Syahrial Ali's Blog » General

XL and Axis requested additional 3G Bandwidth

Syahrial Ali — Mon, 11 Oct 2010 07:47:25 +0000

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.

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Semester 1 2010, XL profits went up, their compatriots decreased

Syahrial Ali — Wed, 22 Sep 2010 09:23:30 +0000

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.

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High Churn Rate, Sparkling the SIM Card Business

Syahrial Ali — Mon, 20 Sep 2010 03:45:09 +0000

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.

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Satellite Business is quite excited

Syahrial Ali — Sun, 08 Aug 2010 23:43:25 +0000

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)

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Flexi and Esia Will Be Merged?

Syahrial Ali — Fri, 11 Jun 2010 00:32:23 +0000

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.

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2009 Subscribers, XL was in 2nd Position

Syahrial Ali — Mon, 07 Jun 2010 06:15:31 +0000

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.

Indonesian Telecommunication Subscribers data
Fixed Phone Operator	2005	2006	2007	2008	2009
PT Telkom	8,686,131	8,709,211	8,685,000	8,629,783	8,376,793
PT Bakrie Telecom (Ratelindo)	114,082	68,359	-	-	-
PT. Indosat (I-Phone)	21,724	26,632	30,479	42,145	42,674
PT. Batam Bintan Telekomunikasi (BBT)	2,530	2,500	2,392	2,300	2,207

Fixed Wireless Access
Telkom Flexi
prepaid	3,240,500	3,381,426	5,535,000	12,568,620	14,490,010
postpaid	821,300	794,427	828,000	736,561	649,047
Indosat Starone
prepaid	229,726	338,435	594,203	681,362	478,732
postpaid	19,708	20,545	33,731	80,227	64,126
Bakrie Esia
prepaid	351,826	1,414,920	3,695,817	7,196,518	9,693,441
postpaid	20,303	64,278	124,884	108,025	94,099
Mobile-8 Hepi
prepaid				332,530	66,526
postpaid					237

Cellular Operator
Telkomsel
prepaid	22,798,000	33,935,000	45,977,000	63,359,619	79,608,839
postpaid	1,471,000	1,662,000	1,913,000	1,940,372	2,034,693
Indosat
prepaid	13,836,046	15,878,870	23,945,431	35,591,033	27,416,788
postpaid	676,407	825,859	599,991	919,213	1,290,410
Excelcomindo (XL)
prepaid	6,802,325	9,141,331	14,988,000	25,599,297	31,101,047
postpaid	176,194	386,639	481,000	416,220	337,330
Mobile-8 Fren
prepaid	1,150,000	1,778,200	2,920,213	2,552,975	2,683,776
postpaid	50,000	47,688	92,588	148,939	122,066
Sampoerna Ceria
prepaid	10,609	133,746	310,176	784,129	636,566
postpaid		967	288	214	302
NTS – Axis
prepaid		10,155	4,788	3,234,800	4,105,156
postpaid		2,560
HCPT – Three
prepaid			2,036,202	4,490,202	7,295,000
postpaid			3,204	10,407	16,000
Smart Telecom
prepaid			115,000	1,456,372	2,528,026
postpaid				74,451	71,639

Source: DG Postel

Total subscribers (Fixed, FWA and Cellular) were:

2005: 60,499,948
2006: 78,623,748
2007: 112,916,388
2008: 170.956.314
2009: 193,205,530

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Three BWA Tender Winners Withdrew

Syahrial Ali — Sun, 09 May 2010 00:25:10 +0000

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.

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Reducing Churn Rate

Syahrial Ali — Wed, 24 Feb 2010 16:12:49 +0000

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.

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Cellular Capex 2010, Still in Crisis?

Syahrial Ali — Mon, 08 Feb 2010 04:31:58 +0000

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)

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Again, Indosat Reshuffles Director and Commissioners

Syahrial Ali — Tue, 02 Feb 2010 13:52:57 +0000

Indosat, a second largest cellular operator in Indonesia just reshuffled its director and commissioners. Kaizad B Heerjee, a director from ST Telemedia was replaced by Laszlo Imre Barta. Kaizad will be officially inactive since May 2010. In board of commissioners, two of them were replaced. The independent commissioners, Setyanto P. Sentosa and Michael Latimer were replaced by Alexander Rusli and Chris Kanter respectively.

This is the second time of high level management reshuffled since Indosat bought by Qatar Telecom (QTel) on June 2008. The first reshuffled was made on June 2009.

Below are the complete list Indosat board of directors up to 2012:

- Harry Sasongko Tirtotjondro, President Director and Chief Executive Officer (since August 11th, 2009)
- Peter Wladyslaw Kuncewicz, Director & Chief Finance Officer (since September 1st, 2009)
- Laszlo Imre Barta, Director and Chief Commercial Officer (effective April 30th, 2010)
- Stephen Edward Hobbs, Director and Chief Technology Officer (since June 11th, 2009)
- Fadzri Sentosa, Director and Chief Wholesale and Infrastructur Officer (since June 11th, 2009)
- Guntur S. Siboro, Chief Marketing Officer
- Syakieb A. Sungkar, Chief Sales Officer

And the board of commissioner up to 2012:
- H.E Sheikh Abdullah Mohammded S.A Al-Thani, Chief Commissioner
- Nasser Mohd. A. Marafih, Commissioner
- Richard Fansworth, Commissioner
- Rachmad Gobel, Commissioner
- Rionald Silaban, Commissioner
- Jarman,Commissioner
- Alexander Rusli, Independent Commissioner
- Soeprapto, Independent Commissioner
- Thia Peng Heok George, Independent Commissioner
- Chris Kanter, Independent Commissioner

Till the end of 2009, Indosat serves around 33.1 million subscribers and it is facing a tight competition from XL who try to be the second largest cellular operator in Indonesia.

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