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Indonesia - Telecoms, Mobile, Broadband and Forecasts


Attention: There is an updated edition available for this report.

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;
  • Convergence and Digital Media;
  • Mobile Voice and Data Market;
  • Internet, including VoIP and IPTV;
  • Broadband services;
  • Regulatory Environment.
  •  
Researcher:- Peter Evans
Current publication date:- June 2009 (15th Edition)
Next publication date:- June 2010


BuddeComm’s Annual Publication, Indonesia - Telecoms, Mobile, Broadband and Forecasts provides a comprehensive overview of the trends and developments in the telecommunications and converging media markets in Indonesia.

  Indonesia has built a substantial telecom sector, providing a solid platform for further growth despite the occasional serious setback. This country of around 250 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.

  The Asian economic crisis of the late 1990s saw the government’s efforts to reshape the telecom industry take 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. In the last decade or so the reform process has accelerated; over the 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, a recent upturn has delivered much better outcomes (over 12% fixed-line penetration by early 2009), thanks largely to the advent of fixed wireless services. These services have 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-2008 fixed wireless services made up about two thirds of the total fixed-line subscriber base.

Meanwhile, Indonesia’s mobile market continues to grow, expanding at an annual rate of close to 50% into 2009. The total mobile subscriber base had passed 130 million by January 2009, up from 12 million just six years earlier. With the country’s mobile penetration suddenly approaching 55%, the industry view is that there remains considerable potential for further growth and the operators have been scrambling to meet the anticipated demand.  

Furthermore, market interest has started to focus on the 3G services already being offered by five operators. While 3G subscribers comprised only around 7% of the national subscriber base by early 2009, the potential of 3G to boost ARPU was not lost on the operators and competition was starting to heat up on the 3G front. Telkomsel is indeed making its presence felt in this market segment, claiming about 72% of the nine million 3G subscribers at end-2008.  

The number of Internet users in Indonesia was estimated at just over 30 million by early 2009, representing a relatively low overall penetration of 12%; at the same time, the Internet subscription market was generally depressed with less than 5 million subscribers. Broadband Internet access was virtually non-existent, with broadband subscriptions running at around 15% of the total Internet subscriber base. While the government continues to promote greater use of online services, these efforts appear to be having only limited impact on the take up rate of the various Internet services on offer.  

In a move that some observers feel could have a negative impact on investment in the country’s telecom sector, Indonesia’s competition watchdog, the KPPU, announced in 2007 that there was evidence of cross-ownership of Indosat and Telkomsel that was violating the country’s anti-monopoly laws. The KPPU alleged that the cross-ownership by Singapore’s state-owned holding company Temasek in two of Indonesia’s mobile operators violated the 1999 anti-monopoly law.  

At the time, Temasek owned a 56% stake in Singapore Telecom, which had a 35% stake in PT Telkomsel. Temasek’s wholly-owned Singapore Technologies Telemedia controlled 75% of Asia Mobile Holdings, a company that owned 40% of PT Indosat. Together, PT Telkomsel and PT Indosat controlled more than 80% of the domestic mobile market. The issue subsequently underwent a process of resolution by the courts. In June 2008, the parties were waiting on a decision by the Supreme Court, after Temasek appealed a lower court’s adverse ruling. The Indonesian Supreme Court threw out the appeal in September 2008.  

Key highlights:

  • Indonesia’s mobile market passed 130 million subscribers in early 2009 with penetration running at 55%.
  • After more than seven straight years of strong growth, the annual increase in mobile subscribers was almost 50%.
  • Indonesia’s 3G market was still in its infancy three years after launch, with 3G subscribers representing only about 7% of the total mobile subscriber base.
  • Mobile market leader Telkomsel has made a big impact on the still small 3G market with 72% of the nine million subscribers coming into 2009.
  • Internet penetration remains low (12% user penetration by end-2008) and Internet subscription rates are considerably lower.
  • Broadband Internet access numbers in Indonesia are starting to grow, but penetration remains exceedingly low (0.2%).
  • DSL remains the dominant broadband platform with about 95% of the broadband subscriptions.
  •  
Indonesia - key telecom parameters - 2008 - 2009
Category | 2008 | 2009 (e) |
Fixed-line services:
  • | | |
  • Total subscribers | 29.4 million | 42.5 million |
  • Annual growth | 51% | 45% |
  • Fixed-line penetration (population) | 12% | 16% |
  • Fixed-line penetration (household) | 48% | 66% |
Internet:
  • |   |   |
  • Total subscribers1 | 4.5 million | 6.5 million |
  • Annual growth | 44% | 44% |
  • Internet subscriber penetration (population) | 2% | 3% |
  • Internet subscriber penetration (household) | 7% | 10% |
Mobile services:
  • |   |   |
  • Total subscribers | 128 million | 180 million |
  • Annual growth | 49% | 41% |
  • Mobile penetration (population) | 55% | 69% | | (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.  

