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The country's second largest phone company, PT Indosat, has
set aside a minimum of US$1 billion in capital expenditure this year to
bounce back from slower growth last year.
"This year's net profit growth will be somewhat equal to income growth
which is around 20 percent," Indosat finance director Wong Heang Tuck
told reporters last week.
Last year, the telecommunications company, which is 42 percent owned by
Singapore Technologies Telemedia, suffered a 13 percent decline in net
profit to Rp 1.41 trillion (approximately $154 million) from Rp 1.62
trillion in 2005.
This is despite the company's total revenue increasing by 6 percent
from Rp 11.59 trillion in 2005 to Rp 12.24 trillion in 2006, with its
cellular division contributing about 75.4 percent, its data division
contributing 15.5 percent and its fixed phone division contributing 9.1
percent.
"In the first half of 2006, our performance was not good, affecting our
overall result for the year," Wong said, adding that in the second half
of the year the company entered a phase of recovery.
Wong explained that the weak performance in the first half of the year
was due to problems in integrating the Satelindo and IM3 networks with
Indosat's own network, after a merger in 2005.
"However, since mid 2006 Indosat resolved these problems and has
devised several marketing initiatives that will make Indosat the most
innovative company in the market and regain growth momentum."
To retain momentum, the company plans to allocate an aggressive capital
expenditure budget of $1 billion, 50 percent of which will come from
the internal budget and the remaining $500 million from loans.
"In the initial stage, we will issue bonds. After that, we will look
for loans from bank syndications, dollar bonds or through other
mechanisms."
Indosat marketing director Wahyudi Wijayadi said the company planned to
use the fund to expand its telecommunications network, including
building another 3,500 to 4,000 base transceiver stations across the
archipelago.
"Through that, we aim to attract about five to six million new
customers," Wahyudi said.
As of 2006, the company had a total of 16.7 million cellular phone
subscribers.
Wahyudi said the target was sensible as growth in the country's
cellular industry was far from reaching a plateau.
According to research conducted by Credit Suisse, Indonesia's cellular
market, including fixed wireless phones, could grow by 24.8 million new
subscribers in 2007.
The company also plans to remain focused on its unique positioning in
the 3G market.
"Our 3G positioning is quite different to other operators. We are
focused on wireless broadband since internet penetration in Indonesia
is limited and such services are not widely offered," Wahyudi said.
"We have launched the service in Jakarta and Surabaya and plan to offer
the service in eight more cities later this semester," he said.
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