– World’s largest archipelago with 17,508 islands.
– Total population: 276m
– Urban population: 157m
– Adult literacy rate: 96%
73m
Do not have access to internet
3rd
Slowest fixed broadband speed in ASEAN countries
44%
Indonesian households do not subscribe to internet because of high costs
The increase in internet users to 73% is a pretty good number, but it is undeniable that there are approximately 12,500 villages that currently do not have an internet connection”
- APJII Chairman in 2020
Internet Access
Is Simply Too Expensive In Indonesia
Low internet penetration…
…with high fixed broadband costs
Telecom Landscape
In Indonesia (1/2)
Characteristics
Description
Current Status
• In 2019, only 42% out of ~84,000 districts had base transceiver stations (BTSs), and ~30% of districts have weak/no signal
• Relatively low fixed broadband connections, with penetration in only ~18% of households due to an obstacle for operators’ deployments that have focused on fiber
• Significant improvement in connectivity has been shown after the Indonesian government initiated the Palapa Ring project under the national strategic agenda in 2016. The goal was to lay 36,000 km of fibre optic cable connecting from the west to the east part of Indonesia to provide high-speed internet
• Five-year plan, publicised in 2019, aimed at providing a 20 Mbps service to 30% of the population, including 71% of urban households
Competitive Landscape
• 5 major players in mobile services, with Telkom as market leader covering almost 50% of total ~355m mobile subscription in 2020
• In fixed broadband, where there is even lower penetration, market share concentration is more pronounced with Indihome (part of Telkom) accounting ~85% of total ~ 11.8m fixed broadband subscriptions in 2020
Spectrum Auction
• 3 blocks of 2.3GHz frequency auction that will be used for 5G networks was conducted in 2021 and won by 2 telco players, Telkomsel (2 blocks) and Smartfren (1 block)
• The 2.3GHz frequency auction was divided into three blocks in the range 2,360MHz to 2,390 MHz with a capacity width of 10MHz each
Joint Service Operation (JSO)
• In June 2021, BAKTI KemKominfo opened a JSO for telco operators to participate in providing 4G mobile services in remote/underdeveloped regions across Indonesia
• Under this JSO, BAKTI will be responsible to provide base transceiver station (BTS) including the land site for the BTS allowing telco operators to penetrate the low economic scale regions with lower capex
Telecom Landscape
In Indonesia (2/2)
Characteristics
Description
State Budget
• Ministry of Finance Indonesia stated that the Indonesian government allocates IDR 17tn ($1.2bn) of the 2021 state budget to improve connectivity across Indonesia mainly for ~9,000 remote / underdeveloped villages
• Part of the government’s 5-year agenda to improve Indonesia's connectivity inclusion, especially in Indonesia's outermost, frontier, and underdeveloped areas
Frequency Auction
• A frequency auction was held in 2022 for a spare 2×5MHz block of frequencies in the 2.1GHz band, specifically 1,975MHz to 1,980MHz paired with 2,165MHz to 2,170MHz, in an attempt to accelerate the development of 5G services across Indonesia
• Telkomsel won this auction over XL Axiata
Increasing Telco Sector Efficiency
• Omnibus Law allows telecoms operators to share and transfer spectrum with prior approval from the central government, potentially paving the way for mobile industry consolidation
• Sharing passive infrastructure with other telecommunications operators became mandatory under the new law allowing smaller players in the industry to expand networks at slightly lower capital expenditure
