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Telkom says industry will slow down next year
State-owned telecommunications operator PT Telekomunikasi Indonesia (Telkom) has predicted a slowdown in the industryâs growth next year, saying it would focus on its competency in fixed and mobile broadband to drive growth
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tate-owned telecommunications operator PT Telekomunikasi Indonesia (Telkom) has predicted a slowdown in the industry's growth next year, saying it would focus on its competency in fixed and mobile broadband to drive growth.
Telkom's finance director, Honesti Basyir, said the operator would allocate 20 to 25 percent of its revenue this year to its capital expenditure (capex) next year.
When asked about the company's fixed year-end revenue projections, Honesti declined to give details. He said the operator earned Rp 77 trillion (US$6.4 billion) in 2012 and was now growing by roughly 8 percent alongside this year's estimated overall industry growth.
'We will allot as much as 60 percent of our capital expenses exclusively to our subsidiary, PT Telekomunikasi Selular [Telkomsel],' he said.
'The remaining 40 percent will go to our own needs in addition to our other subsidiaries,' he added.
Telkomsel is the principle breadwinner for Telkom, contributing approximately 71.5 percent to its parent company's revenue of Rp 61.5 trillion in the first nine months of this year.
Honesti added that 70 percent of the capital expense budget allocated to Telkomsel would go into the third generation (3G) networks of the mobile operator, which has the largest market share nationwide.
'The other 30 percent will go to Telkomsel's second generation [2G] networks,' he said.
Honesti noted, however, that growth in the telecommunications industry would stagnate next year given that mobile operator services had hit full market penetration.
'Next year, the expected growth rate for the industry will sit at 6 to 7 percent whereas this year, it is around 8 percent,' he said. 'We expect to stay at least in line with the estimated industry growth in 2014.'
Besides eyeing an expansion of their telecommunication networks, Telkom will also move forward with their overarching strategy of refocusing on their core business as a telecommunications operator.
Telkom has relinquished an 80 percent stake in its pay-television subsidiary, TelkomVision, to CT Corp., the holding company for multiple media outlets encompassing free-to-air television stations TransTV and Trans7.
Telkom is mulling to put up Mitratel for a share swap with one publicly listed tower company. The two short listed bidders are PT Tower Bersama Infrastructure (TBIG) and PT Profesional Telekomunikasi Indonesia (Protelindo), a subsidiary of PT Sarana Menara Nusantara (TOWR).
The two main players are PT Tower Bersama Infrastructure (TBIG) and PT Sarana Menara Nusantara (TOWR), which runs tower company PT Profesional Telekomunikasi Indonesia (Protelindo).
Telkom's director for IT solutions and strategic portfolio, Indra Utoyo, said Telkom was weighing the valuation of their towers against that of the two major players.
Mitratel has around 3,500 telecommunication towers.
'We will opt for the one that gives us the most appealing offer,' he said.
After the share swap has closed, Telkom plans to list Mitratel's shares in the capital market through a backdoor listing or an initial public offering (IPO), Indra added.
He further said that before the backdoor listing, they were considering to 'unlock the potential' of roughly 13,000 towers under Telkomsel.
'SingTel has shown their consent and has requested us to keep them updated,' he added.
Singapore Telecommunications Limited (SingTel) has a 35 percent stake in Telkomsel.
Indra added that Telkom wanted to relinquish major control over certain subsidiaries to allow the firm to capitalize on the industry's new growth engine ' mobile and fixed broadband.
