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Jakarta Post

Minister tells Telkom to focus on data center, quips over Telkomsel’s 70% revenue contribution

  • Made Anthony Iswara

    The Jakarta Post

Jakarta   /   Thu, February 13, 2020   /   09:57 am
Minister tells Telkom to focus on data center, quips over Telkomsel’s 70% revenue contribution State-Owned Enterprises Minister Erick Thohir (front left), accompanied by Deputy Minister Kartika “Tiko” Wirjoatmodjo (center) and ministry spokesman Arya Sinulingga, attends a meeting with lawmakers at the House of Representatives in Jakarta. (Antara/Galih Pradipta)

State-Owned Enterprises Minister Erick Thohir has criticized publicly listed state telecommunications giant Telekomunikasi Indonesia (Telkom) for being financially reliant on its subsidiary, cellular operator Telkomsel, for its revenue.

Erick said on Wednesday that Telkomsel earnings made up nearly 70 percent of Telkom’s overall earnings. Thus, he wanted Telkom to change its core business and be less dependent on the subsidiary by focusing on areas such as big data and cloud computing.

"It's better to not have Telkom at all [with current conditions] and directly make Telkomsel a state-owned firm. Then, their dividends [earnings for the government] are clearer," Erick said during the launch of a state-owned enterprises internship program in Jakarta.

Erick envisioned Telkom’s cloud and data center business as being competitive with that of Alibaba Cloud, a subsidiary of Chinese tech behemoth Alibaba Group, especially in the domestic market.

“In the past I experienced firsthand during the Asian Games how I was [forced] to use Alicloud. I didn’t want to, why could that not be served by Telkom?” he wondered, expecting Telkom to fix its business lines to be on par with foreign technology and telecommunications operators.

“We also don’t want Telkom to just rely on Telkomsel. [They should] explore new business opportunities,” Erick concluded.

Alibaba Cloud opened its second data center in the country last year, 10 months after launching its first. US tech giant Google has also announced that it was planning to open a Google Cloud Region data center in Indonesia this year, configuring big data using its cloud system while serving clients throughout Southeast Asia.

Telkom currently runs data centers operated by its subsidiary PT Sigma Cipta Caraka or Telkomsigma. The company has more than 283 clients, mostly from the banking and financial service sectors. According to Harry, the new data centers will also be operated by Telkomsigma.

Read also: Telkom to invest around Rp 1 trillion in cloud data centers next year

Telkom chief financial officer Harry Mozarta Zen said in October the company planned to invest around Rp 1 trillion in additional data centers in the country as a facilitator for clients with big data needs. Construction will only commence this year but Telkom is already acquiring plots of land.

“A data center will only be constructed if there is enough demand from our clients. If we had planned to construct a specific amount of centers and it turns out the demand is higher than expected, it is possible for us to build more centers to accommodate as many clients as possible,” Harry told The Jakarta Post.

Read also: Telkom pockets $1.1b profit in Q3 as data business soars

Despite the lagging progress in its data management business, Telkom booked Rp 102 trillion in revenue between January and September of 2019, a 3.5 percent increase from the same period a year before. Telkomsel booked Rp 68.3 trillion or 67 percent of the revenue in that period.

As for net profit, Telkom saw a 15.6 percent increase to Rp 16.45 trillion while Telkomsel alone booked Rp 19.2 trillion net profit, a 5 percent increase.