Indonesia Telecom Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Indonesia Telecom Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

The Indonesian telecom market is expected to register a CAGR of 4.14% over the forecast period. The market for telecommunications in Indonesia, which is among the biggest in the world, has plenty of opportunity to expand. The possible increase in users mainly causes this growth. However, it may also be fueled by more revenue per user as the nation's earnings rise.

• The telecommunications sector in Indonesia is one of Asia's fastest-growing industries, with a market worth billions of dollars. The telecommunications business is expected to expand each year steadily as more people move into the digital era. In the second quarter of 2021, this industry contributed IDR 172,39 trillion (USD 1.1 trillion) to the GDP, up by 6.87% over the same period the previous year, according to the study of Badan Pusat Statistik (BPS).
• Furthermore, according to the Bright Indonesia report, the country has 212.4 million internet users and 338.2 million total mobile connections. As a result, mobile operators and the creation of over-the-top (OTT) applications became dominant in Indonesia. The nation's telecommunications network has also been expanding quickly. They are planning to construct 7,904 communication towers with assistance from the government through Bakti.
• Indonesia is collaborating closely with telecommunications providers to support its transformation program. It is anticipated that those dedicated to playing a significant role in the 5G revolution will also get involved in creating telecommunication networks to support tourism initiatives. As per the OpenGov Asia report, the Minister of Communication and Information praised the introduction of 5G telecommunication services as part of the G20 Indonesia Presidency series to assist the realization of the G20 Summit in Bali.
• The present bandwidths granted for 5G to Telkomsel (30 Mhz) and Indosat (20 Mhz) are, however, less than the "ideal" required in the context of the first implementation. A minimum of 80 Mhz to 100 Mhz of the continuous spectrum should be allotted for the initial 5G mid-band, according to a GSMA suggestion. Generally speaking, more smartphone models support the 1.8GHz band that Indosat utilizes for its 5G network than there are for Telkomsel's network (2.3 GHz). Due to a constrained service area and the operator's initial concentration on the B2B sector, it is anticipated that demand for smartphones that support 1.8GHz may increase shortly, but probably not very quickly.
• In Q3 2021, Indonesia's mobile network data traffic increased by 42% year over year to reach 78EB, including traffic from fixed wireless access (FWA) services, according to Ericsson research. In Q3, there was a greater increase in mobile data traffic than ever before the end of 2016. According to recent projections, the total amount of mobile network data traffic is expected to exceed 370 EB by the end of 2027. By the end of 2021, there were 88 million FWA connections. By 2027, there should be over 230 million. It is anticipated that 5G networks will be used to carry about half of these connections.
• The Indonesian telecom market was significantly impacted due to the COVID-19 pandemic. The COVID-19 era in the country has seen the fastest growth in the following mobile app categories: crises, remote working, education/e-learning, and wellness. There had been a noticeable increase in the usage of telecommunication services, resulting in a huge spike in demand. For example, Telkom Group played an important role as the major internet services provider (ISP) in giving the best services during the pandemic. IndiHome, which is a Telkom product, has provided free upgrades in terms of internet connection speed for their users for one month. For students to access their e-learning providers, mobile operators Telkomsel, XL Axiata, and Indosat Ooredoo have provided free internet quotas of 30 GB.

