Mobile to boost Indonesian telecoms

Summary:Fueled by strong mobile growth behind only China and India in the world, Indonesia's telecoms market will hit US$16.2 billion by 2014, new report notes.

The mobile sector in Indonesia is poised to be one of the world's fastest growing markets behind China and India and the main engine of growth for the country's telecoms sector, according to a new report.

Pyramid Research's "Indonesia: Rising Competition to Spur Telecom Revenue Growth" report predicts that the Indonesian telecoms market will grow at a five-year compound annual growth rate (CAGR) of 12.4 percent to reach revenues of US$16.2 billion by 2014.

Currently, from a revenue perspective, Indonesia is ranked No. 7 in the Asia-Pacific region, Pyramid Research said in a statement released over the weekend.

Revenue from fixed, mobile and pay-TV services in the country amounted to US$9 billion in 2009, a 41 percent jump from US$6.4 billion in 2006.

The country's growth potential is significant as most telecom services have poor penetration rates, noted Tae-Hyung Kim, analyst at Pyramid Research and co-author of the report.

"As the mobile penetration was below the global average at the end of 2009, with broadband yet to reach 1 percent of the population and the pay-TV penetration at 2 percent of households, Indonesia will be one of the fastest-growing telecom markets in Asia," he explained.

Pyramid Research data indicates that Indonesia's fixed broadband household penetration stood at only 0.5 percent in 2009, a figure well below the regional average. Mobile subscription penetration registered 64 percent last year, while actual user penetration stood at only 39 percent at end-2009.

Kim said the mobile services segment will account for US$5.2 billion of the US$7.2 billion increase in Indonesia's telecom services market between 2009 and 2014. There will be a considerable improvement in mobile penetration rates, driven by intense market competition among more than half a dozen mobile operators.

"The bulk of [the revenue increase] will be driven by subscription additions; in fact, Indonesia's 84 million net subscription additions [expected] over the next five years put it behind only India and China on the list of the world’s top growth markets," he said.

The research firm added that there will be 11.8 million mobile broadband accounts in Indonesia by end-2014. Growth in mobile broadband revenue will push overall mobile data revenue to US$5 billion within the same timeframe.

However, in terms of growth, Indonesia's fixed communications service revenue is still expected to exceed mobile service revenue growth in the next five years--an anomaly in the global telecoms landscape. Pyramid Research forecasts that revenue from fixed services will grow at a CAGR of 13.6 percent between 2009 and 2014, compared to 11.4 percent CAGR for mobile services.

Topics: Networking, Broadband, Mobility

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