Telkom Indonesia (Persero) Tbk PT (TLK) 2011 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Telkom FY '11 results conference call. At this time, all participants are in a listen-only mode. There will be a presentation, followed by a question and answer session. (Operator Instructors). I must advise you that this conference is being recorded today, April 3, 2012.

I would now like to hand the conference over to your speaker for today, Pak Agus Murdiyatno. Sir, please go ahead.

Thank you. Ladies and gentlemen, thank you for participating into today's conference call to discuss PT Telkom Indonesia full year 2011 financial results.

On March 30, 2011, we released our financial results for the full year ending December 31, 2011. The earnings press release and other materials may be accessed in the Investor Relations sections of our website, www.telkom.co.id.

This presentation is also being broadcasted live over the Internet and our due recording will be provided on our website following the call. The recording will be available for the next seven days.

With me on the call is Mr. Rinaldi Firmansyah, Telkom's Chief Executive Officer, along with the members of the Board of Directors and senior management of PT Telkom and our subsidiary, PT Telkomsel. Mr. Firmansyah will give you an overview of the results after my opening remarks.

Before beginning, let me remind you that the call and the responses to questions may contain forward-looking statements within the meaning of Safe Harbor. Actual results could differ materially from projections, estimations, or expectations voiced during today's call. These may involve risk and uncertainty and may cause actual results and development to differ substantially from those expressed or implied in this statement. The Company does not guarantee that any action which may have been taken in reliance of this statement.

Ladies and gentlemen, it is my pleasure to introduce Telkom's Board of Directors who are joining us today, Mr. Rinaldi Firmansyah, our President Director and Chief Executive Officer; Mr. Sudiro Asno, the Director of Finance and Chief Financial Officer; Mr. Ermady Dahlan, the Director of Network and Solution and Chief Operating Officer; and Mr. Arief Yahya, Director of Enterprise & Wholesale; Mr. Prasetio, the Director of Compliance & Risk Management.

Also present today are the members of the Board of Directors of Telkomsel, Mr. Sarwoto Atmosutarno, President Director; and Miss Triwahysari, Director of Finance.

Before Pak Rinaldi delivers his remarks, I will take this opportunity to give a brief overview of Telkom Indonesia. Telkom is the single largest integrated telecommunications Company and [Internet] provider in Indonesia.

Serving more than [130 billion] customers nationwide, Telkom is able to serve the [midst] of around 95% on the populated areas in Indonesia for telecommunications, information technology, media and edutainment directly or through its subsidiaries.

As of December 31, 2011, the majority of our common stock, 53.24%, was owned by the Government of Indonesia, with the remaining 46.76% under public ownership, excluding treasury stock.

Our shares are traded on the Indonesia Stock Exchange, the New York Stock Exchange, the London Stock Exchange and also Public Offering Without Listing in Japan.

With that said, I will now turn the call over to Mr. Rinaldi Firmansyah for his remarks. Pak Rinaldi, the time is yours.

Thank you, Agus. Good afternoon, ladies and gentlemen. On behalf of Telkom's management and employees, I'd like to thank all our valued stakeholders for your support for the Company. We sincerely appreciate your participation on this conference call.

I would now like to present several business highlights from the full year 2011. First, broadband users increased by 63% year on year and contributed revenue of IDR9.4 trillion, a 36% growth year on year.

Then second, data, Internet and IT services businesses combined grew strongly with 20.8% growth year on year and recording IDR24 trillion and it was being the second biggest contributor of total revenue following the Voice business.

We remain to be the market leader on Cellular business with 107 million subscribers, with a positive net add of 13 million subscribers from last year.

Now I shall present the operational and financial performance results for full year of 2011. Broadband business grew rapidly, with the total active [band] users to 10.5 million, 63% year on year and revenue IDR9.43 trillion or 36% growth.

[Cause] of increase in this business are the convenience provided to the user in accessing our Internet among others, good price, better speed as well as more interesting content. In addition, the device needs are met by the availability of affordable smartphone and logbook.

