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Industry Overview: Indonesia Telecom Industry

The Telecommunication Industry in Indonesia continues to enjoy sound market growth, driven by rising mobile and Internet access penetration. At the end of 2011, Indonesia's telecom market served close to 270 million subscribers with penetration running at just over 107%. By 2016, Business Monitor International expects there to be 441.8 million mobile subscribers with a penetration rate of 173.8%. In 2011, the Indonesia telecom market generated US$ 14.9 billion in service revenue, representing a 17.6% increase in revenues from 2010 and accounted for 1.8% of the nation's GDP in 2011. According to the Indonesia Cellular Telecommunications Association (ATSI), the average revenue per user for 2011 was IDR 20,000 (USD 2.18), bringing total industry revenue to USD 6.5 billion. Estimated revenue from the industry's fixed-line segment reached USD 1.1 billion. 

According to a report released by Nomura, Indonesian telecommunications firms overall showed strong revenue growth, averaging 6% to 8% in the second quarter of 2012. Much of that growth can be attributed to operators success in delivering affordable mobile broadband services over enhanced 2G networks as well as 3G platforms and meeting demand for portable multimedia devices. The tremendous growth rate of the telecom sector is supported by increased smartphone and wireless usage. Indonesia is the largest mobile market in the South East Asian region, with a 26% sales volume growth. 
A study by Frost and Sullivan predicts that the number of Internet users in Indonesia is expected to increase from 40 million in 2011 to 175 million by 2016 and will provide more business opportunities to the mobile operators. This large influx in Internet and data usage, spurred by the increasingly ubiquitous presence of smartphone devices have compelled many telecommunication operators to beef up infrastructure related to fixed broadband and 3G. With the possibility of a release of additional spectrum in 2012, many telecom firms are also building or buying telecommunications towers to help feed the demand for 3G services in metro areas. The Indonesian Cellular Telecommunication Association (ATSI) has forecasted that operators would invest a total of Rp 43.2 trillion (US$ 4.76 billion) to build 15,000 base tower stations (BTS) in 2012. Big capital spending from major cellular phone providers to increase their data connection capacities would likely benefit the various telecom tower operators.
PT Tower Bersama Infrastructure Tbk, a listed company engaged in telecommunications tower business, plans to build around 560 telecommunication towers and plans to spend around US$ 56 million to build 560 new towers. They have also completed the US$ 406 million acquisition of 2,500 towers from Indosat. Sarana Menara Nusantara, through its unit Profesional Telekomunikasi Indonesia, has agreed to purchase 200 telecommunication towers for Rp 376 billion (US$ 40 million). 
Currently, foreign investment is allowed in telecommunication operators, organizers and content providers. But according to the Trade Minister and former Chairman of the Indonesian Investment Coordinating Board (BKPM), there is a possibility in the future to ease foreign investment in telecommunications towers, despite opposition from the domestic industry as it feels that local investors cannot meet the market need for thousands of base tower stations.
The telecommunication industry in Indonesia still has potential growth in the future given the relatively low penetration rate in broadband and 3G and people's need to communicate or get information. The number of 3G service users is expected to increase to 34 percent of total cellphone users in 2015. It currently stands at 19 percent. With the increase in popularity of mobile commerce and other value added services the future of the telecom sector seems outstanding.
(Source: Insight Alpha)

Indonesia Cellular Telecommunications Association (ATSI)