Indonesia Information Technology Report

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 Telkoms 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 Bakries Esia could achieve a market 

share of around 86%, based on Q309 data. 

Source: Research and Markets