Table of Contents
There has been considerable energy and turmoil in Indonesia's telecom sector over the last decade or so. Growth, both in subscriber numbers and in revenues, has been strong and, more importantly, there are signs that the changes in the regulatory regime and operator restructuring are starting to have a positive effect on the industry. The mobile market has been especially positive. There was a good response to the launch of the more recent launch of 4G/LTE services.
Whilst broadband users has grown on back of a surge in mobile broadband subscriptions and smartphone sales, fixed internet connections remained relatively low, despite broadband development having accelerated. Fixed broadband penetration was still under 2% by 2016 and broadband household penetration was a low 5%.
Continued progress in the development of the telecom sector will need further government action on restructuring the industry. A stumbling start to building the country's fixed-line network was followed by a solid fresh start, aided by the embracing of fixed-wireless technology, which became the dominant component within that market segment. However, the fixed market is now a minor segment and in decline. This is even more the situation with internet which is still in a relatively early stage of development.
Invigorated by the highly successful mobile segment on the back of increased competition in the marketplace, the country's telecom industry has found a new dynamic. The all-important national backbone network is taking shape and on the service side the rapid increase in mobile broadband subscriptions and smartphone take up has been remarkable. However, there had been some signs that the government was hesitating in its efforts to restructure the industry.
Indonesia's economy continued its run of strong positive growth, with GDP increasing by 4%-6% in 2015/16.
The mobile market in Indonesia has been growing strongly, but at a more modest rate than previously (less than 10% annually).
The fixed line market (wireless and wireline) continues to suffer setbacks with a rapidly declining subscriber base.
Broadband services were finally starting to grow, boosted by surging mobile broadband.
Construction of the US$1.5 billion Palapa Ring optical fibre cable project is continuing.
Government initiative on national infrastructure to push fibre and 4G coverage nationwide.
Market leader Telkomsel was continuing to dominate the mobile market, with its mobile subscriber base of around 45% market share.
Having acquired rival operator Axis, by early 2015 Axiata had adopted a dual-brand strategy, promoting both XL and Axis equally.
In December 2015 Singapore telecom companies announced plans to build fibre optic network in some Indonesia's major cities.
By 2016 Internet and multimedia services provider Biznet Networks had expanded the reach of its Indonesian fibre-optic stretching from Java to Bali and Sumatra.
Companies mentioned in this report include:
PT Telkom; PT Indosat; Bakrie Telecom (BTEL); Qatar Telecom (QTel); PT Satelindo; SingTel; ThaiCom. PT Telkomsel, Mobile-8, Smart Telecom, PT Bakrie Telecom SingTel, Temasek; PT Sarana Menara Nusantara; PT Tower Bersama.
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