Syahrial Ali's Blog

Anticipating the disturbing pulse theft, BRTI (Indonesia Telecommunication Regulatory Board) issued a circular to all telecommunications operators in Indonesia. BRTI instructed to stop offering content via SMS broadcast / pop screen / voice broadcast to the unspecified time limit.
In a letter signed by the Director General of Post and Information Organizers as BRTI chairman, Syukri Batubara, BRTI declares this instruction as a follow-up recommendations of the Commission hearing with a House of Representatives, Minister of Communication, BRTI and telecommunications service providers on 10 October and the results of meetings with stakeholders of telecommunications industry on October 11.
It states that in order to improve service quality Premium Messaging Services and to tackle the problem, BRTI instruct the operator of Mobile Cellular Telecommunications Networks and Local Fixed Network with Limited Mobility to:
1. Stop bidding broadcast content via SMS / pop screen / voice broadcast until the deadline to be determined later.
2. Deactivate / unregistrate  at the latest on Tuesday, October 18, 2011 at 00.00 pm for all Premium Messaging Services (including but not limited to SMS / MMS Premium subscription, ringtones, games or wallpapers) except for public services and facilities as well as the financial services capital markets in accordance with the provisions of the legislation, by providing notification of deactivation and information on how to re-register for interested users at no extra charge.
3. Provides summary of users pulses who are cut off due Premium Messaging Services that are enabled via SMS broadcasting / pop screen
4. Returns the users pulses who’ve cut their pulses and harmed by Premium Messaging Services
5. Implementation of items 1 through 4 above shall be reported in writing and periodically to the BRTI starts on Wednesday, October 19, 2011 and every Wednesday of each week until December 31, 2011.
The letter sent to 10 telecom operators in the country. Namely Bakrie Telecom, Hutchison CP Telecommunications, Indosat, Mobile 8, Natrindo Cell Phones, Sampoerna Telekomunikasi Indonesia, Smart Telecom, Telkom, Telkomsel and XL Axiata. (from detik.com)

Telkomsel the biggest Indonesian Cellular Operator announced the number of its customers exceeded 100 million. With this achievement, Telkomsel become the 7 largest cellular operator in the world that are trusted by 100 million subscribers in one country.

“This amount is the number of qualified customers. Telkomsel has strict standards for its customers,” said Sarwoto Atmosutarno, President Director of Telkomsel, while delivering a speech in the “Inauguration of 100 Million Customers” in Ballroom 3 Ritz Carlton Hotel, SBCD, Jakarta , On Tuesday (04/26/2011).

Telkomsel categorizes the SIM card users as high quality when they actively use the cellular card. “If during the three months not making a call or be called for example, automatically removed from the list of customers,” added Sarwoto.

With the achievement of targets 100 million subscribers, Telkomsel has a strong foundation to be beyond telecommunication service based on the data.

In these transformation efforts, in 2011 Telkomsel will invest in capital expenditure worth $ 1.1 Billion U.S. Dollars (about Rp 10.9 trillion) of which 60 percent was allocated to increase broadband services.

Till the end of 2010, PT XL Axiata Tbk claimed 40m subscribers or an increase of 27,7% compare to the period of 2009 which was only 31,4m.

XL’s CEO Hasnul Suhaimi said that the increment mostly happened in last quarter.
“In the last 3 months of 2010, we noted the increment of subscribers was very high, especially in Central Jawa Tengah and Yogyakarta,” he added.
According to Hasnul, the subscriber increment in this year will not as high as 2010, this is beacuse of market saturation, namely 90% of Indonesian population has have mobile number.
XL just targets the increment of 11%-12%. This means at the end of 2011 the XL subscribers will reach 44.5-44.9m.  We always want to grow more than industry namely above 10% each year.

Hasnul also added that the company strategy will not play on tariff of voice and SMS anymore, as now the figure is keeping lower since last year.

“If we play on tariff for these two services, it will impact the quality. Besides that, the SIM card business was not as big as last year, it will be worthless to reduce the tariff as new customer will be small.”
XL will focus on data services which continues to grow its contribution. It is estimated that in 2010 contributed to the data service by 9% -10% of total company revenue. In 2011 it is expected to increase in the range of 15% to 20%.
“Overall revenue grows for 2010 was above 20%.”

According Bisnis Daily, up to third quarter 2010 XL noted a significant increase in performance. In terms of revenue, the company managed to score at Rp13 trillion rupiah, or up 32%
compared to the same period last year.
Meanwhile, net income rose 73% when compared to the same period in 2009 of Rp2.1 trillion . Until that time, XL has 38.5 million subscribers.

