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Thu, May 24, 2012
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Axis Set to Broaden Its Network For $800m
Shirley Christie | May 31, 2011

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Mobile phone operator Axis has earmarked $800 million in capital spending over three years to grow its customer base in an already crowded marketplace. “We are not thinking about the short term, and can make a good decision today that will pay off in several years,” president director Erik Aas said on Monday. The company aimed to raise its number of subscribers to 16 million by 2014, an ambitious 45 percent rise from 11 million now, he said. The funding for the expansion would come from bank loans, and would be invested in mobile broadband development as well as expanding networks by adding more base transceiver stations, crucial for carrying telecom traffic, reaching a total of 15,000 in 2014 from 6,100 today. The sector is already crowded with 11 cellular operators. Leading the field is giant Telkomsel, a unit of state-owned Telekomunikasi Indonesia (Telkom), boasting 100 million customers. Despite the tight competition, Aas said he did not believe the market was yet saturated. “Indonesia has huge potential because GDP is growing constantly, it is politically stable and consumer confidence is growing,” he said. “People can still maximize the use of their mobile devices,” he said, referring to rapidly growing demand for data services on smartphones. He estimated that the national mobile phone market was now worth $9 billion, rising to $13 billion over the next five years. Last year, Axis only booked a revenue of Rp 700 billion ($81.9 million), but Aas expected this to multiply more than tenfold over the next five years. Iwan Rachmat, a senior IT consultant at research firm Frost & Sullivan, also sees room to grow in the telecom sector, saying that only 60 percent of the total population of 237 million had mobile phones. “Data prospects are good, but the company needs big capital to develop the infrastructure needed to support data services,” Iwan said, adding that Axis should offer a complete package of voice and data services with affordable prices. Parent company Saudi Telecom in April raised its stake in Axis to 80 percent from 51 percent, in what analysts have called a vote of confidence in the vast potential of the Indonesian market.