the indonesian telecommunication industry

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January 2011

Developed byICT Consulting Practice

Frost & Sullivan Asia Pacific

The Indonesian Telecommunication

Industry

“Mobile Monday”

Jan 25, 2011

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Needs to be connected…

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Industry Updates- 2010

• Indonesia is the 3rd largest wireless market

in Asia, behind China and India in terms of

number of subscribers that by end of 2010

Indonesia had an estimated 235.8 Mn

wireless subscribers

• SIM Penetration of approx. 96.9% (58%

unique subs) compared to 103.6 Mn

and a penetration rate of 44.2% at the

end of 2007

Source: Frost & Sullivan

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2007 201020092008

103.6 162.9 194.2 235.8

234.4 237.5 240.4 243.3 Population

Wireless Subs.

Penetration

Industry Updates- “Everybody needs one”

31.5%CAGR 2007-2010

Source: Frost & Sullivan

(in „000)

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ARPU- How low can we go?

2010 Blended ARPU

(USD)

7.2

6.9

4.6

3.7

2006

2007

2008

2009

Source: Frost & Sullivan

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2007 201020092008

3.5% 7.0% 7.4% Total Rev. Growth

Source: Frost & Sullivan

Voice & Data Market Revenue- Data Service is on

the Rise

USD Million

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Fixed Broadband- Indonesia lags behind in APAC

market

2010 Fixed Broadband Household

Penetration Rate

Source: Frost & Sullivan

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Wireless Broadband- Broadband is fueled by

mobile wireless

2010 Wireless Broadband Penetration Rate

Source: Frost & Sullivan

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Key Points 2010- Voice is flattening, data is on

the rise

• High “SIM” penetration of 97% by 2010 represents unique subscribers penetration of 58%- plenty room to go, it is commoditized and becoming “hygiene” factors

• 53% of the market is still on 3G while the rest are on 2.5 or 3G- in terms of “data services” this is our next segment to go

• Indonesia‟s blended ARPU stood at US$3.33 in 2010 & expected to go down to USD$ 2.99 by 2015- operators have to anticipate to cater for huge network capacity for expected high minutes (MoU/ sub.) from 170 minutes in 2010 to 194 minutes in 2015

• Combination of flattening voice revenue & increasing data-services revenue- in combination, how to sustain the business?

• “Internet” or data service fever are on the rise however the penetration is nascent with 17% wireless broadband

• Business challenge: High network capacity requirement , low incremental revenue take up, & high cost of spectrum/ license fee

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Wireless Subscribers- Outlook

2010E2009 2012E2011E 2014E2013E

80.8% 96.9% 108% %Penetration119% 129% 136%

Source: Frost & Sullivan

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Wireless Market Revenue- Outlook

9.09%

2010E 2012E2011E 2014E2013E

CAGR: 18.9%

CAGR: 2.93%

CAGR 2010-2014

Source: Frost & Sullivan

USD Million

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Broadband Subscriptions- Outlook

29.2%

2010E 2012E2011E 2014E2013E

CAGR 2010-2014

Source: Frost & Sullivan

17.4% 22.9% 31.0% 37.6% 46.2%

%penetration

(in „000)

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2011 – Where are we going next?

• Indonesia has already shown a strong inclination towards smartphone use, with close to 3 Mn BlackBerry handset users in the market

• 2nd largest “facebook” after the USA and “Twitter” world's highest penetration rate at 20.8% - the demand is huge, now it is left to the business to fulfill the gap

• To answer key question on “data” business: How to monetize data services in the midst of “free” society and keep business‟ profitability?

• To deliver quality & reliability of data services- be it fixed or mobile

• The Indonesian government estimates that it will need an additional 150,000 to 200,000 towers over the next five to seven years, each costing roughly US$100,000- another area of operators‟ diversifications

• “Human capital” or people side of the business, most of the time is “second in priority”- are the resources ready for the next business era?

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Thank you- “You are connected”

Source: Facebook.com

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Partial List of Clients

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Dewi NurainiCorporate Communications

Indonesia

Phone : (021) 571.0838 / 571.3246

Email : dewi.nuraini@frost.com

For Additional Information

Iwan RachmatSenior Cosultant,

Information & Communication Technologies

Indonesia

Phone : (021) 571.0838 / 571.3246

Email : iwan.rachmat@frost.com

www.frost.com