Fitch: No change for Telkom, Indosat

Fitch Ratings said the recent award of a third international direct dialing license to fixed-wireless operator PT Bakrie Telecom carries neutral implications for existing direct dialing operators PT Telekomunikasi Indonesia Tbk. (Telkom, rated BB- with positive view) and PT Indosat Tbk. (Indosat, rated BB- with stable view) over the near to medium term.

Fitch noted that the outcome of the licensing was somewhat unexpected, with Bakrie emerging successful over larger rival PT Excelcomindo Pratama Tbk. (rated BB- with stable view).

The agency said the direct dialing segment in Indonesia is on a long-term downward spiral. Although aggregate call volumes are rising, this is more than counterweighed by lower net settlement rates and voice-over-internet protocol (VoIP) substitution, Fitch said.

Despite its inferior voice quality to international direct dialing, cheaper VoIP services have proved popular in Indonesia, owing to the price sensitivity of the market, Fitch said.

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