Syahrial Ali's Blog

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.

As written since 2 years ago in several postings, such as in  “Indonesia cellular, too many carriers?” and CDMA Operator for Sale I have indicated that CDMA operators will merge to face the highest competition in cellular business in Indonesia. Currently, only 3 of 6 CDMA operators are keen to build their networks, they are Telkom Flexi, Bakrie Telecom Esia and Smart Telecom. The other three, Indosat Starone, Mobile-8 and Sampoerna Telekom were not excited in the their business development. There is a tend that the active operators will buy the non active ones.

On the last November 2009, Indonesia’s Sinar Mas Group (through its subsidiary, PT Gerbangmas Tunggal Sejahtera) has reportedly acquired a 19% stake in Indonesia’s PT Mobile-8 Telecom for IDR211.4 billion (USD22.5 million). PT Tunggal Sejahtera Gerbangmas bought the shares of PT Global Mediacom Tbk (BMTR) in PT Mobile-8 Telecom Tbk (FREN). Previously, the share of the BMTR was 28.21%.  So, PT Global Mediacom Tbk (owned by Hary Tanoesoedibjo) will become the minority share holder in Mobile-8. PT Global Mediacom Tbk was previously the majority share holder with 66,8% and they have sold some of them on September 2008.

Along with the purchase of these shares, the Sinar Mas group has placed its representative Mr. Henry Cratein Suryanaga as chief commissioner of PT Mobile-8. Meanwhile Sarwono Kusumaatmadja and Reynold M Batubara have been appointed and vice commissioner and independent commissioner respectively. The share holder meeting on last November also named the board of director of Mobile-8 i.e: Merza Fachys as CEO and other directors are:  Anthony C Kartawiria, Beydra Yendi, Agus Heryanto Lukas and Yopie Widjaya.

So, Smart Telecom and Mobile-8, both CDMA operators in Indonesia are in the same business group now, namely PT Sinar Mas.

As informed by DG Postel, all cellular and FWA operators in Indonesia have passed the standard Quality of Service for the year of 2009. The measurement has been performed from July to August last year  in the six cities, namely: Jakarta, Bandung, Surabaya, Makasar, Medan and Batam.

As written in the previous post Indonesian Cellular QoS Rule, the measurement items are:   Call Center Service Level, Endpoint Service Availability which include call success rate, drop call and block call, and SMS service level.

Starting from 2010, Indonesian telecommunication regulator will fine operators which do not pass the standard quality of service.

Below are the measurement result.

Source: DG Postel
CSR: Call Success Rate
FWA: Fixed Wireless Access.

According to the data, Mobile-8, a CDMA operator, was the most performed network, both for Fren (cellular) and Hepi (FWA). Its total subscriber was only around 3m by the end of 2008.  Meanwhile, HCPT with its product call “3″, was the less perfromed network followed by Smart Telecom. HCPT is GSM/3G operator, while Smart Telecom is a CDMA operator.

The Indonesian Ministry of Communication and Information Technology announced last Tuesday that it is investigating telecommunications companies that do business with Israel.

This announcement came the day after the communication and information technology minister disclosed that Amdocs was being excluded from a local tender because the controlling shareholders are Israeli.

The Jakarta Globe reported that on Monday Communications and Information Technology Minister Tifatul Sembiring said that Amdocs should not be included in the billing tender of Indonesian cellular service provider Telkom PT because Amdocs has Israeli shareholders. A spokesman said the ministry will investigate Israeli-affiliated telecommunications companies and sanction those found to be in violation of the regulation.

Sembiring is a member of PKS, the conservative Islamic Prosperous Justice Party, and said excluding Amdocs from the tender was justified because Israel has no diplomatic relations with Indonesia.

The newspaper also noted the criticism from a local consumer organization, whose analyst called Sembiring’s action “irrelevant” and unwise. The analyst said that Israeli technology was commonly used in the information-technology sector because Israel is a major producer of high-tech components, and Indonesia imports 90% of the telecommunication parts used in the country.

