Mobile-8 gears up for major expansion

Andi Haswidi, The Jakarta Post, Jakarta

Strengthened by its unique market positioning, PT Mobile-8 Telecom Tbk will see off growing competition from existing operators and foreign entrants to the Indonesian market through a massive network expansion, a senior company executive says.

"We will see a number of new players in the telecoms industry commencing operations this year. I think the competition will get fiercer than ever, especially with new foreign entrants coming in," Mobile-8 senior vice president Martinus Peter Tabalujan told The Jakarta Post on Friday.

Earlier this month, the Bisnis Indonesia daily reported that SK Telecom, a giant telecoms player from Korea that controls more than 50 percent of the north Asian country's telecoms market, was looking at the possibility of entering the Indonesian market this year through the acquisition of an existing local telecoms operator.

SK Telecom is known globally for pioneering nationwide cellular communication based on "code division multiple access" (CDMA) technology, which is also used by Mobile-8.

Another foreign company that is looking at the Indonesian market, and which is bolstered by enormous financial resources, is Russia's Alfa Group, which says it has set aside US$2 billion for the acquisition of a local GSM player.

Despite the obvious benefits that virtually unlimited financial resources can give, Peter said that his company would rely more on its unique position in the market, and its strategic investments to date in network infrastructure and human capital.

The company, which is the only non-GSM cellular operator holding a national license, expects to expand its coverage outside Java from zero to 50 percent this year, to be financed by the proceeds of an initial public offering in November.

At present, Mobile-8 has 490 base transceiver stations and plans to establish another 1,408, with 50 percent of these to be located in Sumatra, Kalimantan, Sulawesi, Papua, Maluku and both West and East Nusa Tenggara.

"Based on these new investments, we are targeting an increase in our customer base from 1.8 million to four million by the end of this year, with about 900,000 of these being outside Java," Peter said.

To strengthen its finances, the company also plans to issue a Rp 550 billion bond early in March, maturing in 2012. All proceeds from the bond will be used to refinance the company's $58.3 million debt to Samsung Corporation as part of the company's strategy to reduce foreign-currency exposure.

Unlike other cellular operators with nationwide coverage, Mobile-8's Fren product offers much more affordable call charges due to the lower costs involved in network development compared to GSM-based technology.

Meanwhile, of the five CDMA operators currently licensed in Indonesia, four of them have fixed-wireless licenses, namely, Telkom with its TelkomFlexi product, Bakrie Telecom with Esia, Indosat with StarOne and Sampoerna Telecom Indonesia with Ceria.

"Through an upgrade in our CDMA technology, we now have the fastest data transfer service. The future of CDMA is limitless. Analysts predict that the growth rate for CDMA-based telecom connections will greatly exceed GSM's," Peter said.

Now in its third generation, CDMA employs CDMA2000 1X EVDO technology, which offers a higher average data transfer capacity of 3.1 megabytes per second, far ahead of GSM's 3G-transfer rate of 384 kbps.

Also this month, Mobile-8 appointed a new senior management team consisting of former officers and experts from Malaysia's Digi Telecommunications Sdn. Berhad.
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