The following notes provide some background to our scenario forecasting methodology:

  • This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.
  • The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.
  • All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.

1. Key Statistics
2. Telecommunications Market
2.1 Overview of Indonesia’s telecom market
2.2 Analysis: Indonesia and the global financial crisis - March 2009


3. Regulatory Environment
3.1 Telecommunications Law 2000
3.1.1 Telecommunications reform
3.1.2 The regulator - Badan Regulasi Telekomunikasi Indonesia (BRTI)
3.1.3 Cross shareholdings
3.1.4 Regulatory developments
3.1.5 Corruption
3.2 Telecommunications Law 1989
3.3 Tariffs
3.3.1 Price fixing
3.4 Privatisation process
3.4.1 Background
3.4.2 Review of privatisation program
3.4.3 Foreign ownership
3.4.4 International Monetary Fund (IMF)


4. Fixed Network Major Operators
4.1 PT Telkom Indonesia
4.1.1 Background
4.1.2 PT Telkom’s KSO partnerships
4.1.3 Privatisation of PT Telkom
4.2 PT Indonesian Satellite Corporation (Indosat)
4.2.1 Background
4.2.2 Privatisation of Indosat
4.3 PT Satelit Palapa Indonesia (SATELINDO)
4.4 PT Bakrie Telecom
4.4.1 Background


5. Telecommunications Infrastructure
5.1 National infrastructure
5.1.1 Overview
5.1.2 Infrastructure developments
5.1.3 KSO ventures - five-zone plan
5.1.4 Rural telephony
5.1.5 Wireless Local Loop (WLL)
5.2 International infrastructure
5.2.1 International gateway exchanges
5.2.2 Submarine cable networks
5.2.3 Satellite networks


6. Internet Market
6.1 Overview
6.1.1 Internet statstics
6.1.2 Internet information control
6.1.3 Cyber laws
6.1.4 Telkom’s national IP backbone
6.1.5 IPv6
6.2 ISP market
6.3 E-services
6.3.1 E-commerce


7. Broadband Market
7.1 Overview
7.1.1 Broadband statstics
7.2 Market background
7.3 First Media
7.4 TelkomNet
7.5 Wireless broadband
7.5.1 WiMAX
7.5.2 Wireless LANs (WLAN)
7.5.3 Internet via satellite


8. Broadcasting Market
8.1 Overview
8.1.1 Broadcasting statstics
8.2 Regulatory environment
8.2.1 Background
8.2.2 Broadcasting Law 2002
8.2.3 Amendments to Broadcasting Law - 2006
8.2.4 Regulatory developments
8.2.5 Dubbing of foreign language films
8.2.6 Migration to digital
8.3 Free-to-Air (FTA) TV
8.3.1 Market overview
8.3.2 Major FTA players
8.4 Cable and pay TV
8.4.1 Introduction
8.4.2 Major players
8.5 Satellite TV
8.5.1 Indosat
8.5.2 PT Satelindo
8.5.3 Indostar
8.5.4 STAR TV
8.5.5 PT Telkom’s Indonusa Telemedia
8.5.6 Other operators
8.5.7 Internet Protocol TV (IPTV)


9. Mobile Communications
9.1 Overview of Indonesia’s mobile market
9.1.1 Mobile statstics
9.2 Background to market development
9.3 Mobile technologies
9.3.1 GSM
9.3.2 Code Division Multiple Access (CDMA)
9.3.3 Analogue services (AMPS and NMT)
9.3.4 General Packet Radio Service (GPRS)
9.3.5 Third Generation (3G) mobile
9.4 Major mobile operators
9.4.1 PT Telkomsel
9.4.2 PT Indosat
9.4.3 PT Excelcomindo
9.4.4 PT Sampoerna Telekomunikasi Indonesia (STI)
9.4.5 Mobile-8
9.4.6 Axis / Natrindo Telepon Selular
9.4.7 PT Hutchison CP Telecommunications
9.4.8 Smart Telecom
9.5 Mobile voice services
9.5.1 Prepaid
9.5.2 Satellite mobile
9.6 Mobile data services
9.6.1 Short Message Service (SMS)
9.6.2 Multimedia Messaging Service (MMS)
9.6.3 Mobile TV
9.6.4 Other services


