Hutchison enters tight RI mobile market

Urip Hudiono, The Jakarta Post, Jakarta

Hutchison Charoen Pokphand Telecom (HCPT) Indonesia became the latest newcomer to the country's already crowded cellular communications industry after it rolled out its nationwide GSM-based services Thursday.

HCPT Indonesia, a subsidiary of Hong Kong-based global cellular giant Hutchison Telecommunications International (HTIL) and Thailand agroindustry group Charoen Pokphand, will initially provide network coverage on Indonesia's most-populated island of Java, before expanding it to Bali in June, and Sumatra, Kalimantan and Sulawesi by 2008.

The company will use Hutchison's global "3" mobile service brand, and will start off by offering prepaid cards, before venturing into post-paid services.

However, HCPT Indonesia will have to compete with existing -- and already established-- local giants Telkomsel, Indosat, and Excelcomindo, as well as CDMA-based operators Mobile-8, Bakrie Telecom and Telkom -- all which are engaged in a fierce services and price war.

It is Indonesia's potential for growth in mobile communications that has encouraged the company to invest US$400 million so far on its initial startup here, the company's president Rajiv Sawhney said during the launching of the service. This figure will rise to up to $1 billion by next year.

HTIL chief executive officer Dennis Lui sees the penetration rate in the Indonesian mobile market as having the potential to increase to between 50 and 60 percent of the country's population of some 220 million people, from 27 percent at present.

"Analysts have mentioned growth of some 30 million new subscribers in Indonesia in the coming years. We believe we can attain a fair share of that market," Sawney said. "The challenge is how to provide network coverage, sufficient low-cost handhelds and affordable tariff schemes, as well as the usefulness of mobile services."

The company declined to state its initial subscriber or market-share target, but Sawhney said it wanted to sign up "one million subscribers as soon as possible." Lui said that the company was expected to achieve a positive balance of earnings before interest, tax and depreciation (EBITDA) within the next two years.

By way of comparison, HTIL's Thai unit netted 8 million subscribers within three years. HTIL has 36.5 million subscribers in 9 markets worldwide.

At present, Telkomsel leads Indonesia's mobile market, with some 35 million subscribers, followed by Indosat with 16 million and Excelcomindo with 9 million.

HCPT Indonesia will be promising top-notch user experiences -- including next generation 3G technology offering online content downloads -- based on simple and affordable low-rate tariff schemes. This includes basing tariffs on whether calls are made between "3" subscribers or not, and whether they are local or long distance, Rajiv said.
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