Business

Telkom teams up with Intel
to boost business

State-owned telecommunications provider PT Telekomunikasi Indonesia (Telkom) aims to increase broadband connections by four times to 20 million subscriptions by the end of 2015, from about 5 million this year.

Telkom president director Arief Yahya said that the operator currently accounted for 2.3 million subscriptions. “This means we have around 3 million more subscriptions to go this year,” he said.

Arief added that to achieve the operator’s goal of extending broadband subscriptions, Telkom has partnered with major players in the information technology sector, including Cisco, IBM and Intel, to push broadband usage in the country.

“We are looking to achieve 100 percent of our target through our partnership programs,” he said.

Telkom provides fixed broadband services through its Telkom Speedy program. Although half of its Rp 19.5 trillion (US$2 billion) first quarter revenue in 2013 flowed from cellular and fixed line services, revenue growth of these “basic” services was far below “new” services.

Revenue from data, Internet and information technology services surged 20.1 percent year-on-year to Rp 7.3 trillion while that from cellular and fixed line increased 0.7 percent annually to Rp 10 trillion.

The Indonesian government, under the Master Plan for Economic Acceleration (MP3EI), aims to have 30 percent of households in Indonesia — equivalent to approximately 20 million subscriptions — connected to broadband Internet by 2015.

Fixed broadband connection, however, in Indonesia remains poor. Government data shows that fixed broadband penetration was at 3 percent last year and was estimated to expand by 5 percent this year.

To achieve set targets, the government is currently building the Palapa Ring, the nation’s broadband backbone that would connect major islands to high-speed Internet.

Telkom and US-based chip maker Intel recently signed an agreement to advance broadband Internet usage. Under this agreement, Intel-powered computers — including notebooks and laptops — would be bundled with special Speedy packages.

According to Arief, customers who purchase Intel-powered devices would receive broadband fee cuts of up to 97.5 percent.

 “Our bundling programs are about creating affordability,” he said.

Intel Indonesia country manager Santosh Viswanathan said that broadband costs had to fall to accelerate Internet adoption in Indonesia.

He added that the biggest challenge in conducting first-time buyer programs was minimizing Internet subscriptions.

“As much as 70 percent of computer ownership costs pertain to Internet subscriptions,” he said.

He added that computer prices, on the other hand, had fallen. Computer purchases currently necessitated five weeks of income whereas five years ago, computer purchases ate away 80 weeks of income, he said.

Yet Arief pointed out that computer prices needed to fall further below to extend ownership.

“If computer prices remain between US$200 and $400, we could only increase broadband subscription by 1 million,” he said.

However, both sides agree that augmenting both broadband and computer penetration in the country through special programs would benefit the information technology (IT) industry in the long-run.

Gregory Bryant, vice president and general manager of Intel Asia-Pacific, said that Indonesia was one of the fastest-growing computer markets, with notebook sales having grown 25 percent year-on-year in the first quarter. “There are going to be bumps along the way but in the long haul, we are a huge believer in that the market is going to continue to grow over a long period,” he said.

He added that business-wise, the partnership between Intel and Telkom would mean the tapping into each other’s network of distributors, retailers and customers.

Arief Yahya added that Telkom justified the deep broadband fee price cuts under their partnership program given that the operator was “investing in future customers and the person who invests in the future wins the game”, he said.

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