Indonesia - Mobile Penetration at 147% by 2016

Mobile penetration in Indonesia is growing continuously and is expected to reach 147% by 2016. Wow, it means mobile penetration rate > total population in Indonesia! Amazing~ It's indeed a lucrative market to tap into as people are holding at least one mobile phone is their hands.

JAKARTA (IFT) – Mobile telecommunications in Indonesia is estimated to reach 147 percent in 2016, higher than this year’s 119 percent estimate. The growth reflects the ongoing saturation in the mobile phone industry and the growth of the operator business, according to the Indonesian Mobile Telecommunications Association (Asosiasi Telekomunikasi Seluler Indonesia/ATSI).

Sarwoto Atmosutarno, Chairman of ATSI, said that the mobile phone industry has entered the saturation phase with mobile telecommunications penetration at around 110 percent. This caused the tight competition between operators, which in turn, caused lower voice and SMS tariffs.

"Due to the competition, the average revenue per user (ARPU) is estimated to reach only Rp 20,000 per month this year,” Sarwoto said.

The low ARPU resulted to the industry's estimated growth of around seven to nine percent. It will be mainly boosted by the largest mobile phone operators, PT Telekomunikasi Selular (Telkomsel), PT Indosat Tbk (ISAT) and PT XL Axiata Tbk (EXCL). The companies' revenues reached Rp 60 trillion (US$ 6.6 billion) in the third quarter of 2011.

Sarwoto explained that the crowded market will move towards mobile broadband services. This means that the data services market will continue to be large, since new users only reached around 70 million last year.

This year, the association projects that the business growth of mobile broadband will reach 100 percent, since the market potential for operators is high. It will also grow significantly if it is supported by related ecosystems such as affordable smart phones, application and content.

"The application or content business will contribute more than 20 percent in the next five years. The association will continue to boost the partnership with provider content,” Sarwoto said.

The association notes that operators are continuing to increase base transceiver station (BTS) units with 3G technology to develop data services. At the end of 2011, there were 22 thousand 3G BTS units of a total of 97 thousand. Last year, three large operators allocated around Rp 30 trillion to develop infrastructure that support data services.

PT Ericsson Indonesia, telecommunications infrastructure provider, estimates that mobile broadband users in Indonesia will reach 150 million by year-end. This is a 150 percent increase from 60 million users last year. Meanwhile, circulated subscriber identity module (SIM) cards are estimated to grow to around 300 million.

Hardyana Syintawati, Vice President of Marketing & Communications of PT Ericsson Indonesia, said that the growth is mainly boosted by the high use of devices that can access wireless internet, such as smart phones, tablet computers, modem dongles and wireless fidelity (WiFi). With the more affordable prices of the devices, use has intensified.

Operator Competition

Fitch Ratings estimates that five telecommunications operators in Indonesia will see significant growths this year despite the tough competition. However, with revenues from voice and SMS services continuing to decline, their growth will be in the low single digit.

The operators are PT Telekomunikasi Indonesia Tbk (TLKM), PT Telkomsel, PT Indosat, PT XL Axiata and PT Bakrie Telecom Tbk (BTEL). There are 10 telecommunications operators in Indonesia as of 2011.

Any Sirapurna, Associate Director of Fitch Ratings, said that the five telecommunications operators control up to 90 percent of the telecommunications market in Indonesia. They are estimated to reach profit before interest rate, taxes, depreciation and amortization exceeding 50 percent. This is due to customer growth and higher revenues from network leasing. (*)

Source: By MUHAMMAD IQBAL on 16th January 2012

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