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Indonesia Telecommunications Report Q3 2007Product Type: Market Research ReportPublished by: Business Monitor International Published: November 2007 Product Code: R302-1819 Description A two-pronged strategy has emerged among Indonesia’s mobile operators, directed at different segmentsof the market. Over the last quarter much has been made of the rise in the number of fixed wirelesssubscribers, predominantly made up of low income households residing in rural areas. The importance ofthis is that while mobile operators find it tough to grow their subscriber bases further in urban areas, thereis ample demand for wireless services from outside of these areas. Indosat’s StarOne fixed wirelessservice revealed an 82% y-o-y increase in its subscriber base, while Telkom’s Flexi had some 4.2mnfixed wireless subscribers at the end of March 2007. Although fixed wireless services provide limitedmobile coverage, its lower prices make it more affordable to a larger percentage of the population thanmobile services. The result is that operators benefit from growing subscriber numbers, but continue tosuffer from falling ARPUs.The popularity of 3G services in the capital Jakarta and the greater metropolitan area is reflective of thegrowing demand for WVAS services. Telkomsel announced that it had 1.8mn 3G subscribers, of whicharound 500,000 derived from the greater Jakarta area, making it the strongest 3G market in the country.Although accounting for the largest proportion of the 3G market, there are four other operators alsooffering services, which should aid the growth of this sector. Indeed, Excelcomindo has commented onits rapidly rising non-voice revenues, up by 32% y-o-y, which despite mostly deriving from SMS, alsocomes on the back of content download services and ringback tones. However, the majority of this 3G growth continues to derive from the aggressive promotions andcompetitively priced tariffs that operators are offering, which raises the question of sustainability. WithIndonesia’s mobile sector already 95% occupied by prepaid customers, encouraging customers to migrateto 3G services may prove difficult without such promotions and offerings. Indeed, we continue to expectthat prepaid subscriptions will drive growth in the mobile sector. To this end, ARPUs are unlikely toimprove in the immediate future. Meanwhile, the Indonesian government has announced new measures placing a cap on foreign investmentin telecoms, as well as transport and property. This marks the first time that the government has set limitson the country’s fixed-line and mobile sectors. The caps were previously at 95% but have been reduced to49% and 65% respectively. Table of Contents
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