“Many of these could be from Israeli manufacturers or come from companies with Israeli shareholders,” he said. “How about products from Taiwan? Many of our telecommunications products are from Taiwan – another country that does not have diplomatic relations with Indonesia.”  (taken from: Haaretz.com)

On January 16th this year, President Republic of Indonesia has signed a Presidential decree no 7 about Tariff and Type of Non-Tax State Income in the Department of Communication and Information. Similar with other rule or decree, this decree valid from the date of signing. With the enactment of this decree, the previous regulation, namely Regulation No. 28 Year 2005 on the same issue is revoked and declared invalid.

However, exceptions apply to administrative sanctions from the telecommunications operation, because Article 14 mentions in full, that the imposition of tariffs on the types of non-tax state revenue derived from the Organization of Post and Telecommunications such as: a. administrative sanctions in the form of fines for violations of the permit obligation telecommunications network administration and / or basic telephony services; and b. administrative sanctions in the form of fines for breach of obligation of the organization permit value-added telephony services and multimedia services, entered into force 1 (one) year after this Government Regulation set. Hence the imposition of sanctions fines began an effective force on the date of January 16, 2010.

Although previously announced as in press releases dated February 3, 2009, and yet through this press release, the regulator wants to remind the Regulation No. 7 year 2009 to the telecommunications providers so they can prepare themselves better before the enactment of the provisions of the fine sanctions. The consequences of the implementation of such regulation can significantly impact for the telecommunications rules violator.

Below are several important things on Regulation no 7 of year 2009.
1. Administrative sanctions for non-achievable development:
- less than 40% from commitment: IDR 600m
- between 41% to 70% from commitment: IDR 400m
- between 91% to 90% from commitment: IDR 200m
2. Sanction in the form of fine for not meeting service quality standards are set according to prevailing regulation, IDR 200m / item.
3. Sanctions in the form of fines for violations due to the absence of compliance with the provision of interconnection schedule (schedule process of the answer, schedule negotiation process, the process of providing access to schedules, etc.) as stipulated in the regulations, IDR 600m / item.
4. Sanctions in the form of fines for violation of price discrimination and interconnection access, IDR 10b.
5. Sanctions in the form of fines for violations of use of domestic products due to capital expenditures that do not meet the applicable provisions, 15% x (Cons Obligations)% x Capital Expenditures / year.
6. Sanctions in the form of fines for violations of the use of domestic production due to operational expenditures that do not meet the applicable provisions, 15% x (Cons Obligations)% x Operational Expenditures / year.
7. Does not meet the minimum services which must be provided, IDR 10m / service.

(translated from www.postel.go.id)

When you travel abroad, you will receive a welcoming message in the destination port from another operator. This message will tell you that you can use your mobile phone in this country as if you are in your own country. You are currently in other country and the operator you use has a cooperation agreement with the local operator in the destination country. You are in international roaming condition.

The same principal can also be applied within the same country. Some operators have better coverage than some others, or some operators have coverage in one or more areas, while some others have coverage in that region but they don’t have in another region. To cover all regions, an operator shall need to make a domestic roaming agreement with other operators.

Up until October 2009, almost 15 years since GSM technology was launched in Indonesia, no cellular operator was interested in domestic roaming. Big operators seem reluctant to provide domestic roaming to its competitor. This is one reason why new entry in cellular industry get difficulties to attract more customer in Indonesia. New entry operators must built their own network to serve customers.

However on Nov 16th 2009, there is a breakthrough in cellular communication in Indonesia when XL agreed to provide national roaming for Axis. Hence Axis’s customer can make a communication in all over Indonesia even though Axis doe have network in that area.

Domestic roaming is beneficial for both parties. The main benefit goes to tenant (Axis), however XL also receives additional revenue from this service. Domestic roaming is enable new entry to attract many customers as it can serve wider coverage.

Special respect shall be given to XL management who opens up an healthy competition with their competitors. Congratulation.