Telkom to launch unit in Malaysia this month

State-owned telecommunication operator, PT Telekomunikasi Indonesia (TLKM) or Telkom, says it will launch its services in Malaysia by the end of August, with commercial operations fully up and running by September.

Telekomunikasi Indonesia CEO Arief Yahya said the company had met all the requirements and would be able to officially launch its services on Aug. 25.

“After the launch, we will need roughly one month to conduct stress tests on our operations before we can go completely commercial, which we target to take place in September,” he said.

Arief added that the market segment the operator would focus on was the Indonesian community in Malaysia, including migrant workers (TKI).

“Malaysia is of sizable potential for us considering that there are around 1.5 million formal migrant workers there, in addition to the 3 million informal workers,” he said.

He added that the average revenue per user (ARPU), or the revenue gained per subscription, was greater in Malaysia.

“Although PT Telekomunikasi Selular [Telkomsel] has 125 million subscriptions, its ARPU is Rp 35,000 [US$3.24] whereas the ARPU in Malaysia is Rp 150,000,” he said, adding that initially the operator aimed to acquire 100,000 subscriptions.

Telkomsel is Telkom’s subsidiary that provides mobile phone telecommunication. It is the largest mobile operator in the country with a market share of 36.7 percent, data from Frost & Sullivan shows.

Telkom earned Rp 40.1 trillion in revenues in the first half of the year, of which Rp 15.4 trillion came from cellular services.

Arief added that Telkom had gained network coverage throughout Malaysia through its mobile virtual network operator (MVNO) agreement.

Telkom, via its subsidiary overseeing foreign expansions, PT Telekomunikasi Indonesia International (Telin), has entered into an agreement with Malaysian telecommunication operator Maxis Berhad.

Under the MVNO agreement, telecommunication operators without frequency licenses work with local operators with licenses to provide telecommunication services. Under this model, a telecommunication operator without a license can still implement its own pricing strategy and operational systems, including billing system.

According to Arief, Telkom has settled on a “pay-as-you-go” model with its host in Malaysia for rental of the network.

“We will pay rent based on the number of subscriptions we gain,” he said.

“Given that the ARPU is Rp 150,000, we will be paying them [Maxis] 60 percent and keeping the rest ourselves,” he added.

He further pointed out that as of the first half of the year, Telkom had amassed 100,000 subscriptions from its overseas operations.

Telkom’s Telin has operations in Singapore, Hong Kong, Timor Leste and Australia. Besides telecommunication services, Telin is also involved in information technology (IT) services such as business process outsourcing (BPO).

However, Telkom’s efforts to grab other foreign markets such as Myanmar has met with difficulties.

Arief added that for telecommunication subscriptions, Hong Kong remained its largest base.

“As many as 60,000 of the subscriptions come from Hong Kong, with the remaining 40,000 from Timor Leste,” he said.

He added that Telkom targeted to build up its overseas subscriptions to 200,000 by the end of this year given that telecommunication services had become widespread.

“Besides Indonesia with its 110 percent, other countries have achieved mobile phone penetration rates of over 100 percent. Malaysia, for example, has a penetration rate of 130 percent,” he noted.