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
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