Indonesia Telecommunication Outlook

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The Indonesian Telecommunication Industry
“Mobile Monday” Jan 25, 2011

January 2011 Developed by ICT Consulting Practice Frost & Sullivan Asia Pacific

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Needs to be connected…

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Industry Updates- 2010 • Indonesia is the 3rd largest wireless market in Asia, behind China and India in terms of number of subscribers that by end of 2010 Indonesia had an estimated 235.8 Mn wireless subscribers • SIM Penetration of approx. 96.9% (58% unique subs) compared to 103.6 Mn and a penetration rate of 44.2% at the end of 2007 Source: Frost & Sullivan

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Industry Updates- “Everybody needs one”
234.4 103.6 237.5 162.9 240.4 194.2 243.3 235.8

Population Wireless Subs.

CAGR 2007-2010

31.5%

Penetration

(in ‘000)

2007

2008

2009

2010
Source: Frost & Sullivan
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ARPU- How low can we go?
2010 Blended ARPU (USD)

2006 2007 2008 2009

7.2 6.9 4.6 3.7

Source: Frost & Sullivan
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Voice & Data Market Revenue- Data Service is on the Rise
3.5% 7.0% 7.4%

Total Rev. Growth

2007
USD Million

2008

2009

2010

Source: Frost & Sullivan
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Fixed Broadband- Indonesia lags behind in APAC market

2010 Fixed Broadband Household Penetration Rate

Source: Frost & Sullivan
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Wireless Broadband- Broadband is fueled by mobile wireless
2010 Wireless Broadband Penetration Rate

Source: Frost & Sullivan
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Key Points 2010- Voice is flattening, data is on the rise
• High “SIM” penetration of 97% by 2010 represents unique subscribers penetration of 58%- plenty room to go, it is commoditized and becoming “hygiene” factors • 53% of the market is still on 3G while the rest are on 2.5 or 3G- in terms of “data services” this is our next segment to go • Indonesia’s blended ARPU stood at US$3.33 in 2010 & expected to go down to USD$ 2.99 by 2015- operators have to anticipate to cater for huge network capacity for expected high minutes (MoU/ sub.) from 170 minutes in 2010 to 194 minutes in 2015 • Combination of flattening voice revenue & increasing data-services revenue- in combination, how to sustain the business? • “Internet” or data service fever are on the rise however the penetration is nascent with 17% wireless broadband • Business challenge: High network capacity requirement , low incremental revenue take up, & high cost of spectrum/ license fee 9

Wireless Subscribers- Outlook

80.8%

96.9%

108%

119%

129%

136%

%Penetration

2009

2010E

2011E 2012E 2013E 2014E

Source: Frost & Sullivan
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Wireless Market Revenue- Outlook

CAGR 2010-2014 9.09%

CAGR: 18.9%

CAGR: 2.93%

2010E

2011E

2012E

2013E

2014E

USD Million
Source: Frost & Sullivan
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Broadband Subscriptions- Outlook
%penetration
17.4% 22.9% 31.0% 37.6% 46.2%

CAGR 2010-2014 29.2%

2010E
(in ‘000)

2011E

2012E

2013E

2014E

Source: Frost & Sullivan
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2011 – Where are we going next?

• Indonesia has already shown a strong inclination towards smartphone use, with close to 3 Mn BlackBerry handset users in the market • 2nd largest “facebook” after the USA and “Twitter” world's highest penetration rate at 20.8% - the demand is huge, now it is left to the business to fulfill the gap • To answer key question on “data” business: How to monetize data services in the midst of “free” society and keep business’ profitability? • To deliver quality & reliability of data services- be it fixed or mobile • The Indonesian government estimates that it will need an additional 150,000 to 200,000 towers over the next five to seven years, each costing roughly US$100,000- another area of operators’ diversifications • “Human capital” or people side of the business, most of the time is “second in priority”- are the resources ready for the next business era? 13

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