This report profiles Indonesia’s telecommunication industry, discussing market trends through 2014 and outlook for 2015 and beyond. The report also highlights leading players in the sector including PT Telekomunikasi (Persero) Indonesia Tbk, PT Indosat Tbk and PT XL Axiata Tbk.

The telecommunication industry has played an important role in the development of Indonesia’s economy over the last few years. Not only has it increased connectivity across the country, it has also helped in stimulating other sectors of the economy like banking, finance, software, hospitality and trade. The telecommunication sector in Indonesia comprises several segments, namely mobile cellular services, fixed line services, internet and broadband services, and network infrastructure services. As of 2013, Indonesia was the world’s third largest telecommunication market in terms of mobile cellular subscribers, after China and India.

2014 was a tough year for the industry because of lower subscriber growth, fall in voice average revenue per user (ARPU) and forex losses. It was also a year of industry consolidation accompanied by retreat of CDMA operators. Data, internet and broadband services accounted for a substantial portion of operators’ revenue in the year. 2015 looks to be more promising with estimated industry growth of around 7-8%, according to the Ministry of Communication and Information Technology. Going forward, Indonesia’s young population and rising per capita income, coupled with an increase in smartphone penetration and data speeds, will add to the growth of this sector.

Key Points:

• Mobile cellular penetration rate grew at a CAGR of around 30% during 2006-11. The penetration rate surpassed the 100% mark in 2011 and rose to 125.4% in 2013.

• The total output of the information and communication sector grew at a CAGR of 27% during 2010-14. In FY14, the sector saw an output growth of 31% y/y.

• During 2008-12, fixed wireline subscriptions grew at a CAGR of 5.7%. However, it saw a decline of 19% y/y in FY13.

• During 2007-11, mobile wireless subscriptions grew at a CAGR of around 28%. However, after the penetration rate surpassed 100%, growth has softened. In FY14, it saw a growth of only 6% y/y.