Indosat subscribers seen at 40 mn

JAKARTA, INDONESIA: The number of subscribers for PT Indosat, Indonesia's No. 2 mobile phone operator, may hit 40 million by year end, based on the firm's growth forecast, and putting it only just ahead of rival XL Axiata.

Indosat said on Wednesday it sees similar subscriber growth in the second half as in the first, which would put the year-end number at about 40 million, or up a fifth from 2009.

Indonesia, Southeast Asia's biggest economy, is one of the world's most crowded telecommunications markets with 11 operators fighting for customers in a population of 237 million.

Among the three main players in the mobile phone market, Indosat has 37.8 million subscribers, well behind PT Telkomsel, a subsidiary of PT Telekomunikasi Indonesia with 88 million, but ahead of PT XL Axiata with 35 million.

"I'm pretty sure 40 million is a reachable target (for) subscribers by the end of the year," said Harry Sasongko, Indosat's chief executive.

"We should have the same growth rate in the second half as in the first half in terms of subscribers."

Indosat's full-year net profit is forecast at 1.524 trillion rupiah, up 1.73 percent from 1.498 trillion rupiah in 2009, according to Thomson Reuters I/B/E/S.

Indosat, controlled by Doha-based Qatar Telecom, and XL are competing for second place, with XL recently giving full-year guidance for subscribers at 39 million.

Indosat, which has a market capitalisation of $2.8 billion, also expects revenue in the second half to grow at the same pace as in the first half, when revenue grew 5.8 percent.

XL said in July that it expects revenue growth of up to 18 percent in 2010.

Indosat's 2010 first-half profit fell 71.5 percent to 287 billion rupiah which it said was because of a stronger rupiah, depreciation, and an unrealised loss on its derivative position from hedging.

Tower asset

Sasongko also told Reuters that Indosat is still considering whether to keep or sell its tower assets. "We're re-organising ourselves and we think the towers should be put in one unit, we're going to put it under one umbrella," Sasongko said.

When asked if Indosat would consider listing the unit in an initial public offering, he said that was one option.

"The possibility is always there, we need to look at the state of the tower business itself, also regulation and market situation," Sasongko said.

Indosat has 17,372 base transceiver station (BTS) towers as of the first half of 2010.

Based on an average construction cost of 1 billion rupiah, its entire tower portfolio would be worth an estimated 17.372 trillion rupiah ($1.94 billion).

Indosat stock closed up 0.54 percent on Wednesday at 4,650 rupiah. The stock has fallen 2.12 percent so far this year, underperforming the market .JKSE, which is up 23 percent.