Cellular business achieve more than 107 million subscribers, or a growth 14% year on year. And then we still are by far the leading provider in the cellular market with around 43% market share. In line with significant growth in the number of data subscribers, Telkomsel continued to expand network infrastructure to provide stable and expansive data services.

Total BTS now reach more than 42,000 units, with around a quarter of it was dedicated to 3G [BTS]. In 2011 alone Telkomsel billed around 1,700 in the BTS with Node-B.

Wireline subscribers this year increased by 3.6% to 8.6 million subscribers, and the revenue contribution [topped] IDR11.6 trillion, a decline of 10.2% compared to the same period last year. To fulfil the demand of user in speed and [continuance] accessing Internet Telkom has prepared infrastructure [and ready].

Telkom had to [center] a superhighway, domestic (inaudible) from eastern to western part of Indonesia, particularly good that can provide speed for user access up to 100 Mbps. This is also part of Telkom's participation in Palapa Ring project. The grand design by Indonesian Government to connect major islands of Indonesia with subsea fiber optic cables that will (inaudible) for 140 cities district across Indonesia.

Meanwhile, through Telin, Telkom International, we develop [internal] broadband connection by joining AAG and Singapore Japan cable system that can provide bandwidth with up to 40 Gbps per [core]. Telkom also equips broadband user with fixed net and CDM to reduce problems in accessing data abroad.

The last portion of the Palapa Ring submarine cable network will be installed over the next two years to complete our national wide coverage of fiber optic infrastructure. This will bring high speed broadband access convergence and enhanced quality to all major cities and islands of Indonesia.

With those backbones and development of the other infrastructure, our cellular will definitely benefit with the access to offer data services throughout Indonesia.

I shall now briefly discuss the financial results and try not to repeat all the information that you may have read in the InfoMemo posted on our website.

One financial position, total asset increased by 2.5% to IDR103 trillion. Total liabilities decreased by 4.6% to IDR42 trillion. Total equity excludes non-controlling interest, increased by 7% to IDR47.5 trillion.

With respect to our comprehensive income on a year-to-year basis, revenue increased by 3.8% to IDR71.3 trillion. Total expenses increased by 8% to IDR50 trillion. EBITDA decreased by 1.5% to IDR36.2 trillion, and EBITDA margin decreased by 2.8% to 51.3%.

Income for the period attributable to owner of the parent decreased by 5% to IDR11 trillion. There were [non-recurring] costs in 2011 (inaudible) impairment of assets, Telkomsel benefited adjustment and accelerated the position of Telkomsel's assets, amounting to IDR1.57 trillion.

Comparatively, if we exclude those non-recurring expenses, we increased our EBITDA by 1.4%, EBITDA margin to 52.4%, and the net income.

Revenue contribution for this period was dominated by cellular voice with which accounted for 40% of our total operating revenue. The second major revenue contributor was data, Internet and IT, that contributed (inaudible) followed by fixed line with 16% contribution.

Interconnection, network and others combined (inaudible) of total revenues. Meanwhile, operation and maintenance was 30% -- 33% of total expenses, while depreciation and amortization expenses were 30%.

Personnel expenses contributed 17%, and interconnection, D&A and marketing contributed 20% of total expenses. In capital expenditure, Telkom Group's spend [IDR46 trillion] with the allocation as follows. The parent company of IDR4.2 trillion, mainly utilized for enhancing backbone and access infrastructure to support the broadband and the new businesses.

Cellular through Telkomsel, amounting to IDR8.5 trillion, mainly utilized for enhancing backbone -- no, mainly utilized for coverage, capacity and IT, and for other subsidiaries amounting to IDR1.9 trillion, covering among others power and other infrastructure ,plus media and edutainment and data centers.

