Syahrial Ali's Blog

On previous posting, it has been written the first reason why incumbents operator have several advantages in cellular businesses in Indonesia. The second reason is the entry time of the new comers. All new comers were started their business when the incumbents have a established network. So, they were too late.

The impact of the late entry time are:

1. New users will be protested about coverage limitation. This leads to unhappy users and back to incumbent operators.

2. Most new users who join the new comers are in low economic level who just have very low budget for their communication need. Middle or high economic level who spend high communication cost already have their mobile number. They already received good communication services from incumbent operators so they will keep their mobile number. (more…)

As written long time ago in several postings, Indonesia currently has 11 cellular operators, 5 of them using GSM and 3G technology and the rest (6) using CDMA technology. Only 3 out of 11 operators are considered in a good business condition. All of them are GSM and 3G operators, namely Telkomsel with almost 60m subscribers, Indosat with almost 40m subsribers and Excelcomindo Pratama (XL) with almost 30m subscribers. (more…)

According to the latest data from DG Postel, the number of mobile prepaid subscribers in Indonesia have reached 117m on last July. If we calculate mobile phone density, then Indonesia with 240m populations has almost 50%  mobile phone density, a quite higher in number. However, the Sharing Vision surveys say that more and more people tend to have more than one mobile phone.

Actually there are at least 2 main reasons why people tend to have more than one mobile phone. The first reason is the tariff. Both GSM and CDMA have quite different tariffing scheme. People still feel that the GSM tariff is more expensive than CDMA tariff. Hence, everyone will have at least 1 GSM mobile and 1 CDMA mobile . GSM phone is used to receive a call and to maintain contact with other people. For your information, GSM technology is implemented earlier than CDMA in Indonesia, so that more people have GSM mobiles than CDMA mobiles. Meanwhile, CDMA is used to make a call because the tariff is so cheap. (more…)

According to Indonesian Stock Exchange, on September 19th and September 22th 2008, PT Global Mediacom Tbk owned by Hary Tanoesoedibjo has released 22,79% of his share in PT Mobile-8 Telecom Tbk. Currently, the share of the company remained at 28.21% (previously 66,8%). Mobile-8 is one of CDMA operator in Indonesia.

Meanwhile, a couple of days ago, Bisnis Indonesia daily reported that three investors from Middle East indicating interest in the shares of Bakrie Telecom including QTel, which recently acquired 40.8 per cent stake in the country’s second largest telecommunication company PT Indosat.

Moreover, both Telkom Flexi and Startone Indosat have slowdown their expansion.

So, what’s really happened?

There are three possible causes, namely internal financial situation, tariff war effects or other technical flexibility.

In Bakrie case, earlier, the Bakrie Group said it will sell shares of a number of its subsidiaries including Bakrie Telecom to raise fund to repay a debt of US$1.2 billion maturing in April next year. So, internal financial condition which lead them to this action.

How about other cases?

Does the tariff war has result in casualties or does the economic crisis has affected this business?

Mobile-8 has announced to quit from tariff war by replacing it with value added services. How about other operators? We still have to wait.

All people in Indonesia know that mobile telecommunication tariff now is already cheap. So, the network qualities will play an important role. If the quality of your network was ugly, the customer will run and move to other operator.

It seems that only CDMA operators were hurt. GSM based technology operator such Telkomsel, Indosat or XL and also new operators such Axis and Three are still making expansion. They keep growing.

One main point should be keep in mind that the low tariff has eroded the income of the operator.

Or does limited spectrum has affected their flexibility. As writen in CDMA-GSM-Competition-in-Indonesia, all CDMA operators just have a small spectrum frequency (5MHz bandwidth), so they have small flexibility in making network design which result ini a higher budget for network expansion. The same problem does not exist in GSM based operator as they have at least 10MHz bandwidth.

So, what is the reason behind of this situation? We don’t know so far. The solution? I believe that transfer of ownership will not resolve the problem. I think, operator merger shall be considered.

Huawei has been chosen by AXIS, Indonesia’s newest GSM and 3G operator, as a key partner in rolling out its full service national network. Under the agreement, Huawei will design, build, deploy and manage AXIS’ 2G/3G network within the island of Java, Bali, Lombok, Kalimantan and Sulawesi for a period of three years to 2010. Specifically, Huawei will be responsible for close to 4,000 sites across the country, on GSM and 3G radio access, optical and microwave transmission.

In addition, Huawei will also provide a nationwide core network and intelligent network (IN) system to AXIS. (more…)