Global Business Guide Indonesia

Investment | Joint Ventures
Moratelindo
Mr Galumbang Menak

Mr Galumbang Menak, President Director

gbg

Moratelindo was established in 2000 as a pioneer in developing telecommunication infrastructure in Indonesia. Within the context of Indonesia’s highly competitive telecommunication market, what can you tell us about the background to the founding of the company and the current expansion strategies?

Mr Galumbang Menak

The company was created in 2000 but we only began to really operate in 2004. When the business began, there was very little high speed internet connection available in Indonesia and what was available was very expensive. I began with VOI and then saw that we needed to establish a connection outside of Indonesia and at the time Telkomsel was the only company that had international cables. What we also found was that the price was being decided by many companies as for example, in one place the cable was owned by Singtel and in another place it was owned by Telkomsel etc. So I looked at the regulations and I decided that I wanted to have my own overseas cable from end to end. The price was 200,000 USD per month for 1 MB. At first I built the microwave connection and did not build a sub marine cable and then the price dropped to 7,000 USD for 1 MB in 2006. Finally, when I laid my own cable it was only 700 USD a month for 1MB. Therefore I can say that the push for providing cheap internet in Indonesia is due to the efforts made by Moratelindo.

This is the story of how we began in the telecommunication sector as a price leader; internet broadband in Indonesia was so expensive due to the lack of competition so our entry forced the price down. Now the price of the wholesale business is decreasing as well so we have moved into retail such as fibre optic connections for the home. We have approximately 50,000 home passes and in the next two years I would like to expand to 500,000 home passes so this is a big challenge for us. I have to be aggressive to achieve this; in Jakarta most of the property developments are undertaken by a few main developers so through those developers we have forged agreements and supplied our latest technology to their properties. Broadband is now one of the main needs of housing in Indonesia so we provide the internet and other services such as cloud computing.

gbg

How does the company stay ahead in terms of use of the latest telecommunication technology and equipment?

Mr Galumbang Menak

Telecommunication is very capital intensive and requires access to the latest technology. Many smaller companies in the sector do not have access to new technology as if you are a small player that is not in the top three operators of a country then the big vendors do not take any notice of you.

We have been working with foreign companies from the beginning such as for the laying of our submarine cable which was carried out with Global Marine. This is important for us as the name of the company and the expertise that they have is a big help for our development. In online business as well, we look at the key players in the sector and try to partner with them as well as take on human resources that have worked for them. In online games for example we have partnered with Zynga as we cannot start from scratch to create the games ourselves. This partnership launched the first Indonesian game on Facebook and I aim to launch a new game every three months.

gbg

How is the company positioned to work with further international partners and investors?

Mr Galumbang Menak

Telecommunication requires a lot of capital investment so I need to work with partners for new projects to share the cost and risk. I take a very conservative approach; I still use Alcatel as a European supplier as I trust the quality of their telecommunication equipment. Many others in the sector go to China where vendors are very aggressive and provide financing but I do not as I prefer to focus on reliability over price.

For the future we are definitely interested in working with new partners to expand the business in Indonesia however finding the right partner to work with has been the challenge so far.

Global Business Guide Indonesia - 2012

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