Ladies and gentlemen, during 2011 we laid the foundation to prepare ourselves facing competition in data and broadband services. We completed more than 300,000 access points of (inaudible) infrastructure by the end of 2011. This is -- this will bring true broadband access with speeds of up to 100 Mbps, which we target to achieve 12 million homes and businesses across the nation by [2015].

Broader initiatives. We launched a number of initiatives to develop our non-traditional businesses. (inaudible) of Groovia our triple play IPTV product grew our subsidiary TelkomVision Indonusa Telemedia. For the first time in Indonesia, Groovia offers customer a similar [spec] of on demand TV, voice and broadband Internet and gives us a premier position in this emerging market.

Delima as our latest e-money offering was introduced. It is allowing easy and secure remittances through our flexi and Telkomsel platforms. With TelkomSigma we begin to offer cloud computing solutions for businesses. Our extensive network gives us a strong competitive advantage in this field, and we see this as an important investment for the future.

Four of our subsidiaries have shown a strong growth in revenue, namely Metra, Infomedia, Telin and PINS, recorded each revenue of more than IDR1 trillion. And we expect, in 2012, more subsidiaries will also make a significant contribution. By 2014 and '15, we expect our information, media, and edutainment business portfolio projected to contribute around 13% to 15% of the total revenue.

Pay-TV business; our Pay-TV Company, TelkomVision, for the first time achieved 1 million subscribers, and positioned itself from the number four now to be the second biggest in the competitive pay-TV industry. TelkomVision was the pioneer for prepaid pay-TV services that give people discretion to choose.

During 2011, we have developed a foundation for our businesses to be able to accommodate growing demands of customers, and face an escalating competition.

Mobile Broadband; fiber-based backhaul is an important component to allow users accessing Internet with sufficient speed. We have rolled out fiber backhaul of [about] 40% of Telkomsel backhaul. Beside that, we have also developed, deployed more than 1,700 Node-B BTS during 2011, and plan to add another 4,000 by the end of 2012.

To modernize its network using NGN with IP base, currently Telkomsel already has in service more than 3,900 Metro E. By end of this year, we will add another 5,000 Metro E nodes. This network modernization is not only to improve the quality of broadband services, but it also improves the efficiency of transmission costs for Telkomsel.

Fixed Broadband; as planned earlier, we have gradually [increased] Speedy subscriber to speed of 1 Mbps, which is a minimum requirement for a satisfactory video usage. During 2011, we have deployed 3,000 hotspot points in 600 locations in Jakarta. These hotspot points could be accessed by subscribers of Speedy, Telkomsel, Flash, and Flexi. And we are going to roll out more to make it 50,000 points intensities by end of 2012. And we are going to 1 million points in the next few years.

Cellular; on the Cellular side, during the last three quarters 2011, we have spent our efforts to sustain revenue growth, as we implemented price optimization we see an improvement in the revenue per minute in second, third quarter, and fourth quarter. We expect stable competitive environment could be continued in 2012.

We saw our new revenue streams value-added services content, digital, grew significantly, despite the premium SMS case which happened in October 2011.

Fixed Line; in 2011, we have done a piloting for copper cable replacement with fiber optic cable using Trade In Trade Off scheme. This scheme will save our budget. In 2011, we plan to have around 1.5 million to 2 million copper cable lines converted into fiber optic cables. We expect, in 2015, most of our subscribers could have capacity of 1,200 Mbps to allow them access to TV and other Internet, plus voice, for the cable.

In some areas with high demand we have deployed fiber to the home to fulfill the demand for high capacity bandwidth. We have started offering triple play service for these particular areas.

Our information services, media, and edutainment revenue contributed 6% of the total revenue. However, their growth were very high. We positioned Metra, our subsidiary, to be a holding for Telkom Group's IME business.

Under Metra there are (inaudible) and line subsidiaries that work on IME fields; TelkomSigma and [Metrosis] in IP [service solution] , including datacenter; Infomedia and AdMedika in business process outsourcing, TelkomVision in Pay-TV business; [Finlat] in e-payment; [Modupia] and MelON in portal and music.

