Indonesia - Telecoms, Mobile and Broadband - Statistics and Analyses

Indonesia Lags in Fixed Broadband but Makes Good Progress in the Wireless Segment

Indonesia's 5G progress depending on end-2020 auction.

Indonesia's large population and complex geography pose a number of challenges for governments to develop economic growth. These challenges are mirrored in the telecom sector, which is well served by mobile infrastructure, but which has inadequate fixed-line capacity in many areas. Continued progress in developing the telecom sector requires further government action on restructuring the industry, promoting foreign investment and encouraging further competition.

The Indonesian data centre market has experienced significant growth over the past two decades as the country has sought to bridge the gap with neighbours such as Singapore and Malaysia. The market is attracting investment from hyperscale cloud providers such as Google, Alibaba and Amazon.

Compared to other Asian nations, Indonesia has very low fixed line and fixed broadband penetration, high mobile penetration and moderate mobile broadband penetration. Development of the fixed broadband market has been restricted due to poor infrastructure, though the number of subscribers of the two main providers, which between them command a 93% market share, increased by around 22% in 2019. The market has considerable room for growth, given that household penetration is only about 15%.

The extensive reach of 3G and LTE networks provide voice and data coverage to the vast majority of the population. Although the MNOs have trialled 5G since mid-2019 the sector has been hampered by the lack of available spectrum. In recent years the market has been characterised by high growth in data services and a reduction in the use of voice and SMS.

The publisher notes that the outbreak of the Coronavirus in 2020 is having a significant impact on production and supply chains globally. During the coming year the telecoms sector to various degrees is likely to experience a downturn in mobile device production, while it may also be difficult for network operators to manage workflows when maintaining and upgrading existing infrastructure. Overall progress towards 5G may be postponed or slowed down in some countries.

On the consumer side, spending on telecoms services and devices is under pressure from the financial effect of large-scale job losses and the consequent restriction on disposable incomes. However, the crucial nature of telecom services, both for general communication as well as a tool for home-working, will offset such pressures. In many markets the net effect should be a steady though reduced increased in subscriber growth.

Although it is challenging to predict and interpret the long-term impacts of the crisis as it develops, these have been acknowledged in the industry forecasts contained in this report.

The report also covers the responses of the telecom operators as well as government agencies and regulators as they react to the crisis to ensure that citizens can continue to make optimum use of telecom services. This can be reflected in subsidy schemes and the promotion of tele-health and tele-education, among other solutions.

Key Developments:

• Telkomsel makes $950 million lease-back deal on some 6,050 mobile towers;
• Steady growth anticipated in mobile broadband through to 2025, supported by high smartphone penetration;
• Smartfren selects ZTE to help develop 5G;

The report update includes Telecom Maturity Index charts and analyses, assessment of the global impact of COVID-19 on the telecoms sector, MoCI's 2019 market report, operator data to Q2 2020, recent market developments.

Key companies mentioned in this report:

Telkom; Indosat; Satelindo; Smart Telecom, Bakrie Telecom, Temasek, TelkomNet, Telkomsel