P.T. Telekomunikasi Indonesia Tbk. (TLK) has decided to upgrade its wireless networks to counter increasing competition in the Indonesian telecom market. The company has decided to spread out its radio access network infrastructure throughout Indonesia. As of now, Telekomunikasi provides both 2G and 3G wireless infrastructure that includes GSM and WCDMA/HSPA technologies. Management has taken a decision to upgrade its existing HSPA network to HSPA+, which will enable the company to offer broadband access speed up to 21 Mbps to its subscribers.
 
Telekomunikasi is also likely to launch the country’s first 4G WiMAX network in the first quarter of 2010. Through WiMAX, Telekomunikasi will offer an alternative to cable and digital subscriber lines technology. Management announced that the company is ready to comply with the required minimum of 40% local content in the products to be used for setting up the necessary infrastructure.
 
The company decided to raise its capital expenditure to $1.4 billion in fiscal 2009, an increase of 25% over previous fiscal. Furthermore, capital expenditure budget for fiscal 2010 has been fixed at $2 billion, up nearly 43% year-over-year. Management has taken a decision to borrow $1 billion to help financing capital expenditure. Telekomunikasi has already signed agreement with two large Chinese network infrastructure developers − Huawei Technologies and ZTE − for vendor financing of $300 million and $100 million, respectively. The remaining $600 million will be raised issuing bonds.
 
Deregulation of the telecom segment by the Indonesian Government has enabled several competitors to provide similar services at lower costs to subscribers. That country’s wireless service providers slashed prices in 2008 in order to capture market share. As a result, ARPU (average revenue per user) reduced across the industry. Major competitors of Telekomunikasi are P.T. Indosat Tbk. (IIT), and P.T. Excelcomindo Pratama.
 
Telekomunikasi has decided to acquire smaller telecom service providers in Indonesia such as Bakrie Telecom to expand its CDMA network. This will help the company to consolidate its market position that currently commands 45% market share for both mobile and fixed-line telecom services in Indonesia.
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