Indonesia's Satellite of Love
If you want to know just how pervasive wireless phones are becoming in Indonesia, just ask the country's president, Susilo Bambang Yudhoyono. No, seriously. Ask him.
On Saturday, Yudhoyono gave out his mobile phone number to a gathering of farmers in his homeland and invited them to call or text-message him with complaints any time of day or night. The media broadcast the number nationwide and within minutes the president's cell phone lit up with the first of thousands of complaints.
Yudhoyono's gambit made two miscalculations: He not only underestimated the discontent of Indonesians, but also their ready and increasing access to wireless phones.
Two clear beneficiaries of the rising demand for mobile phones in Indonesia are the country's largest cell-phone providers: Telkomsel, 65% owned by government-controlled Telkom Indonesia (TLK) and 35% owned by Singapore Telecom; and PT Indosat (IIT), largely owned by the Indonesian government and Singapore Technologies Telemedia.Last year, Indosat saw a 59% increase in cellular subscribers to 9.8 million users, pushing cellular revenue up 46% to $802 million. Telkomsel saw its subscriber base expand by 87% to 16 million in 2004. Since then, both companies have continued to add subscribers, with Indosat reaching 12 million and Telkomsel topping 20 million out of a total population of 242 million residents. Of the two companies, Indosat, which has moved away from its roots as the state-run international call carrier to a company driven by wireless service, offers U.S. investors a purer exposure to the growing wireless market. Its ADRs are actively traded on the NYSE. Nearly 70% of Indosat's revenue comes from its wireless business. Telkomsel has the larger share of the Indonesian market, but direct ownership is limited to its parent companies. U.S. investors, however, can buy ADRs of the larger of its two shareholders, Telkom Indonesia. Telkomsel controls 52% of the Indonesian cellular market, with Indosat controlling 32%, and smaller players such as Excelcom make up the remaining 16%.
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