(Bloomberg) -- PT Telkom Indonesia, the country’s biggest telecommunication company, will buy thousands of telco towers through recently listed unit Mitratel to win the local “price war,” the chief executive said.
Unit PT Dayamitra Telekomunikasi, known as Mitratel, will use most of the $1.3 billion earned through its recent public offering to acquire more than 4,000 towers from Telkom’s mobile unit Telkomsel as well as other operators starting next year, President Director Ririek Adriansyah said in a Wednesday interview. The company may even buy an existing fiber optic company and other fiber networks to meet surging demand for data, he added.
“Indonesia is a tough market so we need to be efficient,” he said. “We need to manage the quality and we need to differentiate ourselves so we’re not trapped in the price war.”
At $0.42 per 1 gigabite of mobile data, Indonesia has the third-cheapest prices in Asia, after Sri Lanka and Bangladesh, according to a report by Cable.co.uk. Telkom is confident that its larger network of towers would help it win against rivals, as PT Indosat and PT XL Axiata along with its own unit Telkomsel already account for most of Mitratel’s revenue.
The world’s fourth-most populous country is becoming one of the largest markets for e-commerce and financial technology as its young population embraces daily activities through smartphones, driving massive demand for mobile internet. The overall digital economy is set to double to $146 billion in 2025, according to a report by Google, Temasek Holdings Pte and Bain & Co.
Other key points from the interview:
- Mitratel’s EBITDA in the third quarter has edged closer toward its peers at around 80% while its tenancy ratio is set to increase, especially in areas beyond Java island
- Telkom sees single-digit revenue growth in 2022
- Company plans to set aside 25% of its revenue for capital expenditure while increasing investment in digital business
- Telkom plans to offer its data center unit in IPO in 2023 and seek higher valuation for it compared with Mitratel
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