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REPORT ABSTRACT: INDONESIA: DATA SERVICES, THE WAY AHEAD

Tavess Page 1

According to Tavess, the Indonesian GSM market penetration is yet again expected to register

around 12% growth rate in 2011. With approximately 80% penetration (for voice-services), the

market is, however, nearing saturation, and the number of double-digit growth years are counted.

As an overview - The Indonesian GSM market which maintains around 85% share of the mobile

telecom market of the country is mainly served by five network providers: Telkomsel, Indosat, XL,

Hutch and Axis. The first three in the list collectively enjoy nearly 90% of the total GSM subscriber-

base, including about 75% of the total enterprise customers.

Challenges:

Despite registering significant increase in subscriber-base and revenues, the operators, save XL, find

it challenging to realize a proportionate rise in profits. This is mainly due to overly competitive

pricings. Tavess believes that most service providers have realized this and hence does not expect tosee any significant tariff play as a move to increase bottom-line. For some, high-churn rate has been

a concern, mainly led by the starter-pack that leaves a large room for switching carriers, underlining

the need for quality in customer-acquisition.

Other challenges ahead for the industry come with the regulatory authority s two major initiatives

expected this year the lowering of inter-connect rates and bandwidth-based frequency fee rather

than BTS-based fee. Both of these adversely impact the bottom-line of the operators.

Opportunity - Data Services:

While voice services have been and will continue to be the major revenue contributors, data and

BlackBerry services have been observed to be important growth drivers in this market. XL, for

instance, had its total revenue up by 20% over the previous year with data services contributing

30%, more than half of the increase, and expects this contribution to rise to 38-40% in 2011. This

trend is expected to rise to the point of shifting the weight scale to data services away from voice

services.

Tavess observes that the service-providers are re-positioning their stand to better respond to this

opportunity. Last year, Telkomsel and Indosat have requested for and obtained additional 3G-

bandwidth, while XL and Axis, that received 3G-license in 2006 and 2005 respectively, have

requested for additional 3G-bandwidth this year. The additional spectrum bandwidth is intended to

strengthen network service capabilities enabling delivery of data services in increased volumes.

Indonesia is one the fastest growing markets for BlackBerry with over 100% Y-Y growth over the last

couple of years indicating the opportunities in the market. Telkomsel and Axis host 700,000 and

250,000 BlackBerry users, respectively, while the countrys CDMA network hosts another 400,000

users. BlackBerry services include Push email, SMS, MMS, IM, Social networking, Browsing, and

many others for less than half a dollar a day or less than US$15 a month. With anytime anywhere

access and cost advantage, BlackBerry services is often viewed as a better alternative to traditional

broadband which costs about US$100 per month. Tavess notes that the not-just-for-business

approach, liberal distribution, local applications and content, pricing competitive to iPhone, trendy

design and the QWERTY convenience has led to favourable adoption of BlackBerry services.

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REPORT ABSTRACT: INDONESIA: DATA SERVICES, THE WAY AHEAD

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Research shows that the number of people accessing internet on mobile-phone in Indonesia has

exceeded those accessing internet on PC; and that over 80% of hand-sets in the market are web-

enabled. The fact that Indonesia is the first market in SEA region and fifth in the world for Dell to

release its first smart-phone indicates its potential and importance.

Tavess estimates the value of Indonesian data services market for the year 2010 at nearly US$6bn,

and expects this to multiply nearly thrice to US$17.7bn by the year 2015, growing at a CAGR of19.5%. To tap into this market effectively by leveraging market conditions, Tavess expects the

operators to:

Capitalize opportunity in data and value-added services by providing data-servicesaddressing life-style that are available and affordable to all

Ensure adequate network load/ capacity management Optimize supply and demand - improve distribution efficiency and unleash channel potential Lead product and pricing innovation

The blend of these four operations, Tavess counts, will not only help make the most of the

opportunities and overcome challenges but also leap early towards opportunities 4G-technology will

unleash.

For more information or complete report, please write to: info@tavess.com

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