XL prepare a capital expenditure of U.S. $ 500 million that will be used to build the 1500-2000 base stations, increased network capacity, and build an optical fiber.
“The amount of capital expenditure was moderate. It could be revised in some times if needed more money. We use internal funds to meet capital expenditure, “said Hasnul. (Bisnis daily)

Responding to the increasing demand of data service and internet broadband, two 3G operators XL Axiata and Axis requested additional 3G bandwidth to the government. XL was awarded the 3G license in the early 2006 with 2x5MHz bandwidth. Meanwhile, Axis (NTS) received their licensed one year before that.  Both operator requested another 2×5 MHz bandwidth.

With this request, from 5 3G operators, only Hutch which does not request additional bandwidth. It implies that both operators have greater demand in data service and internet broadband than Hutch. Meanwhile Telkomsel and Indosat have requested this additional bandwidth and got it last year. Additional spectrum bandwidth will make the network performance of these operators better and serving more subscribers. In addition, customers will be more comfortable because it’s easier to broadband service connection speed and higher capacity.

When the requested approved, both operators should pay for the spectrum levy according to the price of 2006, namely IDR 160b per year. Besides that, they also have to pay upfront fee, 2xIDR 160b.

According to Hasnul Suhaimi, XL’s CEO, additional 3G bandwidth is a step toward 4G technology implementation. 4G implementation is still far away although traffic data is getting higher and higher.

Both XL and Axis also requested International Direct Dialing License (IDD).  Both operators lose in IDD license tender three years ago from Bakritel. Favorite XL was failed because of incomplete administrative reason, while Axis because of higher proportion of foreign shares. Both operators believe that the IDD market is still high and current provider (Telkom, Indosat and Bakrie) can not fulfill all the demand.

Telkom is the leader in International call with 53% of market, followed by Indosat and a small portion of them to Bakrietel.  International call was 70% outwards while 30% are inwards.  Total duration of the call is around 3 billion minutes.

Syakied Sungkar , Axis’s VP Sales and Distribution said that “If Axis is given a IDD license, we will make the IDD call rate very competitive. ” Customer will get benefit with this competition. However, so far there is no indication for second tender of IDD license.

At the end of first semester of 2010, XL noted a massive increment in their profit. XL got IDR1.32 trillion or an 87.4 increment compare to the same period last year which was only IDR 706 billion. This figure is the XL’s highest profit so far. XL got IDR 8.5 trillion revenue for this semester, 35% increment of the same period for the last year which was only IDR 6.25 trillion.

In contrast to the PT XL Axiata, two other major mobile industry, Telkomsel and Indosat have decreased profits, and the largest suffered by Indosat. The profit of cellular operator owned by Qatar Telecom (Qtel), went down 71.5 percent compared to the first half of the year 2009. From IDR 1.007 trillion to only IDR 287 billion. Though its earnings rose 5.8 percent in the same period, from IDR 9.135 trillion to IDR 9.662 trillion. Meanwhile Telkomsel, the biggest cellular operator in Indonesia also has decreased its net profits for about 4 percent from IDR 6.2 trillion to IDR 5.9 trillion only. The same condition with Indosat, Telkomsel also has increased its revenue from IDR 20.6 trillion to IDR 22.9 trillion.

XL’s high profits was trigger by the massive increment of the subscribers. At the end of June 2010, XL noted 35.2 million subscribers, grew 43 percent compared to 24.7 million in the first semester of 2009. This figure  is just 2.6 million below Indosat’s subscriber. If XL can be consistent with their achievement, we may see XL as the second biggest cellular operator at the end of 2010.

Telkomsel is still working hard in achieving their total subscriber target. At the beginning of 2010, they just had 82 million subscribers and at the end of June 2010, this figure was around 88.3 million, which was still far away from their end year target 100 million subscribers. They still have 6 months from July to achieve this target.

Indonesian Cellular Operators are facing a high churn rate subscriber. Telkomsel just write off around 4.4 million of its subscribers this year which is equivalent to 5% of its total subsribers. Meanwhile Indosat and XL have a greater number, namely around 12-13% of its subscribers.

The total number of the subsribers of this three biggest cellular operators in Indonesia are around 150 million subscribers. Then the total churn subscriber for these operators are just below 15 million subscriber, a big number for SIM (subscriber identification module) card business. If we also calculate other cellulars operator, the figure can reach 18 million. For your information, Indonesia has 11 cellular operator, 5 of them are using GSM-3G technology while the other 6 are using CDMA technology.

Many people blame the cheap starter pack is the main reason of high churn rate, not to mention subscribers which are unsatisfied with their current service provider. You can have a started pack for less than US$5 with the equal number of credit. So, the operators get nothing when a new subscriber register. On the other hand, SIM Card provider who gets benefits from new registered subscriber.

Cellular operators have to create a new strategies to lower down the churn rate. They just create the business to other party otherwise.