U.S. telecom companies have the chance to buy into one of Indonesia’s cellular operators, PT Telkomsel, which is seeking a strategic partner to help combat the $586 million investment Deutsche Telekom AG has made in competitor Satelindo.
Telkomsel turned on the country’s second nationwide Global System for Mobile communications system a year ago, and reportedly has about 3,000 subscribers. Telkomsel is owned by two state companies-51 percent by national operator PT Telkom and 49 percent by PT Indosat, the country’s international telecom provider.
Telkomsel’s rival is PT Satelit Palapa Indonesia (Satelindo), which won the first nationwide GSM license in 1993 but didn’t go on-line until shortly after Telkomsel, according to U.S. Department of Commerce international reports. Satelindo claims nearly 25,000 subscribers and provides international cellular and satellite service.
Until recently, 60 percent of Satelindo was held by a private group led by Bambang Trihatmodjo, a son of Indonesian President Suharto. Thirty percent of Satelindo was held by PT Telkom and 10 percent by PT Indosat, which also owns Telkomsel.
Deutsche Telekom, which is owned by the German government, recently bought 25 percent of Satelindo for $586 million; hence, Telkomsel announced to foreign telecom operators that it would accept bids through the end of September for a stake in Telkomsel. The size of the offering has not been announced. Trihatmodjo’s group now holds 45 percent of Satelindo, Telkom 22.5 percent and Indosat 7.5 percent.
British Telecom and the Australian firm Telstra Corp. have reportedly submitted bids for a stake in Telkomsel, and other interested groups may include AT&T Wireless Services, U S West Inc., and perhaps London-based Cable & Wireless plc and France Telecom, two companies which had unsuccessfully bid for the Satelindo stake.
AT&T already has made inroads into Indonesia. It recently installed an Integrated Services Digital Network to upgrade the national system and has a manufacturing plant in Cibitung, West Java.
Nynex Corp., which also had expressed interest in Satelindo, now is a partner in Indonesia’s third GSM operator, PT Telekomindo. The company is expected to offer nationwide service possibly in 1996, said the Commerce Department. Nynex said it has been active in Indonesia since 1989, primarily involved in landline consultation.
Indonesia has had cellular service since 1986 and the growing market now is estimated to be worth $400 million. The country’s population is more than 200 million people on 17,000 islands. The largest island, Java, is one of the most densely populated areas in the world.
Seven wireless systems currently operate in the Republic of Indonesia-two are nationwide and five are regional. The first cellular operator, PT Rajasa Hazanah Perkasa, continues to operate a Nordic Mobile Telephone system in the Java cities of Jakarta and Bandung. RHP claims 29,000 subscribers.
The five-year-old Advanced Mobile Phone System/Narrowband AMPS service operated by PT Komselindo in Jakarta and Bandung claims about 45,000 subscribers, running above its capacity of 34,500.
An AMPS system operated by PT Centralindo Panca Sakti in the populated city of Surabaya also is over its capacity of 9,300. A regional AMPS system with about 3,000 subscribers is operated by PT Telekomindo Prima Bhakti.
Hughes Network Systems Inc. is the vendor for a new fixed wireless network offering Extended Time Division Multiple Access service in Jakarta.
