20 Oktober 2009 Telkom unveils new strategy, logo

Ika Krismantari
The Jakarta Post/Jakarta (19/10/2009)

The nation’s largest telecoms operator PT Telekomunikasi Indonesia (Telkom) announced plans to increase its market share in the industry to 60 percent by boosting non-core business activities.

Telkom’s current market share in the telecommunication and information industry is currently below 50 percent, the company said.

“We are expanding business,” said president director Rinaldi Firmansyah in a dinner party to introduce the company’s new strategy and logo in Jakarta on Friday.

Telkom’s strategy to expand its operation in non-core business is the latest move in efforts to maintain its position as the number one company in the industry despite a current downturn and an expected flattening out in the telecoms business in the coming years.

The company’s non-core businesses include operations in the media, entertainment, software applications development and various Internet services.

The shift of focus to non-core businesses that support its telecommunication service has been translated into a new logo that projects the company’s new ambitions.

Rinaldi also mentioned the company’s information communications technology (ICT) sector to support its business expansion.

He refused to disclose the names of the firms, but said it had set aside a budget of Rp 1 trillion (US$106 million) for the acquisitions.

To focus more on developing its business, Rinaldi said that the company was in the process of divesting several companies where Telkom was not the majority shareholder.

Telkom director for information and technology Indra Utoyo said that the company was in the process of finding buyers for total ownership of its land network operator PT Citra Sari Makmur (CSM), satellite PT Pasifik Satelit Nusantara and terrestrial network provider PT Patra Telekomunikasi Indonesia (Patrakom).

Rinaldi said the company intended to spend $2.1 billion next year on capital expenditure for infrastructure expansion and acquisitions.

The Indonesian telecommunication industry has become saturated as penetration of the mobile phone market, which spearheaded growth in the past decade has slowed, coupled with fierce competition with new player entering the market.

A clear look at the problems facing the industry first became clear in the fourth quarter of last year when the global economic and financial downturn, which translated into higher than expected interest rates and a weakening rupiah, put all the telecommunication providers under more pressure with escalating costs.

For Telkom, the situation reached its peak in June when the company told top decision makers in its subsidiary operating its mobile communications services, PT Telekomunikasi Selular, to slash their annual bonuses by 27 percent.

Telkom’s net profit fell to Rp6.04 trillion in the first semester of this year from Rp6.23 trillion in the same period last year, extending its continued quarterly decline that began in the fourth quarter of 2008.

In the first quarter of this year Telkom registered a 23.4 percent drop in net profits to Rp2.46 trillion. Total revenues were down by 2.2 percent to Rp14.7 trillion.

The global financial crisis aside, analysts said the main contextual problem leading to the toughening industry climate was the government’s decision to cap telecommunication rates but without establishing a floor rate.

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