We downgrade our recommendation for P.T. Telekomunikasi Indonesia Tbk. (TLK) to Neutral following the company’s current valuation and increasing competition in the Indonesian telecom market.   Deregulation of telecom segment by the Indonesian Government has enabled several competitors to provide similar services at lower costs to subscribers. That country’s wireless service providers slashed prices in 2008 in order to capture market share. As a result, ARPU (average revenue per user) reduced across the industry. Major competitors of Telekomunikasi are P.T. Indosat Tbk. (IIT), and P.T. Excelcomindo Pratama.   Indonesia's wireless users often switch service providers to take advantage of low promotional rates and available credit. About 10% of Telkomsel's reported prepaid subscriptions still remain inactive. Moreover, in November 2009, Excelcom and Axis Telecom have signed an agreement for Indonesia’s first roaming network. The deal will allow Axis customers to use Excelcom's network. Telekomunikasi may lose its market ...

P.T. Telekomunikasi Tbk (TLK), the largest telecom carrier in Indonesia, is likely to launch the country’s first 4G WiMAX network in first quarter of 2010. As of now, the company provides both 2G and 3G wireless infrastructure that includes GSM and WCDMA/HSPA technologies and is quickly expanding its wireless infrastructure. TLK’s wireless division, popularly known as Telkomsel has decided to raise capital expenditure plan to $1.4 billion in fiscal 2009, an increase of 25% from previous fiscal. Telkomsel commands 45% share of the total Indonesian wireless market, well ahead of its competitors, P.T. Indosat Tbk (24%), and P.T. Excelcomindo Pratama (17%).  Through WiMAX, TLK will offer an alternative to cable and digital subscriber lines technology. WiMAX enjoys commendable growth potential especially within the emerging markets. The technology provides a low-cost, open network system with an all IP mobile Internet solution that enables efficient and scalable networks for ...