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Indonesia Information Technology Report Q3 2010
Business Monitor International, July 2010, Pages: 98
Indonesia Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Indonesia's information technology industry.
The authors latest update on the telecommunications market in Indonesia contains new data for the 12-month period ended December 2009. Based on this, we have been able to assess how the country’s mobile market has been developing, enabling us to revise our five-year forecasts. In addition, we have also updated our ARPU forecast following YE09 data provided by the leading operators.
Indonesia’s mobile market expanded by 25.4% during 2009. This brought the total number of subscribers to 175.147mn, representing a penetration rate of 73.8%. Despite maturity in the sector, the authors do not envisage penetration rates surpassing 100% until the second half of 2011. Growth is being driven by price competition among the main operators, which includes a number of multiple SIMs. Although some operators are shedding their inactive subscriber bases, not all have followed suit.
The ability of Indonesia’s mobile sector to support no less than eight service providers is unsustainable, and we expect market convergence to occur in the longer term. For the most part the larger operators are focused on improving the quality of their subscriber base by encouraging growth in higher value customers to help offset the falling ARPU base. At the end of 2009, the market average blended ARPU dropped by 14.5% to IDR37,766.
Mobile broadband growth has been a major area of focus, and we expect this will continue to be the case during 2010 and beyond, following the award of an additional 5MHz of spectrum to Telkomsel and Excelcomindo in September 2009 and January 2010 respectively. This, combined with the announcement in March 2010 that Telkomsel launched WiMAX services just nine months after winning a licence, will help to encourage broadband subscription in a country, which suffers from poor fixed-line infrastructure as a result of its geographical terrain. The authors have retained their expectations of the Indonesian broadband market, and we estimate that penetration rates will have reached 5% by the end of 2014, which is up from the 1% expected in 2009, resembling average annual growth of 43.4%.
Meanwhile, fixed-wireless services are thought to be behind the continued growth in fixed line. Market leader Telkom’s Flexi unit continues to report strong subscriber growth, which was up by 19% during 2009. The operator, encouraged by the demand for services – it provides such services as FlexiNet Unlimited, which offers unlimited internet access beginning at just IDR2,500 per day – is keen to expand its presence in the sector.
In view of this, Telkom announced that it was looking to spin off its Flexi unit and team up with either a local or international investor. The operator announced in March 2010 that it saw Bakrie Telecom as a suitable partner for its fixed-wireless service. Such a development would, however, result in an overwhelmingly dominant operator. According to a Reuters report, citing an analyst at Bahana Securities, Flexi and Bakrie’s Esia could achieve a market share of around 86%, based on Q309 data.
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