They are still in a small scale for now, however, we believe they will grow fast in the future.

Ladies and gentlemen, we have made some efforts to maintain Telkom's profitability level. Group synergy program; we streamlined and made more effective our business process through Group synergy, as in the case of our subsidiary, Mitratel, to maintain, develop and monetize Telkom Group's (inaudible). We also have started conduct outsourcing, advertising and printing to our subsidiaries. It all started from the parent and will be cascaded down to other subsidiaries as well.

Our tower subsidiary, Mitratel, at the end of 2011 [own] 3,100 towers of its own, and operated close to 3,000 Telkomsel's towers, and more than 1,400 Telkom's towers, and rented them to the third parties. By this arrangement, Telkomsel and Flexi will focus on serving their customers better. And on the other side, Mitratel will focus on maintaining and monetizing Telkom's good tower asset.

Mitratel booked more than IDR747 billion in 2011, and we expect this could double in 2012.

IT businesses, Sigma; among our IME businesses to which we will rely on the future IT business operated by our subsidiary, TelkomSigma. Its business lines, including software development and maintenance, IT managed services, and system integration. In 2011, Sigma has 324 clients, consist of companies from various industries, banks, insurance, multi-finance, capital market, managed, factoring, government, telecommunication, oil and gas.

We also have launched Telkom cloud service, our one solution to meet the massive demand of cloud computing in Indonesia. Our cloud computing service will support client businesses growing in a more efficient way.

Media business; we deliver media services through our affiliate company, Infomedia. 2011 is the first year Infomedia achieved more than IDR1 trillion revenue, a growth of 23% year on year, mainly contributed by contact center, business process outsourcing, and other line of businesses including (inaudible) services.

Ladies and gentlemen, we also are continuing carrying cost optimization program, focusing activities that will provide a sustainable cost saving in the future. We hope that our overall approach to the business will give us a better competitive position in the future.

Ladies and gentlemen, that ends our presentation. That ends my presentation on the full year 2011 results. Let us continue onwards now with the question and answer session, and it shall be moderated by Agus. Thank

Ladies and gentlemen, we will now begin the question and answer session. (Operator Instructions). Sachin Gupta.

I have three questions. Firstly, on Telkomsel, obviously you've had a successful 2011 in terms of revenue share gains and EBITDA share gains. Just wondering, given what you have seen in the past three months, and how the market is evolving, what are your expectations for the rest of the year? Because I don't think I've seen many explicit guidance from you guys in the presentation, so anything there will be good.

Secondly, just a rationale of this write down in the CDMA business. Is that in anticipation of a potential transaction with another CDMA [player], or that's something just you're marking to market the value of the business?

And the last question, I guess is, your cash flows are pretty strong, your gearing is quite low, just wondering what are management's thoughts on the further cash deployment options. Could it be in the form of higher dividends? Or any potential acquisitions you guys are looking at? That's it, thank you.

We see that 2011 result is a combination of seasonal and also our effort in term of pricing. And guidance for 2012, I think we continue to make [growth] and maintaining our budget. We cannot tell you today, but our first quarter is really in line with our guidance.

So the growth will continue, expecting this year. Thank you.

I think, on the Cellular side, with more synergy on the broadband infrastructure, we see that the combination of these is resulting a positive result that can be also seen. We hope it will continue to be positive on 2012.

And the second question, actually the rationale of the write down of the asset, I think there are two assets that were written down, is on the Telkomsel side. That was because of changes in the useful life of the technology.

And second, on the CDMA, as you clearly pointed out that is mark to market of the CDMA assets that -- because this year, 2011, if you see we are already using IFRS reporting, International Financial Reporting Standard. So we also have to do mark to market on that one.

On the cash position, yes, I think we continue to have a strong cash. Definitely, we will (technical difficulty) for our various [properties], including investment and then shares buyback. And yes, I think we are thinking of improving our dividend payout ratio, as compared to the period last year.

