Is wireless the way forward for Natrindo?

PT Natrindo Telepon Seluler, the third mobile-phone operator to begin services in Indonesia in a year, plans to raise spending on its wireless network in the country to more than $500 million by this year to expand coverage.

The investments will help Natrindo expand after it begins services in Jakarta and surrounding areas by the end of April, President Director Erik Aas said in an interview on March 28. The company, owned by Saudi Telecom and T. Ananda Krishnan's Maxis Communications, started offering mobile-phone calls in East Java under the Axis brand in February.

Upgrading the network helps Natrindo approach its target of offering nationwide service by the end of next year. Surging demand may help the company counter competition from PT Telekominikasi Selular and Li Ka-shing's Hutchison Telecommunications International as six out of 10 Indonesians still don't own mobile phones.

“The market is big enough that everybody will grow,” said Ong Boon Leong, an analyst at Hwang-DBS Vickers Research in Kuala Lumpur. “We see a lot of potential in subscriber growth.”

Indonesia's penetration rate for mobile phones was 39.7 percent at the end of September last year, the lowest among its neighbors Malaysia, the Philippines and Singapore, PT Indosat, Indonesia's second largest phone, said.

Jakarta-based PT Sinar Mas Telecommunications and PT Hutchison CP Telecommunications also started services in Indonesia in the past year.

“There are a lot of people in this country that are not connected yet, we will find our way of attracting them,'' said Aas, the former chief executive officer at Grameenphone, the Bangladeshi mobile-phone company founded by Nobel Peace Prize laureate Muhammad Yunus.

Mobile-phone users in Indonesia are rising 36 percent every year, Fortune magazine reported last week, citing estimates by Imran Khan, an analyst at JPMorgan Chase.

Will Natrindo be able to tap into the rapidly growing Indonesian market?