P.T. Telekomunikasi Indonesia Tbk. (TLK: 34.79 +0.35 +1.02%) has decided to reduce capital expenditures in 2010. During 2009, TLK spends approximately $2.2 billion; however, in the current year, management pegged the capital expenditure level at around $2 billion. The bulk of this capital expenditure budget will be allocated to Telekomsel, the wireless division of TLK. Telekomsel will get around $1.3 billion compared with $1.4 billion in 2009.The Company has decided to upgrade its wireless networks to counter increasing competition in the Indonesian telecom market. The company has decided to spread out its radio access network infrastructure throughout Indonesia. Management has taken a decision to upgrade its existing HSPA network to HSPA+ that will enable the company to offer broadband access speed up to 21 Mbps to its subscribers.
Deregulation of telecom segment by the Indonesian Government has enabled several competitors to provide similar services at lower costs to subscribers. Indonesian wireless service providers slashed prices in order to capture market share. As a result, ARPU (average revenue per user) reduced across the industry. Major competitors of TLK are P.T. Indosat Tbk. (IIT: 27.92 +0.46 +1.68%), and P.T. Excelcomindo Pratama.
TLK has also decided to acquire smaller telecom service providers in Indonesia like Bakrie Telecom to expand its CDMA network. This will help the company consolidate its market position that currently commands a 45% market share for both mobile and fixed-line telecom services in Indonesia.
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