Okay, thank you very much for that.

Luis Hilado.

I also have three questions, two of them about operating expenses and one about revenue.

On the operating expense side, we saw that -- congrats that O&M expenses were down year on year and for the quarter. I just wanted to get some guidance whether the fourth quarter level, should we annualize that or is it just because you did retroactive savings in the fourth quarter for the whole year?

Second question is on the flip side, G&A expenses, we saw that substantially increase because of consulting fees. If we could get some color on whether those fees will recur in 2012 and whether, again, the fourth quarter is something we should annualize in 2012?

And the last question is, any guidance or indications you can give about recovery rates for premium SMS in the first quarter? Are you on track to recovering 50% of that already, of what you've lost in the fourth quarter?

(technical difficulty)

Thank you, I'd like to share to you about the progress of premium rate case. The premium rate case today is still [ongoing] in spite of regulatory. We are still waiting for the green light to, again, promoting by SMS. S [that is banned]. That's why for today's progress in terms of premium rate recovery in revenue is still around 10% to 15% compared to last year's revenue.

Okay, on O&M things that, yes, last year we had a good or better O&M costs. And as Rinaldi's just mentioned in his speech, that also we do a kind of cost optimization program. So we believe that 2012 basically, we can control the O&M costs in a certain level and we maintain in the good level.

So basically, unless -- as you know most of our O&Ms is electricity power costs. So power costs are sometimes, especially in the rural areas, we can control better than in urban areas.

But however by doing our cost optimization, basically, we plan to change some power supply from (inaudible) to be like solar power. So that is basically we are operating in more than 300 areas in Telkomsel's business, Telkomsel site. So, hopefully, yes, our O&M costs, we can manage better.

And in the G&A costs, these have increased significantly due to the (inaudible) in our receivables, due to that we have changed the (inaudible) customer collection policy. So debt was increased, the provision on (inaudible).

And also, the provision of potential (inaudible) on Speedy. Also we, basically had some increasing from the CSR costs of IDR76 billion and also increasing on the professional fees of IDR85 billion. So that was why the G&A last year increased significantly.

Thank you. I just have one further question on O&M. For the fourth quarter it was about IDR3.6 trillion. Do you think that's a number that is essentially is good for the next few quarters or it could go up a bit? Just previous quarters [it's driven] to IDR4.5 trillion.

So, I think for the base station, we can continue, yes? And as I said (inaudible) we cannot fully guarantee as last year. It will depend on the electricity price from the government. But also the set up costs also, basically we can manage better.

Thank you

Okay.

Sebastian Tobing, UBS.

Just a question on FDTH project, can you just give us a little update on how's the progress on that?

And I think Telkom has been, and continues to be, active in making acquisitions in terms of developing content. How is that to synergize and when could we expect that, in terms of revenue contribution, would there be anything significant any time soon? Thank you.

I think, as we mentioned earlier, on the IT, Media and Edutainment businesses, we don't really acquire a content. We do aggregate the content.

So I think that is a big different between aggregation and the acquisition of content. For the time being, I think most of it comes from the pay-TV, music and others.

On the contribution, it has been growing quite significantly; but I think later Pak Agus will come back to you with the numbers.

However, bear in mind that, on the content we do, basically, build also a content and application for the -- one is retail through TV, etc.. Second, for the small to medium enterprises, in which we develop the application and solutions for the (inaudible) etc., etc., for cooperatives. And the third, we develop, also, the content and application for the enterprise business for the big enterprises.

And the fourth one, actually, together with Telkomsel, we develop the Bandung Digital Valley. That is still aggregating; it's not buying or acquiring content.

The cost for developing that is actually quite small; we will pay around IDR50 billion for the next three years. Thanks.

Sachin Mittal, DBS.

Thanks for the call. I have three questions.

