T

he country'€™s largest telecommunications operator, PT Telekomunikasi Indonesia (Telkom), will further expand the country'€™s telecommunication tower business to achieve its goal of becoming the country'€™s largest tower operator within the next three to five years, one of the company'€™s senior executives has said.

Telkom finance director Honesti Basyir said in Jakarta on Wednesday that the firm was still calculating the total capital expenditure needed to support the expansion of the tower business, which would be carried out either by existing business units or through an acquisition.

 '€œWe have not decided yet where the external funds will come from, but it could be from either bank loans or bonds,'€ he said, adding that about 40 percent of the expenditure would come from external funds.

Honesti said that his firm would raise external funds for its five year capital expenditure through a number of stages, with the first stage aiming to amass between Rp 5 trillion (US$417.1 million) and Rp 10 trillion.

Telkom'€™s annual capital expenditure usually fell between Rp 20 trillion and Rp 25 trillion, 65 to 70 percent of which went to its cellular business, PT Telekomunikasi Selular (Telkomsel), Honesti revealed.

He added that part of the capital expenditure would go on acquiring a stake in the country'€™s publicly listed telecommunication tower operators by the first quarter of next year through a share swap deal.

'€œWe aim to be the top player in the country'€™s telecommunication tower business. Henceforth, we want to become a major shareholder in any publicly listed tower operators in the country,'€ he said, refusing to disclose the allocated budget for the acquisition.

Telkom'€™s average annual capital expenditure of Rp 20 trillion is usually used for its backbone & access infrastructure; tower, information and technology (IT), media & international expansion; and its cellular business, which are apportioned 10 percent, 20 percent and 70 percent, respectively, according to a report the company presented to the Investor Summit 2014 on Wednesday.

The state-owned telecommunications company currently operates a tower business through its subsidiary PT Dayamitra Telekomunikasi, better known as Mitratel, which currently has 3,000 telecommunication towers as of April.

The tower business is seen as very promising by a number of enterprises, including publicly listed tower operators PT Nusantara Infrastructure and PT Tower Bersama Infrastructure.

The number of telecommunication towers in the country is forecast to grow annually by 8 percent, reaching 89,409 towers next year from 55,972 units in 2011, according to research firm Frost & Sullivan.

Telkom, which pocketed Rp 8.8 trillion in net profit in the first half this year, is also carrying out major international expansion through its subsidiary PT Telekomunikasi International (Telin) to a number of countries, including Saudi Arabia, Macau, Taiwan, Australia, New Zealand and the United States.

'€œInternational expansion is of great importance for Telkom and the country, particularly ahead of the free market era. We [Indonesia] need to start being a player, not only a market,'€ Telkom president director Arief Yahya said.

In its latest development, Telin is now finalizing the acquisition of Australian call center firm CCA with a total budget of between US$10 and $12 million, after successfully signing a deal with Australian telecommunication operator Telstra early this month.