Telkom to lead Indonesia's $24 bln broadband expansion-minister

JAKARTA, Dec 12 (Reuters) - State-owned telecom firm PT Telekomunikasi Indonesia Tbk will take the lead in a $24 billion drive to expand Indonesia's broadband capacity over the next five years, the communication and information minister said.

Rudiantara, part of newly elected President Joko Widodo's administration, said the government is considering extending unspecified incentives to the company as it seeks to improve Internet access in Southeast Asia's largest economy.

"I'm in the position to support Telkom to take a lead on this broadband plan," he told Reuters. The government is in the process of finalising the details of the plan, he added.

Only 12 percent of Indonesia's total population had access to mobile broadband last year, and that was at a relatively slow speed of 512 kilobyte-per-second, according to ministry data. For fixed line broadband, access was even lower at 5 percent of the total population.

Faster Internet and better access would give a boost to Indonesia's nascent e-commerce market, which the minister estimated could more than double to $25 billion by 2016 from around $12 billion this year.

Rudiantara said the government was discussing incentives with local e-commerce companies such as PT Tokopedia, but he declined to give further details. In October, Japanese technology giant SoftBank Corp and U.S. venture capital firm Sequoia Capital announced a $100 million investment in Tokopedia.

The minister also said the government was considering new regulations for the telecom industry to deal with an anticipated wave of consolidation.

Rudiantara declined to give further details about the regulation, but said he expects the number of telecom operators in Indonesia to more than halve to four in the next decade.

A price war to gain subscribers over the last few years and the high operating costs have squeezed the profits of telecom firms including Telkom, PT Indosat Tbk and PT XL Axiata Tbk.

XL Axiata, part of Malaysia's Axiata Group Bhd, acquired mobile phone operator PT Axis Telekom Indonesia for $865 million earlier this year. In October, XL Axiata said it will sell 3,500 towers to telecom infrastructure firm PT Solusi Tunas Pratama Tbk in a 5.6 trillion rupiah ($460 million) deal. (Editing by Miral Fahmy)

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