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Telkom to make digital services a major income contributor
Publicly listed telecommunications company PT Telekomunikasi Indonesia (Telkom) is stepping up efforts to expand its digital services in a bid to boost income
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ublicly listed telecommunications company PT Telekomunikasi Indonesia (Telkom) is stepping up efforts to expand its digital services in a bid to boost income.
Telkom acting president director Indra Utoyo said his firm aimed to maintain double-digit growth in its digital service business next year.
'We estimate that our digital service business will still grow by double-digits next year. It will contribute 9 percent to our projected revenue total of Rp 100 trillion [US$8.2 billion] next year,' he said Tuesday after the launch of Jakarta Digital Valley, which is aimed at developing local Internet-based startup companies.
Telkom wants to grow its digital business by around 15 to 20 percent this year to make up 8 percent of its total 2014 revenue target of Rp 80 trillion, Indra said. As of September this year, the state-owned company booked Rp 65.8 trillion, a 7 percent increase from Rp 61.5 trillion in the same period last year.
The firm's net profits rose 4 percent year-on-year (y-o-y) from January through September, up to Rp 16.3 trillion from Rp 15.6 trillion.
While not specifically categorized as digital services in the firm's financial report, Telkom's data, Internet and IT services grew 15.4 percent to Rp 26.9 trillion in the first nine months this year.
Its telephone business (cellular and fixed-phone), which account for nearly half of the firm's revenues, meanwhile, grew by only 2.4 percent.
Indra said that to boost his firm's digital service business, the company would target young people through its subsidiary, Telkomsel.
'We will focus on the youth segment; how to make our online applications richer,' he said. Telkom would also develop its machine-to-machine (M2M) and big-data services, he added. 'M2M has also become one of Telkomsel's revenue drivers,' Indra said.
Besides boosting its business activities, Telkom is currently developing a number of centers to support local startups, an idea inspired by America's Silicon Valley. On Tuesday evening, Telkom launched Jakarta Digital Valley after previously launching Bandung Digital Valley and Yogyakarta Digital Valley.
To both manage the 'digital valleys' and to accelerate the firm's digital business, Telkom has established Digital Business Division. Telkom has committed an allocation of up to Rp 50 billion to develop its 'valleys' over the next two years.
Telkom said earlier that it planned to spend Rp 45 trillion next year to support the government's five-year broadband plan. Telkom president director Arief Yahya said Wednesday that the amount was three times more than the company contributed this year.
'We are spending around Rp 15 trillion on the project this year. Next year, it will be Rp 45 trillion,' former president director Arief Yahya said in early October. Arief, who was named tourism minister in President Joko 'Jokowi' Widodo's Cabinet, said the funds would be used to finance Telkom's Indonesia Digital Network (IDN) projects, comprising ID transmission, ID access and ID convergence.
From the total budget, 30 percent would be allocated to transmission cables, fiber-optic networks and satellites; 50 percent to providing WiFi; and the remaining 20 percent to developing technological convergence, he said.
Telkom's annual capital expenditure usually hits between Rp 20 trillion and Rp 25 trillion, 10 percent for its backbone and infrastructure; 20 percent for towers, information and technology (IT), media and international expansion; and 70 percent for cellular business.