First, on the dividend policy; actually, we did not see the Interim dividend in this year. So any reasons why that Interim dividend was missed? And if the payout ratio's increased, any indication of how much would it be improved? That's number one.

Secondly, we saw a decline in non-cellular business, while one of your competitor actually registered an increase by selling the circuits, whether domestic or international circuits. And their [non-cellular actually saw an increase.

So I'm wondering 'til what time should this non-cellular business will keep on [bleeding]; and basically, since we are seeing a turnaround at your competitor, how long will it take for you to see the turnaround? That's number two.

And the last question is, on the proposal of acquiring a Telekomsel stake from SingTel, what is the progress on that proposal? And what are the plans for Dayamitra in terms of this public listing, going forward? Thank you.

Yes. This year -- last year, actually, we had no interim dividend policy. But in this year, even though basically we had to discuss with government as a major disorder as Pak Rinaldi also mentioned that basically we are maintaining the dividend [area]. Also, we are willing to, basically, increase our payout ratio of this year.

So maybe although basically, we want to (inaudible) minimum pay 65% for this year. So -- however, this decision is under government hands. But we basically have to try to convince our government to pay the minimum 65%. That's in dividend payout ratio policy.

Sorry just a follow-up. Will this 65% be applied on the normalized earnings or on the total earnings?

On reported (inaudible), so from the IDR10.9 trillion.

Okay, understood.

Okay. Next one is on the fixed line activity. If you look into the number, fixed line is declining by 6.5%. You are asking the most difficult question to answer. We do expect that it will still decline on the fixed line. However, we do expect the other businesses, like IT services, media and broadband to compensate that further in 2012 and 2013, going forward. But fixed line, we do not expect 2012 to be positive; it would still be negative on the fixed line voice, yes?

Just to follow up on this. How come your non-cellular -- when I'm saying non-cellular it includes fixed line, and all the [light] portions, even IT and all those, how come your performance is so different from what we have seen at your competitors? And there, it has improved -- picked up in terms of year on year. So where is the difference coming from, in your view?

I haven't -- I don't think that they have the same business like us, except for the -- because like other competitors, they do not have the similar business like us.

Let me -- I think let us analyze because we haven't seen their numbers. But as for our concern, we'll look into the businesses. Actually, on IT services, we are better off than the competitors. On media, we are better off than competitors in terms of growth.

Okay, that's helpful, yes.

Yes. The third question on the potential SingTel, I think we are still talking. There is not much progress that we can report on this point in time.

So what happens to Dayamitra? Do you mean that we don't hear any progress on this process?

Okay. Yes, Dayamitra, actually by year-end, the power that they have is 3,100, and it keeps on increasing. I think now it's close to 3,700. So the size is quite big now. And we do expect, because if you see on the capital expenditure, most of the power CapEx is going to Dayamitra, and Telkomsel is outsourcing more and more power to Dayamitra.

So yes, we are going to engage (inaudible) advisor soon on getting the view of what is the potential IPO, although we cannot say when the time for the IPO process. But we are going to get the view of someone more expert than us to give us the guidance. So we will -- basically, after that, we will decide what to do with Dayamitra, whether it will stay as it is, or it is going to do IPO.

I'm sorry about that, but my understanding is that with the foreign stakeholder, tower -- it cannot be a tower company with a foreign stakeholder, unless it's a public company. So the regulation is quite clear, so I'm not sure if -- so why is there a confusion? It looks like without this change in regulation, IPO seems quite unlikely, unless I'm wrong on something.

No, I think you are -- basically like this. The regulation states that for the private company, foreign shareholders cannot own a tower company; but for a public company, foreigners can. Yes, and also operators can.

So with that -- is we haven't decided whether this Dayamitra will do IPO or not. What we tell you just now is that currently, it has already 3,700 towers. And we will evaluate whether this will be public or not.

So my question is, at the time of listing or at the time of IPO, it should be 100% owned by Indonesians, right?

