The battle for control of Indonesia’s third largest mobile operator, Excelcomindo (Excelcom), is heating up with the announcement that its two high profile suitors, China Telecom and Telekom Malaysia, have separately begun talks to secure a majority stake in the company. Initial discussions began in September 2003 when Telekom Malaysia submitted an offer, which was later rejected as too low. Then, in a move which highlights the growing importance of the Indonesian mobile sector, Telekom Malaysia upped its offer price for a stake in the privately-owned cellco after coming under increasing pressure from the Chinese PTO. However, it appears that China Telecom has serious aspirations to expand its presence beyond its national borders and plans to use some of the huge proceeds gleaned from its rapid expansion at home to win control of Excelcom. According to people close to the deal, primary talks concern the 23.1% interest held indirectly by US-based Verizon through its subsidiary Nynex Indocel Holdings, as Verizon has made clear its desire to exit the Asian market. The talks also concern some of the majority 60% holding owned by Indonesian sugar-to-technology conglomerate Rajawali Group via its investment vehicle Telekomindo Primabhakti, whose head of external affairs Fritz Simandjuntak has confirmed the company is looking for a strategic partner rather than another shareholder. Excelcom presents an excellent opportunity in what is one of the fastest-growing markets in Asia, where a mobile penetration rate of under 8% puts it well behind most neighbouring markets.
Established in November 1995, Excelcom 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. By September 2003 Excelcom had an estimated 2.27 million subscribers, a market share of around 14%. Its GSM services are supplied by 600 base transceiver stations, mostly in Jakarta and the main business centres in Bali, Java and Lombok. 98% of customers are lower revenue proXL pre-paid phone card users. In April 2003 the cellco 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 a further USD175 million on expansion projects, some of which has been set aside to explore 3G possibilities.