunikasi Selular (Telkomsel), a Telkom subsidiary, being the largest.
Telkomsel is the operator of GSM-based Kartu Halo, Simpati and Kartu As. So far, Kartu Halo's call rate has been cut by 30 percent, Simpati's by 47 percent and Kartu AS's by 25 percent.
The rate cuts have led the company's net profits to fall by more than 9 percent from Rp 9.82 trillion in the first nine months of 2007 to Rp 8.82 trillion during the same period last year.
Last month, State Ministry of State Enterprises forecast Telkom to contribute Rp 11 trillion in dividends to state coffers, second only to the Rp 27 trillion contribution made by state oil and gas firm PT Pertamina.
Rinaldi, however, remained upbeat that the company would make another significant profit in 2009 on a broader subscriber base as the Indonesia's phone market would still grow.
"We are optimistic that phone penetration in Indonesia will still rise to 80 percent this year," he said.
Indonesia's phone penetration by the end of September last year stood at 62 percent, according to Telkom data.
As of the end of 2008, Rinaldi said Telkom has more than 87 million subscribers, comprising 64 million subscribers to Telkomsel, 13.5 million subscribers to CDMA-based Telkom Flexi cellular phone, nine million subscribers to fixed-line telephone and 950,000 subscribers to the internet broadband service Telkom Speedy.
Telkom has targeted to spend Rp 22.5 trillion in capital expenditure this year, the same amount as last year. Some 40 percent of the funds needed will be financed through loans.
It plans to spend Rp 14-15 trillion for expansion in cellular phone networks and the remaining Rp 7-8 trillion in non-cellular. The company is 51.19 percent owned by the government and 48.81 percent by the public. (hwa) -- Andi Hajramurni also contributed to the story