Indonesia's Telkom to spin off fixed-wireless unit

Indonesia's largest phone company, PT Telekomunikasi Indonesia Tbk (Telkom) , plans to spin of its fixed-wireless operation, Telkom Flexi, into a separate unit next month, the company chief said on Wednesday.

Arwin Rasyid, Telkom's president director, said the move was aimed at providing greater flexibility for the unit in fixed wireless telecommunications, where Telkom faces competition.

Operators in the fixed-wireless market, which provides mobile telecommunications with limited range, use code division multiple access (CDMA) technology, rather than the more widely used GSM standard.

"The CDMA market is getting more developed and competition is tougher. The spin-off will create more efficiency," Rasyid told reporters.

He did not say whether Telkom planned to sell the unit in the future.

Telkom's fixed-wireless operations contributed more than 2 trillion rupiah ($221.5 million) to the company's total revenue, which was expected to reach 51.3 trillion rupiah last year.

Rasyid also said Telkom Flexi planned to spend 2-3 trillion rupiah for capital spending this year.

A number of Indonesia's telecommunication firms such as PT Indosat Tbk and PT Bakrie Telecom Tbk compete with Telkom in the fixed-mobile sector.

Mobile phone use has been growing rapidly in Indonesia in recent years and many industry experts predict the number of subscribers will hit 100 million by 2010.

Despite the rapid growth, the penetration rate of around 20 percent remains low compared with other countries in the region, such as Malaysia with around 80 percent and about 50 percent in Thailand. ($1 = 9,030 rupiah)

Reuters