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This report provides a comprehensive overview of trends and developments in Indonesia’s telecommunications market. The report analyses the Telecoms Infrastructure, mobile, fixed broadband, Digital Media and Digital Economy sectors. Subjects include:
- Market and industry analyses, trends and developments;
- Facts, figures and statistics;
- Industry and regulatory issues;
- Major players, revenues, subscribers, ARPU;
- Broadband, VoIP, IPTV;
- Mobile voice and data markets;
- Broadband (FttH, DSL, wireless);
- Digital Economy and Digital Media sectors eg e-Commerce and e-Payments;
- Mobile and fixed broadband forecasts to 2021
Mobile Broadband is the Backbone behind Indonesia’s Telecoms Growth
There has been considerable energy and turmoil in Indonesia’s telecom sector over the last decade or so. Growth, both in subscriber numbers and in revenues, has been strong and, more importantly, there are signs that the changes in the regulatory regime and operator restructuring are starting to have a positive effect on the industry. The mobile market has been especially positive. There was a good response to the recent launch of 4G/LTE services.
Continued progress in the development of the telecom sector will need further government action on restructuring the industry. A stumbling start to building the country’s fixed-line network was followed by a solid fresh start, aided by the embracing of fixed-wireless technology, which became the dominant component within that market segment. However, the fixed market is now a minor segment and in decline. This is even more the situation with internet which is still in a relatively early stage of development.
Invigorated by the highly successful mobile segment on the back of increased competition in the marketplace, the country’s telecom industry has found a new dynamic. The all-important national backbone network is taking shape and on the service side the rapid increase in mobile broadband subscriptions and smartphone take up has been remarkable. However, there had been some signs that the government was hesitating in its efforts to restructure the industry.
The fixed broadband internet market in Indonesia is still in the relatively early stages of its development. With Digital Subscriber Line (DSL) as the dominant fixed broadband technology in the country, the penetration of fixed broadband subscriptions was sitting at under 4%. The take up of high speed services based on fixed access platforms has only been modest.Fixed broadband penetrations stood at only 1.7% in 2016 and is predicted to increase to between only 2.7% and 3.3% by 2021.
This level of internet penetration remains low by world standards, but has been relatively consistent with its economic status and the availability of infrastructure, especially fixed-line services.
Low subscription patterns have been a challenge for the government in its building of the online nation that it is keen to realise. Of particular importance in addressing the challenge has been the rapid growth in mobile broadband access. 4G mobile services offering mobile broadband is relatively advanced and act as direct substitute to fixed line broadband and acts as an inhibitor for further fixed broadband rollouts. Mobile broadband subscribers have grown significantly over the past few years in Indonesia and penetration rates now stands at 50% of the overall population.
The country’s mobile market was characterised for many years by the large number of players licensed by the local regulator. Seven mobile operators are competing for revenues in the Indonesian market: Telkomsel, Indosat, XL Axiata, 3 Indonesia, SmartFren, Bakrie Telecom an dInternux (Bolt). Market leader Telkomsel continues to maintain a huge presence but is under increased threat from the competition.
All the major mobile operators in Indonesia are well advanced in the deployment of their 4G LTE networks. The two largest providers, XL Axiata and Telkomsel both have networks that covered over 70% of the country by 2017.
Over the last decade Indonesia’s mobile market has displayed solid growth over the last five years with penetration increasing from 103% in 2011 to 148% in 2016. This strong growth has been driven by an increase in subscribers from the market leader Telkomsel, supported by increases from Indosat, and 3 Indonesia. Growing use of mobile broadband has been a major driver. Mobile broadband subscribers have grown significantly over the past few years in Indonesia and penetration rates now stands at 50% of the overall population. Growth is predicted to taper off over the next five years to 2021 as the market has now reached a higher state of maturity.
Industry consolidation is possible towards 2018 as intense data competition may force smaller and unprofitable mobile operators to be pushed out of the market. Industry consolidation is more likely to have a positive impact on the local telco sector as it will reduce the overcapacity in the market and bring more stability to data tariffs.
- The mobile market in Indonesia has been growing strongly, but at a more modest rate than previously.
- The fixed line market (wireless and wireline) continues to suffer setbacks with a rapidly declining subscriber base.
- Broadband services were finally starting to grow, boosted by surging mobile broadband.
- Government initiative on national infrastructure to push fibre and 4G coverage nationwide.
- PT Telkom constructed more fibre-optic backbone networks, terrestrial and submarine
- Investment in data centres has started to take off;
- There are early signs of adoption of cloud computing by local industry;
- Both Telkom and Indosat have been expanding the number of WiFi hotspots around the country;
- Google has been actively involved in an Indonesian startup incubation program.
- XL Axiata has rolled out 4G LTE services to around 100 towns and cities in Indonesia.
- Telkomsel’s strategy in 2017 is to focus on its Digital Business including an aggressive 3G/4G base transceiver station deployment.
- Telkomsel, working with Ericsson, Huawei, Nokia and ZTE, launched 4.5G services in nine cities
- PT Indosat Ooredoo was preparing to launch 4.5G (presumed LTE-A Pro)
Key companies mentioned in this report:
PT Telkom, TelkomNet, Telkomsel, PT Indosat, Bakrie Telecom, PT Indosat, PT Internux; PT First Media.