|Title:||Indonesia cellular telephony operators' capital expenditures in dollars for 2011|
|Source:||Indonesian Commercial Newsletter|
Start of full article - but without data
Capital expenditures of cellular operators, 2011
Operator Capital spending (US$ million)
Telkomsel X.XXX Indosat XXX XL Axiata XXX Smartfren Telecom XXX Axis Telekom Indonesia XXX Hutchison CP Telecommunications Indonesia N.a Sampoerna Telecommunications Indonesia N.a Total X.XXX
Sources: ICN processed
Cellular phone telecommunications have grown fast in Indonesia over the past XX years marked by the number of subscribers. The number of subscribers has increased from year to year. Indonesia is the fourth largest in number of cellular phone subscribers in Asia after South Korea, China and Japan.
Currently, Indonesia has X operators of cellular phone using the technology of GSM (Global System for Mobile) and X operators with technology of CDMA (Code Division Multiple Access). Based on data at the Pots and Telecommunications Directorate General, in the period of 2006-2010, the number of cellular phone users in Indonesia grew XX% per year. By the end of 2010, the number of cellular subscribers reached XXX million, with GSM operators dominating XX% of the cellular market CDMA having a X% market share. Pre-payment dominate XX% of payment system with post payment accounting for only X%.
Telkomsel, with XX million subscribers, had the largest share or XX.X% of cellular market in 2010. Cell phone market has reached rural areas even isolated areas in the country. Telkomsel service has covered all kecamatan district areas in Indonesia since 2008.
The number of cellular phone users in Indonesia has increased rapidly Teledensity has reached XX.X% in the world fourth most populous country of XXX million people, but still lower than Singapore's XXX%.
The rapid growth of the business and the market potential that is still open for penetration attract more investors to the country. A number of foreign operators in Asia such as Singapore Telecommunication Ltd (SingTel), Axiata Group Berhad (formerly Telekom Malaysia) and Maxis Communication Bhd from Malaysia already established foothold in the country through acquisition of the shares of local operators including Telkomsel and XL Axiata (formerly Excelcomindo). Indosat, which was formerly a state telecommunications company, has also fallen into the hand of foreign investor. Qatar Telecom Group acquired XX% stake in Indosat from STT (Singapore Telecommunication Technologies), and XX% through tender offer. The government holds XX%.
In early 2011, the government approved additional frequency allocation of X MHz for X operators of third generation (XG) telecommunications technology PT Axis Telekom Indonesia (formerly PT Natrindo Telepon Selular) and PT Hutchison CP Telecommunication Indonesia. Meanwhile, almost all suppliers of telecommunications technology in the world have their units in Indonesia to get a share of the huge and growing market. Cellular telecommunication is one of the most dynamic service industries that require large additional investment every year. In 2011, spending on telecommunications networks is estimated to reach US$ X.X billion.
In facing the tight competition, some operators seek merger such as PT Smart Telecom by acquiring Pt Mobile X. The merger of the two companies gave birth to new larger company PT Smartfren Telecom early 2011. Currently all cellular operators rely more on data service and subscribers as the main sources of income.
Cellular telecommunications system
Currently Indonesia has two systems of cellular telecommunications Global System for Mobile communication (GSM) and Code Division Multiple Access (CDMA).
GSM is a digital telecommunication technology operating on frequency of XXX MHz. In the frequency of XXX MHz, GSM has XXX slots of carrier frequency canal with a bandwidth ranging from XXX MHz--XXX MHz uplink and XXX MHz--XXX MHz downlink. The band width for each slot is XXX kHz. As the use of the frequency could not meet the requirement of the subscribers, given the rapid growth of the number of subscribers, the same frequency could be reused under the mechanism of frequency re-use at one BTS with a certain safe distance, is applied.
The GSM technology is widely adopted and developed in Europe. GSM is superior in many aspects over the old analog system. International Roaming could be made with GSM technology. It is not tied to one supplier; therefore, there is no monopoly. The validity of subscribers is examined before a conversation take place with the facility of hopping frequency. There would be no third party that could illegally hear the conversation. The voice quality is better and more sensitive, the subscriber capacity is larger and the features of subscribers are more varying, paging, facsimile, and ISDN.
