Telkom Indonesia, the state owned telecommunications giant, is set to target growth in the data center industry amid waning legacy businesses.

As data consumption grows in Southeast Asia’s fastest growing digital economy, Telkom Indonesia will capitalise on the growing number of businesses and individuals going online.

“Within our enterprise segment, we are focusing on businesses with good profitability, including data center, cloud, connectivity and enterprise solutions while limiting businesses with low margin, in this case, device-related businesses,” said Andi Setiawan, Telkom Indonesia’s Vice President of Investor relations, first reported in The Jakarta Post.

Telkom Indonesia has plans to build a data center in Jakarta. The first phase is slated to be completed by mid-2021.

Telkom Indonesia currently owns three data centers in the country through its subsidiary Telkomsigma, which also holds the biggest share in the data services market at 43%.

In Telkom Indonesia’s annual report, 74% of their data centers’ capacity has been utilised.

Overall, Indonesia’s data center market is expected to grow at an annual rate of 11%, as a result of US$1 billion in investments.

And with the proliferation of 4G and eventual rollout of 5G in the country, Telkom Indonesia also aims to strengthen its cellular tower business through its subsidiary Mitratel.

“In time, we will need to unlock Mitratel, either through an initial public offering or strategic partnership,” said Mr. Setiawan.

Telkom Indonesia will look to strengthen Miratel’s position by consolidating up to 6,000 towers currently owned by Telkomsel, another subsidiary of Telkom Indonesia.

Telkomsel’s revenue was reported to have dropped by 3.6% year-on-year in the first half of 2020 due to dwindling mobile voice and SMS services.

“The trend of increasing connectivity has brought about alternative solutions for SMS and voice; our revenue experienced a slump, but mostly from the legacy business segment,” said Doni Andriansyah, Telkomsel’s Financial Planning and Business Partner Senior Vice President.

The revenue for Telkomsel’s SMS, fixed and cellular voice segment fell by 27.5% this year, while their data, Internet and technology services segment grew by 6.8%.

But it’s not all doom and gloom for Telkomsel, as their digital business segment grew by 13.4% in the first half of 2020, echoing the noticeable shift towards digital solutions during the COVID-19 pandemic.

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