Indonesia- Mobile Market

BSD News, 01 October 2011

It is certainly intensely competitive, but the size and growth potential of the Indonesian telecoms sector suggests that players that invest and innovate can enjoy considerable success. In an exclusive interview with Oxford Business Group, Indonesia’s minister of information and communications technology, Tifatul Sembiring, noted the existence of many companies in the market, increases use of mobile internet. “There are 12 mobile operators in the market, five of which control 92% of income revenue,” Tifatul told OBG. “Due to the resulting price war we are seeing average revenue per user (ARPU) falling. Companies looking to come in have to be extremely innovative and clever to capture any market share. The creativity of telecommunications service developers will be key to the future of the industry in Indonesia through their capability to combine mobile and internet services”.

A number of recent developments in the Indonesian telecoms industry make it clear that the market still has potential for growth, but that it will not come cheaply, as emphasis is put on delivering value-added services. On May 4, the international press reported that PT Indosat, the country’s second-largest telecoms group after Telekomunikasi Indonesia (Telkom), had posted a 63.3% rise in net profit to Rp453.9 billion (USD53.2 million) in the first quarter of the year. Revenues grew a more modest 3% to Rp4.88 trillion (USD 571.8 million) quarter-on-quarter, as mobile revenue grew 6.2%. The firm clocked up subscriber growth of 21.2% to 45.7 million, the sort of increase unthinkable in many markets, and a sign that there is still considerable potential for building customer bases in Indonesia, a market of nearly 240 million people, if the right strategy is adopted. Indeed, even with the mobile penetration rate standing at around 67% as of end-2010, topping the 100 million
subscriber mark, there is still significant scope for attracting new clients. In 2006, Indonesia had a penetration rate of 22%, or around 30 million subscribers.