Syahrial Ali's Blog

Indonesian Satellite Association (ASSI) disclose the value of the satellite business in Indonesia in semester I/2010 that reached U.S. $ 600 million (about Rp5, 4 trillion), which consists of leasing satellite transponders and service network.

Tonda Priyanto ASSI Chairman expressed the main use of transponders is still for the backbone network for GSM mobile access.

“In addition to the GSM backbone, the use of satellite transponder is also widely used for VSAT networks (very small apperture transponder),” he told Business Today.

Driven by increased use of VSAT rural telephone administration (universal service obligation / USO), Internet service provision project districts, and data networking needs of national companies and government.

Based on ASSI data, the number of transponders in Indonesia has currently reached 200 units, both from local and foreign satellite satellite which has landing rights in Indonesia.

Meanwhile, Eddy Setiawan a consultant in a number of satellite operators said the lease per transponder on average per year is U.S. $ 1 million. Assuming there are approximately 110 units of transponders operating in Indonesia, then the value of business per year reach U.S. $ 110 million.

“That’s only transponder lease, if the VSAT industry is also calculated, then from VSAT earn U.S. $ 152 million per year for a total of approximately U.S. $ 262 million,” said Eddy, a LAPAN (National Aeronautics and Space Institute) consultant.

Former ASSI Secretary General said that this figure does not include the direct-broadcast and television business to home (DTH). (from: bisnis.com)

There was a big news this week when the biggest CDMA operator Telkom Flexi intended to merge with Bakrietel Esia. The CEO of PT Telkom, Rinaldi Firmansyah has sent the letter to Ministry of State Own Enterprise, Mr. Mustafa Abubakar concerning this. The minister has given the green light, so Telkom can proceed with their plan.

The negotiation shall be started to reach the win-win solution. As we know, Telkom Flexi is the biggest CDMA operator in Indonesia with currently 15 million subscribers, while Bakrietel Esia is the second with just below 10 million subscribers. When the merger happened, the CDMA market will be monopolized by these operators.

There were different views about this merger. Some argue that this merger will make unhealthy competition in CDMA business. They will dictate the market as they have 80% of the market share. Some others see there are several advantages of this merger for both companies. Telkom and Bakrie can deliver better services to all subscribers since they have adequate bandwidth to play with. They will have more efficient cost both in operational and expenditure.

Above all, we as the customer, not only want better services but also affordable tariff.

According to the data from Directorate General of Post and Telecommunication of Republic Indonesia,  there was a big change in the number of cellular subscribers’ data at the end of 2009. Since 2004, Telkomsel was the leader in cellular business, followed by Indosat and XL. However, since the end of 2009, XL was promoted to the second place ahead of Indosat.

At the end of 2009, the number of Indosat’ subscriber was down to 28.6 million, from 36.4 million at the end of 2008. Meanwhile, XL’s subscriber was 31.4 million, increased quite significant number, 5.5  million, from just below 26 million at the same period. Telkomsel was still the leader with more than 81 million subscribers.

In the fixed wireless access, Telkom flexi continues their lead with more than 15 million subscribers, followed by Bakrietel Esia with almost 10 million.

For new entries, HCPT led with 7.3 million subscriber followed by Natrindo Axis with 4.1 million.

The complete data can be found below. Read the rest of this entry →

Public Relation Information and Communication Ministry, Gatot S. Dewa Broto announced that two BWA Tender Winners namely PT. Rahajasa Media Internet (Konsorsium Wimax Indonesia) and Konsorsium PT. Comtronics Systems with PT Adiwarta Perdania have sent official withdrawal letter. Actually both consortia have been given opportunity to fulfill their commitments up to April 26, 2010. However, they did not make use this opportunity. Before the time expires, both consortia have decided to stop the process. Meanwhile, regulator has also canceled PT Internux BWA license because this company has failed to fulfill their commitment since February 22nd this year.

According to the BWA tender result, PT. Rahajasa Media Internet (Konsorsium Wimax Indonesia) won in 3 regions (Papua, Maluku and North Maluku, and Riau Islands (Batam and Bintan) with the total bidding value almost IDR 2.7 billion for 3 regions. Meanwhile Konsorsium PT. Comtronics Systems with PT Adiwarta Perdania also won in 3 regions namely West Java (outside Bodetabek), Central Java and East Java with the total bid almost IDR 74.5 billion. Internux was the winner for Jabodetabek with the bidding price of IDR 110 billion.

