2010 Indonesia - Telecoms, Mobile, Broadband and Forecasts

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Last updated: 29 Mar 2010 Update History

Report Status: Archived

Report Pages: 127

Analyst: Peter Evans

Publication Overview

This report provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in Indonesia. Subjects covered include:

  • Key statistics;
  • Market and industry overviews;
  • Regulatory environment;
  • Major players (fixed and mobile);
  • Infrastructure development – national and international;
  • Digital media;
  • Mobile voice and data market;
  • Internet, including VoIP and IPTV;
  • Broadband services;
  • Regulatory environment.

Researcher:- Peter Evans
Current publication date:- March 2010 (16th Edition)
Next publication date:- November 2011

Executive Summary

Indonesia has built a substantial telecom sector, providing a solid platform for further growth. This has been despite the occasional serious setback. This country of around 230 million people presents a huge potential market; however, it faces some particularly big challenges that need to be confronted if it is to successfully continue the building of the telecommunications infrastructure needed to support what is a uniquely complex geography. At the same time, there is no avoiding the fact that Indonesia must also deal with a range of social, political and economic issues that have been proving problematic.

Although more than a decade ago, the Asian economic crisis of the late 1990s forced the government to take steps to reshape the telecom industry, and as a consequence it took on a new impetus. Prior to this the government had certainly been addressing the issues and working towards a more competitive market; but progress had been slow and at times erratic. In the last decade or so the reform process has accelerated, with the government being more decisive; over this same period Indonesia has been experiencing healthy sustained growth in subscriber numbers and revenues.

While fixed-line teledensity remained disconcertingly low for a number of years there has been a recent upturn that has delivered much better outcomes (over 15% fixed-line penetration by early 2010). The biggest single factor in this surge has been the advent of the fixed-wireless service. This technology has considerably boosted the growth rate in the last few years and provided much-needed basic telephone services to previously unserved communities. The roll-out of fixed-wireless infrastructure has been given good support by the operators with Bakrie Telecom and PT Telkom leading the way. Although the published statistics have been somewhat imprecise, by end-2009 fixed-wireless services made up about 76% of the total fixed-line subscriber base. In other words, in a short space of four years this technology platform had transformed the fixed-line market.

Meanwhile, Indonesia’s mobile market has continued to grow. Whilst it was expanded at an annual rate of close to 50% in 2008, the impact of the global financial crisis saw growth slow somewhat in 2009. The total mobile subscriber base had passed 150 million by January 2010, up from 12 million just seven years earlier. With the country’s mobile penetration at around 65% in early 2010, the industry view was that there was still considerable potential for further growth in the market and the operators were scrambling to position themselves to meet the ongoing demand. Furthermore, market interest had started to focus on the 3G services already being offered by five operators. Whilst 3G subscribers comprised only around 7% of the national subscriber base by early 2009, the potential of 3G to boost Average Revenue per User (ARPU) was not lost on the operators and competition was starting to hot up on the 3G front. Telkomsel was indeed making its presence felt in this market segment, claiming more than 70% of 3G subscribers by March 2009.

The number of Internet users in Indonesia was estimated at just over 26 million by early 2010, representing a relatively low overall penetration of 11%. At the same time, the Internet subscription market was generally depressed with less than 7 million subscribers reported by early 2010. Broadband Internet access, whilst certainly increasing, was at a relatively low level of activity, with subscriptions running at around 18% of the total Internet subscriber base. While the government was continuing to promote greater use of online services, these efforts appeared to be having only limited impact on the take up rate of the various Internet services on offer.

Market highlights:

  • Indonesia’s mobile market passed 150 million subscribers in early 2010 with penetration running at 65%;
  • After more than seven straight years of strong growth, the annual increase in mobile subscribers had moderated somewhat to just under 20%;
  • Indonesia’s 3G market was still in its infancy four years after launch, with 3G subscribers representing still only about 7% of the total mobile subscriber base;
  • Nevertheless, the operators were keenly pursuing 3G business as it opened the door to increased ARPU.
  • Mobile market leader Telkomsel had made a big impact on the relatively small 3G market with more than 70% of the total 3G subscriber base in 2009;
  • Internet penetration remained low (11% user penetration by end-2009) and Internet subscription rates were considerably lower;
  • Broadband Internet access numbers in Indonesia were starting to grow, but penetration remained exceedingly low at 0.5%;
  • DSL remained the dominant broadband platform with about 95% of the broadband subscriptions; this meant of course a heavy reliance on the limited copper-wire infrastructure to access DSL services.

Indonesia – key telecom parameters – 2009 - 2010

Category

2009

2010 (e)

Fixed-line services:

 

 

Total number of subscribers

35.5 million

41.0 million

Annual growth

17%

15%

Fixed-line penetration (population)

15%

17%

Fixed-line penetration (household)

60%

69%

Internet:

 

 

Total number of subscribers1

6.5 million

9.0 million

Annual growth

44%

38%

Internet subscriber penetration (population)

3%

4%

Internet subscriber penetration (household)

10%

14%

Mobile services:

 

 

Total number. of subscribers

150 million

180 million

Annual growth

17%

20%

Mobile penetration (population)

65%

76%

(Source: BuddeComm)

Note: 1Estimate including broadband subscribers. 

Data in this report is the latest available at the time of preparation and may not be for the current year.

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