BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Telecomunications Sector of Indonesia

The arrival of an increasing number of CDMA operators to Indonesia's telecoms market has impacted on the fixed-line and mobile sectors. Aside from the entrance of Mobile-8 and Bakrie Telecom, in 2007, Hutchison Telecom launched its brand '3', while Smart Telecom also announced its intentions to commence services commercially by the end of 2007. Hutchison Telecom began its services during the first half of 2007, to end with a strong mobile subscriber base of a little over 1mn. This exceeded the market and the operator's expectations, given how growth has been slow in the mobile sector thanks to high tariffs. Perhaps on the basis of Hutchison Telecom's positive customer growth, Smart Telecom has announced a target subscriber base of 1.4mn by YE07.

Growth in the mobile sector has largely been driven not only by new competition, but also through the aggressive network expansion plans of recent operators to Indonesia. Now with some seven mobile operators, in the first six months of 2007, there were 13.4mn net additions, representing growth of 20.4%. However, with the country still retaining one of the highest tariffs in the world, it would also appear that mobile growth is being driven by fixed wireless services, ideally suited to CDMA networks. Indeed, Bakrie Telecom's fixed wireless access (FWA) service Esia reported annual subscriber growth of 127.6% y-o-y, while the FWA services of Telkom and Indosat enjoyed subscriber growth of 57% y-o-y and 132.2% y-o-y respectively.

With this level of growth in FWA, it is not surprising that this the fixed-line market has reported increases, although these are not as strong as in the mobile sector. According to the ITU, the latest figures we have for 2006 reveal growth of 12.5% during the year. However, Telkom, which dominates the fixedline sector having experienced a 5.7% y-o-y (or IDR301.9bn) increase to fixed-line revenues of IDR5.639trn, reported that this was on account of the rise in its wireless production by 77.2% y-o-y. Similarly, Indosat announced that operating revenues from its fixed voice service have increased by 41.1% y-o-y to IDR774.4bn, on the back of an increase to its international direct dialling (IDD) call revenues and fixed wireless service revenues.

Bakrie Telecom is to become the third operator behind Telkom and Indosat to offer IDD services. The operator will begin to build its infrastructure for an international network in the coming three years. Of the operator's licence win, beating Excelcomindo and Natrindo Telepon Selular, a spokesman at the Ministry of Telecommunications said 'the principal licence will be issued for a month, once the licence has been issued they can start operations. But the problem is Bakrie has not developed the infrastructure, so they have three years to do it.'

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Business Environment

Asia

Indonesia Telecoms Business Environment SWOT

Chapter 3 - Industry Forecast Scenario

Fixed-Line

Table: Indonesian Telecoms Sector – Fixed-lines – Historical Data & Forecasts

Mobile

Table: Indonesian Telecoms Sector – Mobiles – Historical Data & Forecasts

Internet

Table: Indonesian Telecoms Sector – Internet – Historical Data & Forecasts

Chapter 4 - Macroeconomic Forecast Scenario

Confidence Problem

TABLE: GDP And Population

Chapter 5 - Country Snapshot: Indonesia Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 6 - Competitive Landscape

Market Structure

Competitor Analysis

Table: Key Players – Indonesia Telecoms Sector

Table: Key Operators Financial Indicators

Key Players

Fixed-Line

Table: Regional Fixed-Line Penetration Overview

Internet

Table: Regional Internet Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Market Data Analysis

Fixed-Line

Table: Operational Highlights 2001-2005 – Telkom Fixed-Line

Financial Highlights 2001-2005 – Telkom

Mobile

Table: Indonesian Wireless Market, H106

Table: Indonesian Blended Mobile ARPU, 2005-2006 (IDR/month)

3G

Industry Developments

Chapter 7 - Company Profiles

Regional Case Study – Motorola

Table: Motorola Net Sales by Region (US$mn)

Table: Motorola Market Sales by Locality of End Customer

Table: Leading Mobile Phone Handset Sales (mn) – Q306

PT Telkom

Indosat

Telkomsel

Excelcomindo

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Sources

Chapter 9 - Appendix: Regional Demographic Data

Table- Manufacturing Wages (ave per annum), US$

Table - Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Asia Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of Asian Telecommunications Sources

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BMI's Asian Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include: