Asian telecoms heavyweights eye Indonesia's Excelcomindo

24 Sep 2003

Several of the Asia-Pacific region’s major telecoms players are rumoured to be in talks to buy Indonesia’s third-largest cellular operator Excelcomindo, with China Telecom [NYSE: CHA] and Telekom Malaysia [Kuala Lumpur: TLMM] heading the list of possible suitors. Officials at China Telecom yesterday confirmed that the company was holding discussions with Excelcomindo’s two principal shareholders – local conglomerate Telekomindo Primabhakti (60%), and Nynex Indocel Holding, a subsidiary of US telco Verizon Communications (23.1%). The former has been fighting mounting debts for more than five years, whilst Verizon is thought to be keen to offload its stake as part of its ongoing pruning of its overseas investment portfolio. By way of contrast, China Telecom is keen to make its first international investment and is not short of funding following the exceptional growth witnessed in its home market over recent years. It is also keen to keep pace with domestic rival China Unicom, which is currently shopping for overseas investments itself.

Established in November 1995, Excelcomindo launched its services commercially on 8 October 1996, becoming the third Indonesian operator to provide GSM services. Having recovered from the financial struggles of the late 1990s the company signed up one million customers by the beginning of 2002 and increased its overall subscriber base to 1.8 million by the end of the year, a figure the company estimates will grow to over five million by 2006. Its GSM services cover primarily Jakarta and the main business centres in Bali, Java and Lombok. 98% of customers are lower revenue pre-paid phone card users. In April 2003 Excelcom announced it had installed an Internet Protocol signalling system, supplied by Cisco Systems, which is designed to cope with increasing customer demand and improve cost-efficiency. The company hopes to invest some USD175 million on expansion projects, some of which has been set aside to explore 3G possibilities.

Indonesia
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