NEW DELHI, India-The Indonesian cellular phone market, which witnessed strong growth during 2000 despite political turmoil, is set for further expansion in 2001 when two more GSM players join the race.
The country has seven cellular operators today. Three of them-Telkomsel, Satelindo and Excelcomindo Pratama-operate GSM 900 MHz services, while Telesera, Metrosel and Komselindo operate AMPS services. The seventh operator, Mobisel, offers NMT services.
The total subscriber base increased by 1.3 million to a total of 3.4 million users during 2000. Last year, the GSM operators achieved a growth rate of more than 50 percent, and observers expect the industry to maintain this pace for the next two to three years.
“The cellular market was one of the few `bright spots’ through 2000 in Indonesia,” commented an industry executive.
According to the Association of Indonesian Cellular Operators (ATSI), the seven cellular operators invested more than US$800 million combined during last year to expand their networks. And most of the investment projects were financed by the companies’ own funds rather than bank loans or from other sources.
Competition will intensify with the entry of two more players, PT Telkom and PT Indosat. Both the state-owned companies plan to begin their GSM 1800 MHz services in the second half of 2001. Setiawan Sulistyono, head of investor relations for PT Telkom, said the company plans to launch its services in August 2001. Siemens is providing the infrastructure for the network, which will initially cover greater Jakarta, Bandung and Bandar Lampung.
MSS competition
In addition to the two new GSM operators, the entry of GSM-compatible satellite phone service operated by Asia Cellular Satellite (ACeS) is expected to expand cellular services.
“Satellite phones will play a key role for two reasons. First, our pricing is very aggressive-less than a dollar for a minute. Second, seamless roaming with Indonesian GSM operators. With the existing GSM cards, subscribers will be able to sign up for the satellite service,” said Ashutosh Garg, chief marketing officer of ACeS International.
The company hopes to reach a subscriber base of 40,000 by end-2001, mostly tapping the vast regions not reached by GSM operators. Indonesia has some 13,000 islands.
The subscriber base for GSM 900 services is expected to swell to 5 million in 2001.
“There is the possibility of some consolidation in the number of operators, perhaps as early as this year, depending on whether the government of Indonesia allows a proposed merger of PT Telkom and PT Indosat. If a merger of these two `full service carriers’ takes place, there is every possibility of the number of nationwide cellular operators being reduced to a maximum of three,” said a Motorola spokesman.
Besides the government decision on the merger of Telkom and Indosat, there are regulatory and licensing issues that will determine the future growth.
A number of these impediments could be removed if the government moves quickly to introduce an independent regulator to adjudicate key tariff and licensing issues.
