Telkom looking to build presence in Middle East

JAKARTA. Publicly listed state-owned telecommunications operator PT Telekomunikasi Indonesia (Telkom) is aiming to expand its business to Saudi Arabia as well as other Middle East countries this year, expecting to cash in on the large number of Indonesians living in and traveling to the region.

Telkom president director Arief Yahya said the company would partner with local mobile-network operators in the Middle East and operate as a mobile virtual network operator (MVNO) through its international subsidiary PT Telekomunikasi Indonesia International (Telin).

A MVNO provides wireless communication services without owning the network infrastructure. It partners with network operators to access network services at wholesale rates then sets retail prices independently.

“Our principle is that we will always follow the money, the people, the traffic and the network. So, we aim to get to any potential places that we’re not in yet,” Arief told The Jakarta Post after a state-owned enterprises awards event held by BUMN Track on Thursday.

There were around 1 million Indonesians working in Saudi Arabia alone and another million that traveled to the country, he said.

The number of umrah pilgrims to Mecca, Saudi Arabia, doubled to around 1 million last year from 500,000 in 2012, according to data from the Religious Affairs Ministry.

Arief said he expected Telin to earn revenue from workers’ remittances, worth trillions of rupiah.

The total funds sent home by all Indonesian overseas workers amounted to US$7.41 billion last year. About 65 percent of them worked in the Asia-Pacific region, with Malaysia the main destination and the rest in the Middle East, Africa, America and Europe.

Telin president director Syarif Syarial Ahmad announced last year that Telkom had signed a memorandum of understanding (MoU) with Saudi-based conglomerate the Al-Lama Group.

Al-Lama operates in both the Middle East and African markets in a number of business lines, including property, hotel, construction and telecommunications.

“By using this operational method, Telkom does not need to spend much on starting our business in our targeted countries in the Middle East,” Arief said, declining to disclose any further details about the planned Middle East expansion.

Besides planning to expand into the Middle East market, Telkom is currently expanding its presence in California’s Silicon Valley in the United States, where many global startups such as Facebook, WhatsApp were born.

“We are aiming to collaborate with local venture capitalists, such as Fenox Venture Capital, to build an incubator for Indonesian talent in the digital industry,” Arief said.

The budget for the expansions would account for part of its average annual capital expenditure of $2 billion, of which 70 percent was for the firm’s cellular business, 20 percent for broadband and the remaining 10 percent for other infrastructure development, such as telecommunications towers, he explained.

Telkom’s shares, which are traded under the code TLKM, closed at Rp 2,715 (23 US cents) on Thursday, down 0.37 percent from the previous day. (Khoirul Amin)