Indosat, a member of Qatar’s Ooredoo group and one of the leading telecom
companies in Indonesia, is at the forefront of the task to keep people connected
through phone and Internet. It boasts 26 percent of the group’s total revenues and
60 percent of the total subscriber base, writes Umer Nangiana
Lying between Indian Ocean and the Pacific Ocean, it is truly an oracle of splendour and beauty. Indonesia, with its scenic landscape, exhilarating beaches, green mountains and rain forests besides some of the active volcanoes, offers some of the most popular and exciting tourist destinations around the world.
The small island of Bali, for instance, is like a paradise on earth. The country on the whole is indeed a combination of land masses spread across the ocean, decorated with all that is beautiful on earth.
People make an essential part of Indonesia’s grandeur and there are so many of them. In this most densely populated Muslim country with 250 million people distributed unevenly across islands, the majority is concentrated towards the more viable pieces of land such as Java, Sumatra and other islands.
Despite the long channels of ocean separating them, this huge population and the thousands of tourists going in and out of this South East Asian island country everyday constantly remain connected with each other and the outer world.
Thanks to an efficient network of telecommunications, you would be pleasantly surprised to receive signals on your phone even in the middle of a thick rain forest up in the mountains. However, establishing and maintaining this connection has been a daunting task.
Indosat, the member of Qatar’s Ooredoo group and one of the leading telecom companies in Indonesia, is at the forefront of the task to keep people connected through phone and Internet. Boasting 26 percent of the group’s total revenues and 60 percent of the total subscriber base, Indosat has presence across Indonesia.
Alexander Rusli, the President Director and CEO of Indosat, tells Community how the revolution in telecommunication has changed the lives of Indonesians and the company’s efforts to ensure that people get the best of telecom and internet services throughout the tricky landscape.
“We are lucky that the population is still big in the main islands. Java has about 50 percent of the population. Then we have Sumatra, Kalimantan, Bali is a smaller island and that is also covered while the rest are the smaller islands,” says Rusli to explain the task at hand while shifting from voice based services to more data-oriented ones. Indosat owns two satellites that it utilises for the provision of services to customers.
How did they go about establishing the ground network on islands?
The company uses a number of different parallels in smaller islands. Some of them are targeted ones. These are typically the ones where the company has a good working relationship with the local governments. “Then we put sites there that are self-sustainable in a sense that it has a radio access network but it also has solar power,” says the company’s president.
“The biggest challenge however is getting reloads. As prepaid service you need to buy reloads and with these islands that typically becomes a problem – the accessibility problem, that is,” he adds.
Almost 99 percent of the Indonesian market is prepaid with only one percent very high end users on postpaid services. The attachment with prepaid has nothing to do with people’s purchasing power as there were many customers who consume volume on a monthly basis than postpaid customers. It has more to do with the behaviour pattern, says the CEO.
“On the post-paid side, bill-shock is something that has a psychological effect. Also, the verification of IDs for such a large population is another issue. So a lot of operators have chosen to go heavy on the prepaid,” concludes Rusli.
However, the rapid growth in the number of smartphone users and data subscribers was driving the growth trend.
“The only direction is up. In Indonesia most of the first access to Internet is through mobile phone because PC penetration is relatively low. So if you see the Internet penetration today, the number is actually the same as the smartphone penetration,” says the company CEO, adding that the feature phones are being replaced with smartphones and that number will go up.
However, all the operators have some problems with the availability of the frequency. About 20 percent of the customer base is on smartphones, the rest are on 2G. “In some of these areas, we are the market leaders and we even have problems in moving our 2G customers to become 3G users because of the old handsets in use,” Rusli points out.
The biggest challenge in removing these cell phones is not price anymore but people’s behaviour. There is a psychological tilt towards smartphones and it includes factors such as battery timings. A feature phone’s battery lasts far more than a smartphone’s and that is the biggest incentive for the people in villages, in particular, he reckons.
However, the number of smartphone users is constantly increasing. Telecommunications have brought about a positive change in the lives of the people of Indonesia.
“In Indonesia, it is a matter of day and night. Before the telecommunication era came about, we had a ministry of information. It was abolished. That is because of telecom. People these days get the information at the speed of light so-to-speak,” says Rusli.
“It has also allowed different businesses to flourish that were not there before. It has allowed SMEs to flourish and become bankable. It has changed so many things,” he adds.
Besides catering to the needs of the local population, Indosat also targets tourists visiting Indonesia in large numbers throughout the year. There are special deals and special cards for tourists as roaming is still an expensive option than using local networks.
Indosat makes the visibility of relationship between Qatar and Indonesia, and that of Ooredoo, very high with its presence across all the provinces of the country. The company’s president says he was astounded to see the high growth rate in Qatar which was also a prepaid heavy market.
“We are happy to have them (Ooredoo) as shareholders. I think their hunger for growth is very high and that supports whatever needs to be done on this side,” says Rusli.
He suggests that financial sector is an area where Qatar should look at more in terms of any future investment plans. “The unbanked people here are still huge and if you look at the micro businesses, this is where the most growth opportunities are,” emphasises the Indosat president.
Indonesia as a country, he says, is declared as one of the least performing in terms of Internet access through cell phones in the region. “We are trying to improve on that as much as we can. We are hoping that with the newer technology, the cost of the investments cuts cheaper for us hence allowing better quality,” says Rusli.
At Indosat, they are trying to create a more youthful brand. Praising the spirit of the chairman of Ooredoo group Sheikh Abdullah bin Mohammed bin Saud al-Thani, who is also the chairman of Indosat, Rusli admires his push for a bigger market share and better quality.
“If it was not for him, I would not have taken the CEO job because I was not on the board before. His goal-oriented approach and determination for Ooredoo is fascinating,” says the Indosat President.
The chairman of Ooredoo is also the chairman of Indosat. The CEO of Ooredoo is also the board member of Indosat. Formally, the board meets four times a year and there are more visits from Doha and other operators between these meetings, informs Rusli.
Within the group, Indonesia is the most competitive and the only country where there are nine operators in terms of competition. The group has existence in other markets that at the most have only three operators, says the Indosat president.