In 1995 the government granted the operating licenses nationally for three GSM XXX operators without going through tender--Satelindo (later merged into Indosat), Telkomsel and XL Axiata (formerly PT. Excelcomindo Pratama). Currently there are X GSM cellular operators in Indonesia.
In order to increase the GSM canal capacity, there is now frequency of XXXX MHz (X.XGHz) or known as Digital Cellular System (DCS) XXXX, a Personal Communication Network--PCN from Europe.
GSM on the frequency of XXXX MHz is generally known as DCS (Digital Cellular System) XXXX or GSM XXXX in which there are XXX carrier frequency canals that could be used to serve cellular subscribers. The canals consist of uplink: XXXX MHz--XXXX MHz and downlink: XXXX MHz--XXXX MHz.
The use of frequency of XXXX MHz will increase the capacity to serve GSM subscribers. DCS XXXX is generally adopted in urban areas which need large serving capacity as the number of subscribers is generally larger in urban areas. The high frequency of GSM XXXX has positive effect on services. In the same service area, GSM XXXX could provide larger connecting capacity almost three times that of ordinary GSM. However, it has negative side that it needs more units of BTS (Base Transceiver Station) than needed by GSM XXX. This is because of the greater use of the frequency of GSM XXXX compared to the use of frequency of XXX MHz.
In addition, in a number of cases, GSM XXXX has some communication problems for use in some types of high rise buildings. DCS XXXX system is used by operator PT. Natrindo Telekomunkasi Seluler.
With the growing demand for mobile telecommunication services, higher frequency will be needed to serve the growing number of subscribers that is one with a frequency of XXXX and known as PCS (Personal Communication System) XXXX.
PCS XXXX has smaller coverage area but has larger capacity to serve larger number of subscribers compared with DCS XXXX and GSM XXX. One new GSM operator using the frequency of XXXX MHz. Is PT HutchisonCP Telecommunications Indonesia using the X G technology XG in addition to GSM.
CDMA also constitutes a system of digital technology used in fixed as well as mobile telephones. The technology is adopted widely in North America.
The CDMA technology especially CDMA XXXXXx is known to be superior in that it produces much clearer voice and in the speed of data transfer. The superiority of GSM lies in roaming and broad usage of the technology.
The superiority of CDMA technology particularly CDMA 2000 XX lies in the quality of voice which is much clearer as the CDMA technology could remove noise to the very minimum level. The clearness of the voice is considered important in the provision of telephone service. CDMA fixed wireless telephone is equal to the wire line in the quality of voice.
CDMA 2000-XX technology has been used in many countries like South Korea, China and the United States. In Indonesia, the operators of CDMA XXXXXx with cellular license are PT. Smartfren Telecom (a merger between PT. Smart Telecom and PT. Mobile-X Telecom) and PT. Sampoerna Telecommunications Indonesia. Other cellular operators hold the license as fixed-wireless operator such as PT. Telkom, PT. Indosat and PT. Bakrie Telecom.
CDMA technology is also superior in speed of data transfer. In Indonesia, the speed of data transfer of up to XXX.XKbps is used in almost all service areas but the speed of data transfer data of X.XMbps is only for CDMA2000 XX EV-DO networks in Jakarta.
Unlike GSM, CDMA technology tends to adopt close-standard, therefore, any one wanting to produce CDMA cellular phone must pay for the license to the license holder Qualcom. This is one of the reasons why some leading cell phone vendors refuse to do business with CDMA technology such as Siemens and Sony Ericsson. The two vendors may think CDMA not feasible with the obligation to pay for the license.
The existence of GSM technology in Indonesia is stronger as it is supported by wide networks. CDMA would take long time and need an effective strategy to beat GSM in the market, although CDMA is more competitive in price. GSM needs extra cost for installation of new equipment. However, GSM-based cellular phones are greater in number and variety than CDMA cell phones.