With this situation, West Java will only be supplied by IM2, Central and East Java by Telkom, Papua and Maluku with North Maluku by Telkom and Riau Island by Berca Hardaya Perkasa.

Telecommunication Business owners are still waiting for the following regulation since the absence of the second winner for that 7 regions.

According to Gartner, Indian cellular  operators face the highest churn rates compared to their counterpart in Asia pacific Region (APAC). The monthly churn rate for India range from 3.5 per cent to 6 per cent. This followed by Malaysia with 2-2.5 per cent and Taiwan with 2-3.5 per cent. Meanwhile, Thailand and Japan have monthly churn rate 1.9-2.6 per cent and 1.5-2.6 per cent respectively. Gartner also reported that Indonesia monthly churn rate was only 1-2 per cent. It means that in Indonesia only 1-2% of customers change their cellular operator every month.

Churn rate is defined as the number of participants who discontinue their use of a service divided by the average number of total participants for any given period of time. So, even though the customer change their number in the same operator, they are still included in the churn rate.

The churn rate in Indonesia is caused by at least by 2 main reasons. First, the cheaper price of starter pack compared to top-up. For your information, mostly prepaid customer who moves from one operator to another or who frequently changes their mobile number from the same operator. The starter pack can be bought for about 60 cent only. This includes 50 cents basic pulse and another 50 cent for bonus pulse. So, you get US$1 credit for just 50 cent. Meanwhile, if you want to top-up for US$1 pulse, you have to pay US$1. An easy choice for customers.

The second reason is the lack of numbering cost. Every operator can easily release a cellular number without any cost from the regulator. Actually numbering is one of scarce resources in telecommunication world. People are reluctant to memorize long number.  Without any regulation, the numbering becomes wild. To reduce churn rate, regulator shall charges every number used by operator. With this regulation, automatically the cost of starter pack will be higher. People will choose to maintain their phone number instead of using another starter pack.  Actually the starter pack costs much for operator as they need to pay for SIM (subscriber identification module) as well the licenses for the number of customers in their billing system.

I believe there are so many ways to reduce the churn rate in cellular industry in Indonesia. However, the charge for numbering is the most effective ways.

When almost all operators decreased their capital expenditure in 2009, how about this year 2010? Here are the data.

Telkom the biggest telecommunication operator will spend about IDR 2oT (more than  US$2b) for its capex, 65% 0f them (around US$ 1.3b) will be used by Telkomsel (the largest cellular operator). This figure is just below 2009 figure (US$1.5b). Telkomsel will focus on its  mobile broadband services. This service skyrocketed last year from 200,000 subscriber in 2008 to more than 1.6m in 2009. It increased for about 700%, fantastic.

Indosat, the second one will spend IDR 4,5T  (around US$470m) 2010, it also below the figure of 2009 (US$600m). This fund will be used mostly for 3G Based Transceiver Station expansion. Currently Indosat serves around 28.7m subscribers down around 19% from last year figures. For your information, besides cellular services Indosat also provides data services and fixed line services as well as international gateway service. The biggest contribution is still from cellular services (75%), followed by data services (15%) and fixed and international gateway (10%).

XL, the 3rd largest cellular operator will spend around US$450m for its capex in 2010. This figure is far below 2009 figure (US$ 600m). However, according to the CEO, Hasnul Suhaimi, the company financial is getting better. So with a company profits during 2009, XL plans to propose dividend at annual general share holder meeting.

Bakrie telecom, the 2nd largest CDMA opeartor in Indonesia plan a US$200m for its capex in 2009. This figures is equal to the 2008 and 2009 figures. Bakrie has planned US$600m expenditure for 2008-2010 or equal to US$200m per year.

No information was received from Axis and HCPT concerning thier capex for 2010. For your information Axis capex for 2009 was around US$500m.

From the figues above, we can see that almost all operators decreased their expenditures in 2010. Still in crisis? (data taken from various sources)