Telkomsel Plans Capex Hike

Indonesian mobile operator PT Telekomunikasi Selular (Telkomsel) has pledged to increase its capital expenditure (capex) by about 25 percent to more than US$1.4 billion this year as it expands its GSM and WCDMA/HSPA coverage.

The operator, in which national incumbent PT Telekomunikasi Indonesia Tbk. (Telkom) and Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY) own 65 percent and 35 percent stakes, respectively, increased its mobile customer base by 6.8 million during the first quarter to take its total to more than 72 million.

That gives it a leading market share of approximately 45 percent in what is, according to Pyramid Research , Asia/Pacific's fifth biggest mobile market by revenues. (See Top 10 Telecom Markets: Asia.)

With Indonesia boasting a population of about 240 million and a mobile penetration rate approaching 60 percent at the end of 2008, Telkomsel is now investing to support further growth and help maintain and even extend its market lead ahead of chief rivals PT Indosat Tbk and PT Excelcomindo Pratama , which hold market shares of about 24 percent and 17 percent, respectively.

Having spent about 12 trillion Indonesian Rupiah ($1.15 billion) in capex in 2008, the carrier plans to increase that by 25 percent to IDR15 trillion ($1.44 billion) this year, Telkomsel's president, Sarwoto Atmosutarno, told reporters at a press conference.

Telkomsel recently handed out new radio access network (RAN) infrastructure deals to Ericsson AB (Nasdaq: ERIC), Huawei Technologies Co. Ltd. , and Nokia Networks , having already awarded 2G and 3G core network expansion contracts to Ericsson and Nokia Siemens in 2008. (See Ericsson Wins in Indonesia and NSN Wins at Telkomsel.)

Alcatel-Lucent (NYSE: ALU) and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) were also considered for the RAN deals but were not selected this time.

News of the spending increase came as Telkomsel reported a 4 percent decrease in first-quarter revenues to IDR9.25 trillion ($891 million), largely due to the impact of currency exchange rates on its international interconnect revenues, though a cut in post-paid service charges also contributed to the decline. First-quarter net income fell by 29 percent to IDR2.58 trillion ($248 million).

Parent company Telkom reported first-quarter revenues of IDR14.7 trillion ($1.4 billion), down 2 percent compared with a year ago, and net income of IDR2.46 trillion ($237 million), down 22 percent.

— Ray Le Maistre, International News Editor, Light Reading

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