Syahrial Ali's Blog

I found this interesting news from www.telecommagazine.com that wrote the this issue.  Hutchinson Telecommunications (HTIL) which also operates outside Hong Kong to offer mobile services in six other countries in Asia is planning to exit from Indonesia. HTIL offers mobile services in Indonesia through Hutchinson CP Telecommunications (HCPT), a joint venture with CP Group of Indonesia under product name “Three” (3).

‘Negative factors’ were reportedly cited for its decision which included ‘complicated regulatory risks.’ The joint venture operates 2G and 3G platform in Indonesia and has a subscriber base of 3.6 million as at September 2008 giving it a market share of 2.8 percent.

In December 2007, Indonesia invoked its anti-monopoly laws against Temasek Holdings, Singapore’s sovereign wealth fund manager, for its indirect holdings in two telcos, Indosat and PT Telkomsel. The stakes in the two Indonesian telcos were owned by two Singapore entities – one, a fully owned investment unit, ST Telemedia and the other is publicly-listed, Singapore Telecommunications Limited, in which Temasek has substantial interests. Following unsuccessful appeal in May 2008, ST Telemedia sold its stake in Indosat to Qtel, Qatar Telecom.

Although this article was written in last January, the issue is still new for Indonesian Telecommunication communities.

As scheduled, Department of Communication and Information Technology keeps their promise to start the process of BWA tender in Indonesia. As stated in the Minister Decree on Jan 19th, 2009, the tender process shall be started in 3 months times. When the April 19th is on Sunday, then the announcement is released on Monday April 20th.

Yesterday, the chief executive of BWA tender has released a memorandum of information concerning the BWA tender in Indonesia. This info memo document can be downloaded here. The document contents all information concerning the BWA tender, including the schedule, bands, foreign share etc.

Below are the complete schedule of the tender process.

It is also mentioned that there are 15 regions and 2 block of frequency, namely 2360-2375MHz and 2375-2390MHz.

As informed many times in this blog, you should be ready now. BWA tender will really be performed very soon.

JAKARTA, Apr 20, 2009 (Xinhua via COMTEX) — Indonesian telecommunication company, PT Telekomunikasi Indonesia (Telkom), dominates the international call market in the country, a Telkom official said here Monday.

Telkom’s Marketing Communication and Public Affairs VP Eddy Kurnia said that Telkom, through its 007 dial number, is dominating 53 percent of international calls in Indonesia at the moment.

Telkom is currently establishing cooperation with 45 international telecommunication operators. It serves 8.7 million fixed phone subscribers, 13.5 million non-wired subscribers and 68 million cellular phone subscribers.

The state-run telecommunication company is seeking more cooperation with more telecommunication firms to expand its inter connection services.

“As long as it fits with the existing regulation and is profitable, we want to set up more inter connection cooperation with more telecommunication firms in the world,” he said quoted by Bisnis Indonesia daily as saying Monday.

Indonesian international call market has been largely served by two large domestic telecommunication firms Telkom and PT Indonesia Satellite (Indosat). Another domestic telecommunication firm PT Bakrie Telecom tries to tap international call market with dial number of 009.

Learning on the lucrative international call market, a publicly- listed telecommunication company PT Excelcomindo Pratama (XL) intends to open such a call service. (source: www.tradingmarkets.com)

On the January 19th, 2009, Indonesian Minister of Communication and Information Technology has released a decree about Broadband Wireless Access (BWA). According to that document, the tender shall be executed in three months times. It looks like that they want to keep their promise. On their website, Directorate General of Post and Telecommunication informs that the BWA tender process will be started on this April.

There is a modification on the participant’s requirement. Previously, the participants were only from telecommunication network providers and service providers, now they will allow the consortium which are the joint venture of  telecommunication network providers and service providers. The purpose of this rule is to widen the opportunity for companies in broadband wireless access business but have a limited fund or want to share the risks.

It is also mentioned that the ownership limitation of  foreign capital are 49% same with other telecommunication provider using radio with circuit switch and packet switch as well as cable based fixed network with circuit and packet switch.

The BWA tender processes consist of tender document picking, hand in the written statement related with tender document, submission of questions, clarification session. Then, complete documents  hand in including the bid bond, and so on.  It will be 3 steps tender  which consist of one qualification step and 2 seals bids. If the process start  in the 4th week of April, the result will be known in June 2009.   The process will take around 2 months times. So, be ready!!!

Indonesian Government will launch another 3G tender for a block of frequency (5MHz) using a beauty contest on April this year. For your information, all 5 3G operators (Telkomsel, Indosat, XL, HCPT and NTS) currently just have 5 MHz bandwidth. Previous Minister of Communication and Information Technology, Mr. Sofyan Djalil has already given a clue that some times in the future, government will provide additional bandwidth for the operator who really need it. And now, that promise is fulfilled.

Current Minister of Communication and Information Technology, Mr. Mohammad Nuh said that additional bandwidth for 3G is really needed in accordance with subscriber increments. Current channels are so crowded so that operator needs additional channel to maintain the quality of service.

Although using a beauty contest tender, government still retain the price as release on last tender (2006), that is IDR 160b ( US$15m) per 5 MHz. Telkomsel has agreed with that price while other operators bid for a lower price, i.e: PT Excelcomindo Pratama Tbk IDR 40b,  PT Indosat Tbk IDR 30b, PT Natrindo Telepon Seluler IDR 20miliar, and HCPT just bid for IDR 12b.

As can be seen from the price bid, Telkomsel will won the tender. If Telkomsel win,  Telkomsel will have a big opportunity to outperform the Indosat  for the data service. For your information, Indosat is the leading operator on providing mobile data services.

This year, 2009, is considered as the year of crisis. Is there any effect on operators’ capex? Here are the data. Indosat the 2nd largest GSM and 3G operator in Indonesia  just plans to spend around US$600m for its 2009 capex, down just below 50% of last year capex of US$1.25b. XL, the 3rd largest, plans US$700m for its 2009 capex, 44% lower than previous year capex (1.25b). Telkomsel, the largest GSM and 3G operator has allocated US$1.5b for 2009 capex. This figure is exactly the figure of 2008. However, if we investigate closely, Telkomsel has to finance its USO project for around US$2m. So, Telkomsel also decrease their 2009 capex by a small amount only.

How about other operator?

Bakrie telecom, the 2nd largest CDMA opeartor in Indonesia plan a US$200m for its capex in 2009. This figure is equal to the figures in 2008.  Axis, the new comer in GSM and 3G business will spend around US$500m for its 2009 capex, less than previous plan US$700m. In 2007-2008, Axis spent around US$1b. Axis just moved to its new office to Dea Tower in Mega Kuningan Jakarta. Meanwhile, Mobile-8 just want to spend around US$40m in 2009. This fund is the balance of last year capex which planned for US$140m but spent only US$100m.

From the figues above, we can see that almost all operators down their expenditures in 2009. It means that the global crisis affect their business. (data taken from various sources)