Business

Telkom to cease CDMA business
on poor prospects

Good story: State-owned telecommunications operator PT Telekomunikasi Indonesia (Telkom) president director Arief Yahya (center), along with directors Indra Utoyo (from left), Honesti Basyir, Ririk Adriansyah and Priyanton Rudito, discuss the company’s performance after its general shareholders’ meeting in Jakarta on Friday. PT Telkom has paid out Rp 9.9 trillion (US$871.2 million) in dividends this year, up 19 percent from last year. (Antara/Hendar)
Good story: State-owned telecommunications operator PT Telekomunikasi Indonesia (Telkom) president director Arief Yahya (center), along with directors Indra Utoyo (from left), Honesti Basyir, Ririk Adriansyah and Priyanton Rudito, discuss the company’s performance after its general shareholders’ meeting in Jakarta on Friday. PT Telkom has paid out Rp 9.9 trillion (US$871.2 million) in dividends this year, up 19 percent from last year. (Antara/Hendar)

Major telecommunications operator PT Telekomunikasi Indonesia (TLKM) reaffirmed its plan on Friday to soon exit the code division multiple access (CDMA) business, as it no longer offered “exciting” prospects.

Telkom innovation and strategic portfolio director Indra Utoyo said it would stop looking for new “Telkom Flexi” customers this year as part of its business consolidation plan.

Flexi is Telkom’s CDMA service brand.

“We will gradually consolidate Flexi’s business into that of Telkomsel and migrate the customers,” he told reporters after Telkom’ annual general shareholders’ meeting.

“So, new Flexi customers are not part of our focus.”

The state-controlled firm manages Flexi under its wireless broadband division and puts it in the “fixed wireless” business category.

It reported that last year, the number of its fixed wireless customers kept falling from quarter to quarter.

By the end of 2013, the figure amounted to 6.77 million, falling 62.1 percent year-on-year.

In its 2013 annual report, the publicly listed company said tight competition in the cellular market, which consisted of both CDMA and global system for mobile (GSM) players, led to declines in the average tariffs of cellular services.

That eventually resulted in Flexi’s lower average revenue per user (ARPU), down 3.6 percent year-on-year to Rp 8,000 (71 US cents).

Telkom is looking to enter the E-GSM (extended-GSM) sector by using the 850 megahertz frequency band as laid out in its migration plan, according to Indra.

“We have gained approval from the Communications and Information Ministry to conduct a trial and will begin in Papua,” he said.

Telkom is not the only operator thinking about exiting the CDMA business.

PT Indosat (ISAT), another major operator, is also considering using its CDMA frequency for GSM-based services.

Indosat provides its CDMA services under the StarOne brand.

Similar to Telkom, Indosat also hopes to be able to venture into E-GSM.

Meanwhile, during a press conference after Telkom’s general shareholders’ meeting, Telkom president director Arief Yahya said the company would expand its international service coverage to Taiwan and Macau in 2014.

“We expect that our network will have covered 10 countries by 2015,” he said.

Its international network now includes Australia, Hong Kong, Malaysia, Myanmar, Singapore, Timor Leste and the US.

According to Telkom finance director Honesti Basyir, it aims at increasing the revenue contribution of its international network to total revenues, from the 2 percent recorded in 2013 to 4 percent this year.

Last year, its total revenues amounted to Rp 82.97 trillion.

To support this year’s business, Telkom sets aside around 20 to 25 percent of its revenues as capital expenditure.

“We may issue debt papers this year, but we are still carrying out an internal assessment. We already have Rp 4.5 trillion in standby loans from state-owned banks. So, in terms of financing and liquidity, we are actually doing fine,” Honesti said.

Telkom’s shares ended at Rp 2,275 apiece on Friday, up 0.7 percent from a day before.

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