- 42 - Hutchison and Natrindo also provide cellular services in Indonesia and in 2012 were each awarded an additional 10 MHz of
spectrum on the 3G license frequency bandwidth 2.1 GHz. This additional spectrum increased their respective total allocated frequency spectrum to 20 MHz and 25 MHz each. In accordance with the announcement of MoCI No.19PIHKOMINFO22013
dated February 25, 2013, Telkomsel has been selected as one of the companies to be granted an additional 3G license with radio frequency in the 2.1 GHz bandwidth.
C. IDD
We compete in traditional IDD services non-VoIP in Indonesia primarily with Indosat, as well as Bakrie Telecom. IDD also faces competition with VoIP and other internet-based voice services likes Skype and Google Talk.
D. VoIP
We formally launched our VoIP services in September 2002. VoIP uses data communications to transfer voice traffic over the internet, which usually provides substantial cost savings to subscribers. A number of other companies, including XL Axiata,
Indosat, Atlasat Solusindo Pte, Ltd., PT Gaharu Sejahtera, PT Satria Widya Prima, PT Primedia Armoekadata Internet and PT Jasnita Telekomindo also provide licensed VoIP services in Indonesia. Other unlicensed operators also provide VoIP services that
may be accessed through websites or through software that allows voice communications through the internet using computers or smartphones.
VoIP operators compete primarily on the basis of price and service quality. VoIP operators, including us, offer budget calls and other products aimed at price sensitive users such as prepaid calling cards. We currently offer our primary VoIP service “Telkom
Global-01017” and the lower-cost alternative “Telkom Save”. Telkom Save offers discounted rates for certain countries to which there is heavy traffic from Indonesia while offering regular VoIP tariff rates for other countries. In addition to other VoIP
operators, we also compete with internet-based voice services likes Skype and Google Talk.
E. Satellite
The Asia-Pacific region and especially Southeast Asia continues to need satellites for both telecommunications and broadcasting infrastructure. This need is driven by the high demand from services such as cellular backhaul, broadband
backhaul, enterprise network, OUTV Occasional Usage TV, military and Government network, DTH television, flight communication, and disaster recovery.
At the same time, the supply of available satellite transponders in Southeast Asia is limited. Almost all of the orbital slot positions covering Southeast Asia are occupied. Of the satellites currently under construction one is planned to occupy the
118 E orbital slot, but it is estimated to enter service only in 2016.
Generally, large global satellite operators can use economies of scales to offer more competitive prices without affecting their financial performance. This may result in a market premium subsidy in very competitive markets.
There are 18 satellite operators with satellites covering Southeast Asia: 1.
SES Global Luxembourg 2.
Eutelsat Asia France 3.
APT Satellite Hong Kong 4.
AsiaSat Hong Kong 5.
JSAT Japan 6.
MEASAT Malaysia 7.
MCI – Media Citra Indostar Indonesia 8.
Indosat Indonesia 9.
VinaSat Vietnam 10.
SingTelOptus Singapore 11.
Telkom Indonesia 12.
ChinaSat China 13.
Mabuhay Philippines 14.
Thaicom Thailand 15.
ABS Hong Kong 16.
Lippo Star Indonesia 17.
Intelsat US 18.
Telesat Canada Our satellite operations primarily consist of leasing satellite transponders capacity to broadcasters and operators of VSAT, cellular
and IDD services and ISPs, as well as providing earth station satellite up linking and down linking services to domestic and international users. We face competition from foreign and domestic service providers and compete most closely in Indonesia with
- 43 - Indosat and PSN. Other private satellites serving the broadcasting market within the coverage of the Telkom-1 and Telkom-2
The satellite industry in Indonesia is one of the most competitive in Southeast Asia. This is evident from the shift in market structure since 2003 from monopoly to oligopoly. One of the reasons for this shift in market structure is that the domestic satellite
industry is not strictly regulated by the Government of Indonesia. Although Ministerial Regulation No.37PM.KOMINFO122006 dated December 6, 2006 issued by the MoCI was intended as an entry barrier for foreign satellite
operators, the currently applied “open sky” policy has in fact increased competition amongst domestic and foreign satellite operators. Another factor in the shift in market structure is the limited capacity of domestic satellite operators, which are thus
unable to benefit from the fast growing market demands in Indonesia.
In view of market opportunities and limited supply, we plan to expand our satellite business with the construction of Telkom-3S satellite through a partnership on acquired orbital slot. The Telkom-3S satellite is currently under development.
The current trend in the satellite business is the development of broadband satellite. As the bandwidths in the C-Band and Ku- Band frequencies are fully utilized, utilization of the Ka-Band frequencies will become an option. The technology for Ka-Band
frequencies has been progressing rapidly in the last decade. Broadband satellite utilize Ka-Band frequencies with a re-use configuration, resulting in capacities of up to 100 Gbps. Currently, we are engaged in design and demand studies for broadband
satellites.
F. BTS
