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Thursday, February 02, 2006

Hutchison's Indon unit to lose 3G edge with more players

(HONG KONG) Hutchison Telecommunications International Ltd's (HTIL) Indonesian mobile unit will soon lose its place as one of only two operators licensed to run both 2G and 3G services, with the Indonesian government likely to award 3G spectrum to another two local operators, according to the South China Morning Post.

Big market: Indonesia's mobile subscriber numbers are expected to grow by 30% this year to 61 million. The newspaper quoted analysts as saying that while Cyber Access Communications would first roll out 2G services in Indonesia, they feared that the 60 per cent-owned unit of HTIL would miss out on the emerging mobile market's peak subscriber growth because of its slower-than-expected 2G network roll-out.

Gatot Broto, a spokesman for Indonesia's directorate-general of post and telecommunications, was quoted as saying that the government would auction 15 megahertz (MHz) of spectrum in its second round of 3G spectrum auction next Tuesday. Another 20MHz is expected to be auctioned in 2008.
'(One likely scenario) is for the government to split the 15MHz so that one winner would get 10MHz, and another, 5MHz,' said Mr Gatot.
The current round has generated keen interest from seven firms, including operators Telkomsel, Indosat and Excelcomindo. The only other operator with a combined 2G and 3G nationwide licence is Natrindo Telepon Seluler, which is 51 per cent owned by Malaysia's Maxis Communications.

Analysts say a 3G operator needs at least 10MHz of spectrum for a service roll-out. Mr Gatot said Cyber Access had already returned 5MHz of its paired spectrum to the government after it appealed to the two existing 3G licensees last September for a partial return of their 3G spectrum.

The administration wanted the spectrum back for a second round of auctions for operators such as Indosat and Telkomsel, who were reportedly upset about not securing any 3G spectrum in the first round in 2003. Cyber Access now has 10MHz of unpaired 3G spectrum.

With less 3G spectrum, Cyber Access would probably have to build more base stations to add network capacity to compensate for the lost spectrum - a move likely to increase its investment cost, one analyst said.

Meanwhile, analysts do not expect Cyber Access to launch a 2G service until early next year, later than its original launch target set for this year.
HTIL said last month that the first 2,000 cell sites, built by Siemens, were not expected to be completed until the second half of this year.

Richard Moe, an analyst at Macquarie Research, said operators such as Telkomsel would probably be more aggressive in building a network than newcomers such as Cyber Access, as it already had 9,000 base stations in the country.

With a mobile penetration rate of just 20 per cent, Indonesia's mobile subscriber numbers are expected to grow by 30 per cent this year to 61 million, before growth slows to just 20 per cent by 2008. That compares with a growth rate of 55 per cent last year.

Mr Moe said Cyber Access's delayed launch means it would have already missed out on the country's peak subscriber growth rate.

The Business Times Singapore
February 2, 2006

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