• According to the Ericsson Mobility Report, telecom companies stand to benefit most from providing business-to-business (B2B) 5G solutions to industries including manufacturing, energy, and utility businesses, as well as media and entertainment. As per the study, Indonesian telecom companies might see a 35% boost in income, or USD 8.2 billion, by 2030 if they provide 5G services to businesses, despite the country's difficulties implementing the fifth-generation technology.
• Bali became the sixth city to get 5G coverage after Surakarta, Jakarta, Surabaya, Makassar, and Balikpapan.
• Without the involvement and cooperation of several stakeholders of the country, such as the Ministries of Communication and Information, Tourism, and Creative Economy, the implementation of 5G would not have been feasible in Indonesia. Micro, small, and medium-sized enterprise (MSME) businesses may benefit from the potential and simplicity of accessing a more significant market by using the internet. Numerous fresh ideas can also be generated. To increase the chances for the country's digital economy to expand, the government is expected to utilize its access to the internet to foster the growth of the digital environment in the nation.
• Open signal reported that Telkomsel and Smartfren purchased 20 MHz and 10 MHz of the three 10 MHz TDD spectrum blocks in the 2.3 GHz band that Indonesia's Ministry of Communication and Information (KemKominfo) auctioned off in mid-April 2021. The availability of more spectrums should enable Indonesia's carriers to accommodate higher levels of mobile data consumption and enhance the mobile user experience in the future. Telkomsel started offering 5G service using the 2.3 GHz band spectrum, which is already accessible in eight cities. Indosat started offering 5G service in Surakarta utilizing the 1800 MHz band. After receiving their certificate of operation eligibility (SKLO) from regulator Kominfo, other companies are planning to deploy 5G. Smartfren has reportedly conducted 5G experiments utilizing the 26 GHz mmWave frequency.
• As per the Telecom review report, the government is developing several spectrum bands to serve the 5G network by farming and refarming frequency spectrum in all levels, such as low band, capacity band, and super high band. In March 2022, three national cellular providers (Telkomsel, Indosat, and XL Axiata) obtained government approval to launch commercial 5G services in Indonesia. These services are available in a limited number of residential areas and hotspots in 13 major cities. The Mandalika MotoGP 2022 and the G20 Summit are both expected to host the 5G Experience.

• Due to the country's massive population, extensive archipelago, and the current low cost of technological gadgets, Indonesia has one of the world's most saturated cellular telecommunications markets. Indonesia's population was estimated at 271 million in 2021, with 338.2 million mobile connections, or 126% of the total population. This results in the growth of over-the-top ("OTT") apps and the dominance of mobile operators in the internet service providers ("ISP") market.
• There was a growth in online video streaming after COVID-19. An estimated 66 million people use online streaming services in Indonesia, watching 3 billion hours of OTT video each month. These trends are expected to continue in the years to come. The OTT market has seen the demise of regional platforms like iflix and Hooq, the launch of Disney+, and the expansion of Chinese streaming goliaths iQIYI and WeTV into Asia. Viu, Netflix, and Vidio now hold most of the video streaming user base in Indonesia. These established players are now up against the newcomers looking to establish themselves.
• According to a Future of TV analysis by The Trade Desk, OTT streaming had a meteoric rise in popularity after the pandemic. Over one in three Indonesians already stream material over the top (OTT) as OTT has become a popular form of entertainment where people can watch their favorite shows across devices whenever and wherever they want. Indonesia is currently leading in the Southeast Asia region with a strong 40% year-over-year rise in OTT consumption.
• Smartphone costs have decreased, mobile broadband coverage has improved, and internet access has become more reasonably priced. The expansion of OTT in Indonesia may be linked to these trends. OTT platforms are adjusting their offers to attract these customers by considering consumer preferences. A low-cost version of Disney+ called Disney+ Hotstar teamed up with Telkomsel to give access to 160 million registered subscribers of the telecom company in 2021. More local and Asian content is available on the top three platforms than on any other platform in Indonesia's Play Store entertainment category. A weekly payment option is available in Vidio's subscription configuration for its sports broadcasting service.

• The Indonesian telecom market is highly fragmented in nature. Some major players in the market studied are Telkom Indonesia, Indosat Ooredoo, XL Axiata, Smartfren Telecom, and Tri Indonesia. The market also hosts other internet service providers (ISPs), MVNOs, and fixed-line service providers. Some Indonesian telecommunication companies are competitive internationally and hold strong ground in the global telecom space.
• In July 2022, Telkom Smart teamed up with Tuya Smart to introduce its IoT services in Indonesia. Telkom introduced IndiHome Smart for the consumer market and sooltanCam for small and medium-sized businesses using Tuya's private IoT service deployment technology, Cube Solution.
• In January 2022, Asia Link Dewa Pte Ltd and PT First Media Tbk's equity holding in PT Link Net Tbk was acquired by Axiata Group Berhad and PT XL Axiata Tbk in a conditional share purchase agreement ("SPA"). The proposed acquisition strengthens Axiata's strategic entry into the untapped fixed broadband market and supports its Indonesian development goals.

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support