Yes, you are right. Until it is listed, it has to be 100% owned, or owned by the operators.

Okay. So you're saying it's owned by operators, so that -- so basically you still comply with the regulations?

Yes, we do.

Okay. Thank you.

Colin McCallum, Credit Suisse.

Three questions from me. First of all, could you just give us the Group CapEx budget for 2012, split into Telkomsel, Telkom fixed line and Telkom other subsidiaries? That's the first question.

Secondly, will there be an ERP in 2012? And are there any indications you can give us on natural attrition that we might expect; the number of employees who are reaching normal retirement age anyway? You haven't seemed to have benefited from that over the last couple of years. I'm just wondering when that might begin. So maybe number of naturally retiring employees in 2012 and '13 would be helpful.

And then the third question I have is just on this dividend payout issue again. I just want to make quite clear what Pak Rinaldi is saying. Are you talking about increasing the dividend payout ratio structurally from [55%], where it has been, to [65%] across the next few years?

Or is what you're saying, that the headline earnings were obviously in 2012 -- 2011, and you want to make sure that shareholders received the same absolute amount; therefore, you're just going to nudge the payout ratio for 2011, to try and stabilize the dividend in 2011? What is it exactly you're saying [Pak]? Thank you.

I think that's a very good question from Colin. Well, on the dividend payout ratio, I think, first, we look into our future cash flow position and the potential cash accumulations. So one, the dividend payout ratio is not meant only for only this year; actually, it will be in stages going to be increased. Yes, so that is the -- it's not only 2011 and 2012.

However, as Sudiro was saying, we are going to talk to our major shareholders definitely on it. And then on the -- say what it is. But from the management point of view, yes, we plan to do that going forward.

Very clear, thank you.

Yes, and on the Group CapEx, probably Pak Sudiro.

Yes, let me take this question. For the CapEx, Colin, basically we -- for this year we are continuing to [roll out] our (inaudible) 3G BTS. And also, we are continuing the rollout of eastern part of Indonesia, for the submarine cable.

And, of course, also Pak Rinaldi was saying, basically in this year, we are continuing to deploy or to [build] another 2,000 -- of around another 2,000 powers in Dayamitra, Mitratel, so our CapEx as a Group in this year, basically it's about IDR16 trillion, yes. It will go up to --

Was that IDR16 trillion did you say please?

Telkomsel, about IDR9 trillion and [close to] Telkom as a parent around IDR4.5 trillion and to other subsidiaries, especially Dayamitra it's around IDR2 trillion. So the total is about IDR16 trillion in this year.

Thank you. And on ERP?

ERP is not CapEx, but it's OpEx, yes.

(inaudible)

Oh sorry (laughter).

Yes, we are planning to spend ERP in this year, about IDR500 billion. To -- [for a run] also of 650 employees to 700 employees.

(inaudible)

Yes. I think, Colin, your question is when will this be on the natural retirement, this year will be around 500 employees. 2013 will be 700, 800. So I think the ERP will stop by around 2013, 2014.

Very clear. Thanks a lot Pak Rinaldi.

I think we still need to have one more question.

Arthur Pineda from Citigroup.

Three questions for me. Firstly, on the fixed line side, can you clarify what's driving this change in network revenues, it's up quite a bit? How much do you think you could push this in 2012?

Secondly, on the mobile business, how confident are you on the wireless capacity? Do you think there's room for eventual CapEx uptick on the mobile side as data demand grows? It seems like usage has doubled on the data side for you.

Lastly, on the mobile business again. You've obviously made some inroads in 2011 with your competitors slipping. Are you seeing any changes in the competitive positioning by Excel or Indosat who have to react to your gains? Are you confident that the rational price points will remain going forward? Thank you.

Thank you for the question in the mobile business. I think that what Pak Sudiro mentioned about Telkomsel CapEx this year, we already planned this together with Telkom. So if you see the Telkom CapEx, most of the development in Telkom is for the purpose of supporting Telkomsel. So we see this, our CapEx is more than double comparing the competitors.

