Indosat boosts capital expenditure to $1.2b

The Jakarta Post, Jakarta

PT Indosat, the country's second largest mobile phone operator, will increase its capital expenditure this year to US$1.2 billion from $1 billion as initially planned to further expand its networks and improve the quality of its services.

Indosat president director Johnny Swandi Sjam said Wednesday around 15 to 20 percent of the capital expenditure would be used to expand cellular networks, including the building of new base transceiver stations (BTS), while the remaining would be used to improve services.

As of June this year, the company had built 8,366 BTS, or a 33.9 percent increase from the 6,248 BTS in June last year.

Indosat finance director Wong Heang Tuck said about $300 million of the $1.2 billion capital expenditure would come from the company's own fund and the remaining $700 million from bank loans and the issuing of bonds.

"The company still needs around $200 to 300 million from other sources," Wong said.

Sjam said increasing capital expenditure for capacity expansion was needed because the number of Indosat's cellular subscribers had already increased by 44.3 percent to 20 million as of June from 13.9 million in the same month last year, while the number of its fixed wireless subscribers surged by 132.3 percent to 483,400 from 208,100.

He said the first semester showed a good record in consumer growth, so the company changed the new subscriber target number for this year to seven million from six million as initially planned.

The sharp increase in the number of subscribers resulted in a 33.3 percent increase in the company's total revenue to Rp 7.69 trillion (about US$826.8 million) in the first half of 2007 from Rp 5.76 trillion in the same period last year.

"Indosat's success in the first half of 2007 is attributed to the growing demand for cellular, fixed-voice and fixed-data services," Sjam said in a press briefing.

He explained that cellular operating revenues grew by 37.4 percent to Rp 5.89 trillion in the first half of 2007 from Rp 4.30 trillion in the same period last year.

Meanwhile, fixed-data service revenues grew by 9.9 percent to Rp 1.01 trillion in the first half of 2007 from Rp 927.3 billion due to increasing demand of wholesale and corporate consumers to rented internet circuit, internet protocol virtual private network (IPVPN) and internet services.

Fixed-voice service revenue grew by 41.1 percent to Rp 774.4 billion from Rp 548.9 billion in the same period last year and was driven by an increased demand for international calling and fixed wireless services.

The cellular business contributes 77 percent to the company's total revenue, while its fixed-voice and data services contribute around 10 and 13 percent respectively.

Sjam said the company's operational spending increased by 34.8 percent to Rp 5.66 trillion in the first half from Rp 4.19 trillion in the same period in 2006. Therefore, its operational profit increased by 29.4 percent to Rp 2.03 trillion from Rp 1.56 trillion, while its net profit soared by 54 percent to Rp 845.1 billion from Rp 548.8 billion. (02)
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