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Cellum and Telkom Indonesia Target Number 1 Spot

Hungary’s Cellum Global is hoping to help make Telkom Indonesia the number one FinTech provider in the archipelago state within one year. In return, Telkom is taking a minority 30.4% stake in the mobile wallet provider.

Cellum Global Chairman-CEO János Kóka declined to disclose how much money Telkom is injecting into Cellum, citing local capital market rules, but did say it was “significantly more” than the USD 3 million PortfoLion (the venture capital arm of OTP) had paid in Series A funding in 2011. Operative control of Cellum will remain with its current management. 
“I believe there has not been any similar FDI from Indonesia in Hungary before, and I am sure this is the first of its kind in technological investments,” Kóka told the Budapest Business Journal in an exclusive interview before the announcement was made public.
In sport they tell you getting to number one is the “easy” part; holding on to the position is where it becomes really difficult. But Joddy Hernady, senior vice president for media and digital services at Telkom Indonesia told the BBJ that, with the disruptive technologies in play in the digital world, you need to be ahead of the competition. 
“Currently we are number four in FinTech, but the others are not so far ahead and we are still at an early stage. The right time for us to move is now, as this appears to be a ‘winner-takes-it-all’ game. Even in China there are only two big players. It is very important to lead the market. By the end of this year we should be number one,” Hernady says.

Perfect Sense

For Kóka (Hungary’s former Minister of Economy and Transport between 2004 and 2007), the link up with Telkom Indonesia, through its wholly-owned digital services subsidiary Metranet, makes perfect business sense. Telkom already has positive experiences of working with Cellum’s FinTech platform, which is also being trialed by Indonesia’s state motorway management agency for its digital toll payment system, he said. 
“We have always been looking for value added investors. You need money to develop products, markets, R&D, but we need someone who can give us far more than just cash. Telkom gives us inroads into the largest FinTech market. This was the right approach for us, rather than traditional FinTech investors in the United States or London who do not understand the specialties of the Indonesian market.”
That market is the real prize for Cellum, given its goal of expanding beyond the confines of CEE. “It is the world’s fourth biggest country and growing very fast. Half the population is under 30. […] It has a population of 260 million, and 300 million [mobile phone] subscriptions, 90% of which are pre-paid.” 
The wide distribution of smartphones takes on an extra dimension when combined with one other factor. “One of the specialties of Indonesia is that the number of bank cards [per capita] is significantly lower; people use e-money services for transactions. We have a unique capacity to tap into this ecosystem,” said Kóka. The same access would be impossible to achieve for a small Hungarian scale up on its own. “The opportunities there are endless,” he added.
“Jakarta is a city of ten million at night, and 30 million during the day. That’s 20 million people commuting daily. It has multiple cities the size of Hungary. Transactions are increasingly electronic: ticketing, tolling, parking, congestion charges. All this requires seamless solutions,” Kóka explained.

Robust and Agile

Hernady said Telkom targets both B2B and B2C business and, given its “number one” ambitions, “it is important to support that with a very good unified platform that is robust, has good technology and offers agile development when it needs updating”. Adding Cellum’s mobile wallet and secure e-payment solutions helps Telkom build “very compelling user cases” Hernady believes.
Kóka has been appointed a FinTech advisor to Telkom Group, and has presented it with a five-year plan based on their agreement. He said success in Indonesia will open up possibilities right across Southeast Asia. And tools that are developed for that rapidly expanding market will also be adaptable nearer home. 
“Reverse transfer is easily imaginable. Just as we are taking proven solutions from Europe to Indonesia, at the same time what is developed there can be used here. This is the beauty in having Telkom as an investor; it is not counter-interested. As we grow, its share-holding increases in value.”

Telkom Group was founded in 1965. The government of Indonesia holds 52.09% of the shares, with the remaining 47.91% traded on the Indonesian Stock Exchange (as TLKM) and the New York Stock Exchange (as TLK).