Indonesian Operators Call for Limits on New Market Entrants

Indonesia's telecoms operators are lobbying the government to restrict the number of new entrants into their local market. The Indonesian Cellular Telephones Association (ATSI) chairman Merza Fachys was reported by the Jakarta Post as saying that due to limited frequency allocations and phone numbers, there was no room for any new players.

"The government must regulate the number of players so as to ensure the sustainability of the industry," Merza said in his speech at the annual national coordination meeting on telecommunication, information and media held by the Indonesian Chamber of Commerce and Industry.

The current market is already overcrowded and this has lead to damaging price wars between the operators, claimed Merza. "Cheaper tariffs generate more customers, but at the price of lowering the quality of the services," he said.

He also noted the confusion about who would regulate 3G services, particuarly if an operator offered video streaming over a cellular network as the broadcast regulator may need to authorise such services. The issue is not simply academic, as the government had different laws relating to foreign ownership, so a mobile operator can be 65% owned by an overseas investor, but if they offered video services then potentially the broadcast laws limiting foreign ownership to 25% could apply.

Qatar Telecom recently completed the purchase of a 40.8% stake in PT Indosat from Asia Mobile Holdings for $1.8 billion.

Qatar Telecom signed an agreement earlier this month to buy Indosat from Asia Mobile., which is 75%-owned by Singapore Technologies Telemedia. Qatar Telecom is the holder of the remaining 25% stake in Asia Mobile.

ST Telemedia's decision to sell its stake in Indosat follows a legal dispute that began last November, when Indonesia's antitrust regulator accused Temasek of violating a monopoly law by holding indirect stakes in Indosat and Jakarta-based mobile carrier PT Telkomsel.

Telkomsel is Indonesia's largest mobile operator by number of subscribers and Indosat ranks second. Singapore Telecommunications, 55%-owned by Temasek, has a 35% stake in Telkomsel.

On the web: Jakarta Post

Posted to the site on 24th June 2008