Indonesian operators’ call to lure customers has only just begun
Thursday, May 8, 2008
A blizzard of advertisements for Indonesia’s 11 mobile operators has covered the country, competing for the lowest prices, best call quality and cheapest deals.
So begins what is expected to be a major boom in mobile subscriptions and telecom revenue.
The national regulator slashed internet work connection charges by up to 40 per cent last month and these savings have largely been passed on to users.
The authorities are pushing operators to share towers, which will reduce costs and enable greater network expansion.
From the user’s perspective, it is becoming increasingly difficult to get a fixed line as those operators are not finding it cost efficient to expand.
Meanwhile, mobile handset prices are tumbling, with the cheapest second-hand models selling for just under Rp200,000 ($22), a 50 per cent fall in 18 months.
Phone sales rose 30 per cent year-on-year in the January-March quarter to 3.5m, with retailers reporting that most were priced at less than Rp400,000.
Running a mobile phone has become more affordable because the cheapest refill for pre-paid numbers – which account for 95 per cent of the market – has been cut in just over a year from Rp50,000 to Rp1,000, although Rp10,000 vouchers are proving popular.
All the major operators are expanding and deepening their networks to cover more of the sprawling Indonesian archipelago.
Telkomsel, the market leader with about 56 per cent market share, claims to cover 95 per cent of the population. Others are trying to catch up. Capital spending will total billions of dollars over the next few years.
Analysts believe that at the end of last year, only 25 per cent of the 225m Indonesians had mobile phones, although SIM cards for some 100m numbers had been sold.
Some people have multiple numbers and use different phones depending on who is calling them and where they are in the country; others discard SIM cards after use since it is often cheaper to buy a new number than refill.
Erik Meijer, deputy chief executive of Bakrie Telecom, describes the promotional offers of the last few months as “the price perception war”.
“The real price war has not started yet because the operators are still learning how to fight it,” he says. “It’s going to start in earnest over the next year and then things are going to change.”
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