Indon cellcos want tower ban lifted

Nicole McCormick
15 Apr 2010

Indonesian operators are backing calls by the investment board chief to allow foreign investment in the tower space.

Gita Wirjawan, chairman of the Investment Coordinating Board (BKPM), believes local industry requires infrastructure investment of up to $8 billioneach year.

That investment, he says, cannot be met solely by local funding.

The BKPM wants five business segments, including mobile masts, to be opened up to foreign investment, which entails removing the sector from BKPM’s Negative Investment List.

But that would require the overhaul of a 2008 ministerial decree banning foreign investment in mobile towers.

“[The] foreign ownership limitation on towers never came from BPKM, which is the body supposed to be in charge of the Negative Investment List – it came from a decree issued by the Minister of Communications,” said Wim Timmermans, CFO of operator XL Axiata.

“It looks like this decree was cooked by some nationalistic forces in the regulatory body under strong lobby of some non-viable small local tower operators.”

Coordinating Minister for the Economy, Hatta Rajasa, also recently added fuel to the debate, when he said the government intended to continue following the 2008 ministerial decree banning foreign ownership in mobile towers.

“I don’t think the government is against it [foreign tower investment],” said Timmermans.

“It would seem more that the new minister is not yet powerful enough to call the shots.

“I think this is a clear example where those who drafted the decree in the past are pretty clueless on what is strategic and more importantly do not understand that local companies will not be able to fund any meaningful tower initiatives.”

Heru Sutadi, commissioner for the Indonesian telecoms regulator BRTI told that the regulator and the government are not against foreign investment of towers.

“The operator can still [own] and build the tower, and most of Indonesia’s operators are owned by foreign [investors],” Heru said.

“[Only the] tower provider and contractor must be local companies.”

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