We will focus on 100 big cities this year continuing from last year, already achieved 45, but, of course, we will deploy around 4,000 3G that are providing at least the four very important cities area like Medan, Jakarta area and Surabaya area and also Bali area will be coupled with the most 3G readiness to support the broadband services. This is our confidence (inaudible) of wireless capacity. But, of course, we don't forget about to manage 2G and 2.5 to serve our customers that still rely on handset 2G readiness.

In term of competitive composition, this is a good question, yes. I think because of the penetration is already more than 100%, we see that revenue share is more important than CB share because you could see that our ARPU can be very good indication comparing with our competitors, especially for the others of small operators that now already taking up the number of subscriber. But you can see that ARPU or RPM is not really promising there.

So there is -- again, unless we start this year with more [in] data, we are business watching and then let's see that our CB is more valuable CB or customer base -- the most valuable customer base in this industry. Thank you.

I think the question on the network, as we mentioned earlier, we keep on building the new network, both on the backbone and transport as well. And as a result, although the number is still small as compared to the other revenue lines, we do expect that on 2012, it will still grow at the double-digit, but on the (inaudible) of 15% to 18% for the 2012. Thanks.

Understood. Sorry, if I can just do one follow-up question. I notice in the press that the SOE Minister has granted you permission to acquire StarOne. Just wondering what are your plans on this? Is there any economic rationale for such an acquisition?

Sorry, again?

Ministry of State-Owned Enterprise saying Telkom to --

Sorry, I can --

No, I think well, as a matter of fact, similar to what was planned in the past with other CDMA operators, we are not going to acquire another CDMA operators, basically. No, we are not going to spend money on acquiring any CDMA operators. I don't know about the comment of the Ministry, but we will check it today.

Very clear. Thank you very much.

Okay. Thank you very much. Because of the time limit, we apologize for those whose questions could not be addressed.

If you have more and further questions, just please feel free to contact Investor Relations directly, or you can directly email me.

Before we end our conference call, I would like to ask Pak Rinaldi, our CEO, for his closing remarks. Please, Rinaldi?

Ladies and gentlemen, 2011 was important for us, marked by the rapid development of our New Wave businesses in consolidating our TIME services.

Against a backdrop of ongoing decline in fixed Wireline, our IME businesses and subsidiaries grew strongly, enabling us to record solid revenue growth. This was an improvement of the previous year's result.

We also took a number of strategic initiatives to complete the transformation of our business infrastructure, human resources and corporate culture, to maintain our position as a market leader in the TIME industry in this country.

Our performance in 2011 was affected to some extent by the dynamics of the market and changes in the regulatory framework. As our business portfolio indicates, there was growth in the broadband and Internet businesses and in New Wave or IME businesses, not only in our own business but in the market in general.

2012 will be critical for Telkom's transformation from a fixed line and cellular voice operator to a fully fledged telecommunication IT media and edutainment businesses.

The trends are encouraging. IME contribution to revenue reached (inaudible) in 2011 and we predict this to be more than double in 2015.

We believe that the key to profitability and sustainability is to offer more and better services to customers. To that end, we will focus on improving network quality and reliability whilst strengthening innovation in response to improving technologies so that we can make services increasingly personalized, seamless and accessible from multiple access points.

The competitive landscape in the cellular market will continue to be tough, albeit stable, but with improvements made during the last year, Telkomsel is now much more strongly positioned.

With cellular penetration approaching saturation point in Indonesia, growth in this sector is indeed slowing, but current trends have convinced us that there is still considerable scope for growth in our subscriber base and even more so in data and value-added services.

I would like to thank you all again for participating in this conference call and look forward to meeting you again in the near future and I wish you all good day. Thank you.

Ladies and gentlemen, that does conclude our conference for today. The replay of this conference will be available later today. Thank you for participating. You may now all disconnect.