Indonesia’s second largest telecoms operator by subscribers PT Indonesian Satellite Corporation (Indosat) says it is allocating 60% of this year’s USD600 million capital expenditure to expand and improve its networks and services, in an increasingly cutthroat domestic market. The Jakarta Post quotes Indosat president Johny Swandi Sjam as saying the investment will target improvements in both bandwidth and networks ‘as a whole’. ‘We have to prevent our existing users from switching to the competition,’ he added.
The domestic wireless market is home to eleven cellular and fixed-wireless operators offering GSM and CDMA-based technologies. Intense competition has impacted on operators’ bottom lines in recent years, as they cut prices in an effort to entice subscribers onto their networks. In 2008 Indosat saw its own net income dip by 8% year-on-year to IDR1.80 trillion (USD151.2 million) from IDR2.04 trillion. Given that more than two-thirds of its revenues are derived from wireless operations (the remainder is made up from sales of fixed line and multimedia services), Indosat is keen to shore up its overall business. The CAPEX will be funded through internal resources and from bank loans.
Indosat’s main rivals are also intent on spending heavily in the coming year to hang on to subscribers and gain new ones. The country’s leading operator by subscribers, PT Telkom, has allocated up to USD2 billion on CAPEX projects for the coming year, while third-placed PT Excelcomindo Pratama (XL), previously announced its investment for this year would stand at between USD600 million and USD700 million. Meanwhile, PT Bakrie Telecom has earmarked USD200 million for its expenditure programme and PT Mobile-8 intends to spend around USD125 million.