2009-10-23 20:49:04 -
Indonesia Telecommunications Report Q1 2009 - a new market research report on companiesandmarkets.com
www.companiesandmarkets.com/Summary-Market-Report/indonesia-tele ..
Significant price competition in the mobile sector has led BMI to revise its forecast upwards for 2008- 2013, as tariffs become cheaper. Heightened rivalry among operators vying for a larger share of the market is occurring at a time when domestic consumption in the economy is slowing on account of the existing global financial market crisis and despite a reduction in overall fuel and food prices. Together with rising market costs and average revenue per user (ARPU) rates that are in decline due to subscriber mixes which are overwhelmingly dominated by the prepaid sector, operators are expected to face slowing profits. Telkomsel reported flat profits over the year ended June 2008, while Indosat stated that despite mobile revenue rising over
the same period, as a percentage of total revenues, it was falling.
News that an additional foreign investor in the form of Qatar Telecom (Qtel) is to enter the mobile sector is welcomed however, illustrating Indonesias continued efforts to attract additional investment. Qtel is to raise its stake in Indosat to 65% from 49%, following a reversal in government policy. Under current laws, foreign investors may retain a stake up to 65% in a mobile operator and 49% in a fixed-line company. In the case of Indosat, which has both mobile and fixed-line, the state had initially decided it fell under the fixed-line category. While we welcome the change in the foreign shareholder threshold, it does present a confused portrayal to investors. In addition, Qtel was reported to be interested in Bakrie Telecom, although Rakhmat Junaidi, a director at Bakrie Telecom, told Reuters that the family of Indonesia´s chief social welfare minister, Aburizal Bakrie, still wants to hold a controlling stake in the mobile phone operator.
The Badan Regulator Telekomunikasi Indonesia (BRTI), Indonesias regulatory authority, could do more to encourage growth in the sector aside from looking to foreign investment, although it would appear to be considering the award of WiMAX licences. This would be a welcome addition to the countrys broadband market, particularly given the existing weak fixed-line infrastructure associated with the difficult terrain of the country. On account of this, Indonesias broadband penetration has been higher in cities rather than remote areas, leading to the emergence of a significant digital divide. Deployment of WiMAX equipment and services could take place as soon as 2009, depending on the regulator, although asymmetric digital subscriber line (ADSL) will retain overwhelming dominance of the broadband market.
Indonesias telecoms development relies heavily on regulatory intervention, a factor which will be one of the main forces determining where it sits in our later Business Environment Ratings. We have reduced the countrys independence of regulatory score for this quarter due to the handling of the Indosat case, while the BRTI continues to drag its heels on issues such as mobile number portability (MNP) which could make a difference to the sector. For now, however, Indonesia sits fourth from the bottom in 12th place.