In late 2006, the government issued a regulation on frequency tapes for XG. Some operators were forced to move to other frequency tapes and those stayed were required to pay. Operators of CDMA-based fixed wireless phone Indosat (StarOne) and Telkom (Flexi) for Jakarta and Banten were forced to move to frequency tape of XXX Megahertz and cooperate with other operators.
Currently Indonesia has XX cellular operators including X. GSM operators and X CDMA operators. There are three large GSM-based cellular operators Telkomsel, Indosat and XL Axiata which hold the license to operate with nationwide coverage. The three companies operate with dual band--on the frequency of XXX Mhz and frequency of XXXX Mhz hat could serve XG technology
The first GSM operator in the country was PT. Satelit Indonesia (Satelindo), which was originally jointly owned by the Bimantara Group, Telkom and Indosat. Later Indosat and Telkom agreed on exchange of their respective shares in two subsidiaries Satelindo and Telkomsel in order to end cross ownership and to create a healthy competition. Indosat's stake in Telkomsel was sold to Telkom and Telkom's share in Satelindo was sold to Indosat that Telkomsel fell under control of Telkom and Satelindo was owned by Indosat.
In 2003 PT Satelindo and PT Indosat Multimedia Mobile (IMX operator, a subsidiary of Indosat, were merged into Indosat for efficiency in cost. Indosat, however, maintained the cellular products of each the defunct subsidiaries Matrix card, Mentari card of Satelindo and IMX card of Indosat Multimedia Mobile. Apart from providing GSM cellular service, Indosat has CDMA fixed wireless service called StarOne and offers international direct dial (SLI) and long distance direct call (SLJJ) and multi media service.
In 2004, Indosat in cooperation with Starhub, a sister company of Indosat in Singapore, succeeded in launching the feature of Black Berry which is a complete mobile Solution including wireless e-mail, global address lookup, wireless calendar synchronization, and mobile data, integrated and safe. The Black Berry service needs GPRS (General Packet Radio Services) networks to allow all the features to function properly. The superiority of the BlackBerry service over other wireless services is that it has push mail technology which will enable the subscribers to access e-mail without dial up first. The user of BlackBerry also will always be connected with GPRS that will allow real time data streaming.
In 2005, Indosat teamed up with Nokia to launch Black Berry Connect service through which subscribers could access the service without having to use special handset from RIM (Research In Motion). Access could be made with Nokia XXXX and Nokia XXXX handsets.
In 2009, Indosat focused more on upgrading technology rather than expanding networks with more units of base transceiver station (BTS). In 2010, Indosat promoted its XG service by expanding service network and broadband capacity. It also started modernization of cellular networks through the application of the technology of single RAN SDR (Single RAN Radio) in the BTS broadcasting network, and prepared migration to digital Internet Protocol network. Indosat succeeded in attracting more subscribers, increasing its market shares and improving cost efficiency with the expansion program
In 2011, Indosat plans to take over control of retail broadband from subsidiary PT. Indosat Mega Media (IMX), which operates as an Internet Service Provider.
PT. Telecommunications Seluler (Telkomsel) is a subsidiary of the state telecommunications company PT Telkom. In the beginning Telkomsel was designed to function as a pilot project for GSM-based mobile telecommunications project of Telkom and Indosat, respectively with stakes of XX% and XX%. The entry of foreign partner changed the share composition in Telkomsel. Currently, Telkomsel is XX% owned by Telkom (XX%) and XX% by Singapore Telecom Mobile (SingTel, XX%).
Around XX% of BTS units of Telkom are used by Telkomsel, and on the other hand around X% of BTS units of Telkomsel are used by Telkom's Flexi service.
Telkomsel issued a bond valued at Rp X trillion to finance its capital expenditure in 2007. Meanwhile, PT Telkom set a budget of Rp XX trillion for use as capital expenditures of its cellular subsidiary. The bond fund was used for business expansion to maintain its market share of at least XX%.