10. Forecasts
10.1 Overview
10.2 Forecasts - fixed-line market to 2018
10.3 Forecasts - Internet services to 2018
10.4 Forecasts - mobile market to 2018


11. Glossary of Abbreviations


List of Tables
Table 1 - Country statistics Indonesia - 2008
Table 2 - Telecom revenue and investment statistics - 2007
Table 3 - Telephone network statistics - 2008
Table 4 - Internet user statistics - 2008
Table 5 - Broadband statistics - 2008
Table 6 - Mobile statistics - 2008
Table 7 - National telecommunications authorities
Table 8 - PT Telkom fixed lines in service - 2006 - 2008
Table 9 - PT Telkom postpaid and prepaid fixed wireless subscribers - 2008
Table 10 - PT Telekom fixed wireless pre- and postpaid ARPU - 2004 - 2008
Table 11 - PT Indosat fixed wireless subscribers - 2006 - 2008
Table 12 - PT Indosat pre- and postpaid fixed wireless subscribers - 2008
Table 13 - Bakrie Telecom subscribers - 2004 - 2008
Table 14 - Bakrie Telecom pre- and postpaid ARPU - 2004 - 2008
Table 15 - National network statistics - 2005 - 2008
Table 16 - Fixed-line subscribers and teledensity - 1995 - 2009
Table 17 - Fixed line subscribers and annual change by operator - 2008
Table 18 - Five-year USO deployment of lines plan for villages - 2006 - 2010
Table 19 - Fixed wireless (WLL) subscribers by operator - 2008
Table 20 - PT Telkom fixed wireless subscribers - 2008
Table 21 - Internet users - 1998 - 2008
Table 22 - Internet subscribers - 1998 - 2008
Table 23 - Total international Internet bandwidth - 1998 - 2008
Table 24 - Number of IPv4 and IPv6 addresses allocated in Indonesia - 1999 - 2007
Table 25 - Internet licences by licence type - 2007
Table 26 - PT Telkom dial-up Internet subscribers - 2004 - 2008
Table 27 - Broadband subscribers - 2000 - 2008
Table 28 - DSL subscribers - 2001 - 2008
Table 29 - Broadband subscribers and households - 2008
Table 30 - PT Telkombroadband subscribers - 2004 - 2008
Table 31 - Key broadcasting statistics - 2008
Table 32 - Broadcasting sector, TV households and home satellites - 1997 - 2008
Table 33 - Pay TV subscribers - cable and satellite - 2001 - 2007
Table 34 - Mobile subscribers - 1995 - 2009
Table 35 - Mobile operators and subscribers - 2008
Table 36 - Subscribers and market share by operator - 2008
Table 37 - CDMA mobile operators and subscribers - 2008
Table 38 - 3G mobile operators and subscribers - 2008
Table 39 - Telkomsel subscribers - postpaid, prepaid and market share - 1999 - 2008
Table 40 - Telkomsel post/prepaid ARPU, annual change, subscribers & annual growth - 2008
Table 41 - Telkomsel subscribers - postpaid and prepaid - 2001 - 2008
Table 42 - PT Indosat postpaid and prepaid subscribers - 2008
Table 43 - PT Indosat postpaid & prepaid ARPU - 2006 - 2008
Table 44 - Mobile-8 subscribers - 2003 - 2008
Table 45 - Axis / Natrindo Telepon Selular subscribers - 2G & 3G - 2007 - 2008
Table 46 - Prepaid subscribers - selected mobile operators - 2008
Table 47 - Forecast fixed-line subscribers and penetration rates - 2007 - 2008; 2013; 2018
Table 48 - Forecast Internet subscribers and penetration rates - 2007 - 2008; 2013; 2018
Table 49 - Forecast mobile subscribers and penetration rates - 2007 - 2008; 2013; 2018


List of Exhibits
Exhibit 1 - Original consortia, and KSO operating in each geographical zone
Exhibit 2 - Indonesian satellites - 2008
Exhibit 3 - Major FTA television broadcasters, ownership, launch date and coverage

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