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Telkom taps East Timor market

Jakarta Globe - January 19, 2013

Francezka Nangoy, Dili, East Timor – Telekomunikasi Indonesia aims to gain a 60 percent market share of cellular phone users in East Timor by 2015, while preparing to enter Australia's call center business.

Arief Yahya, president director of the firm better known as Telkom, said the company had set an initial target of 4,000 new subscribers this year. However, he said the company already had about 20,000 new pre-subscribers ready to use their cellular service in East Timor, putting them well on their way to surpassing that target.

Arief was talking to journalists at a meeting in Dili on Thursday as the company officially launched Telkomcel, a cellular communications brand under Telkom's international subsidiary, Telin.

Initially the company will cover a small area of East Timor, he said, with 30 base transceiver stations at the start of operations. "By April, we will have more than 110 BTS and will cover 95 percent of East Timor," Arief noted.

The company is investing $50 million to establish Global System for Mobile Communications (GSM) and 3G telecommunications operations in the country. The license for the cellular business will run through 2015. Arief said the investment was fully funded by Telkom's internal funds.

Arief said he believed that business in East Timor would be a profitable venture as citizens of the country showed strong potential purchasing power.

He said the average revenue per cellphone user in East Timor was $10 per month. In comparison, Indonesians only bring in an average of Rp 35,000 ($3.63) in revenue per user per month.

East Timor has a population of about 1 million and Arief aims to reach 60 percent of them by 2015. Per capita income in the country was $896 as of 2011, according to data from the World Bank.

"Our competitive advantage is the better technology that we use," Arief said, adding that compared to its competitor in East Timor, the technology Telkomcel uses would help offer "more efficient and more effective tariffs" to customers. Telkomcel's only competition in East Timor is Timor Telecom.

Xanana Gusmao, prime minister of East Timor, on Thursday welcomed the entry of Telkom into East Timor. He said Indonesia and East Timor were closely linked geographically and should have closer relationships in business.

He said that, as an infant nation, he hoped East Timor would learn from the Indonesian economy and that the two countries would "both look into the future."

On Thursday, Telin signed a memorandum of understanding with six institutions to be their preferred cellular provider. Those institutions included East Timorese state agencies and local operations of Indonesian state-owned enterprises.

In Australia, Telkom is planning to enter the call center outsourcing business. He said the company may announce those plans as soon as next week, but did not elaborate on Thursday. Arief said Telin already had operations in Singapore, Malaysia and Hong Kong, contributing about 3 percent to Telkom's total earnings.