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, mobile valued added services and telecom infrastructure services. As of 2011, Indonesia was the world’s fifth largest telecommunication market in terms of mobile cellular subscribers after China, India, USA and Russia. It is also one of the fastest growing markets in the world.

The industry continued on its growth trend in FY12, riding on the wave of increasing data traffic and growing internet penetration. The country’s young population is driving the multimedia, broadband and internet services of the network operators. The immense popularity of social networks is evident by the fact that Indonesia was the fourth largest market for Facebook as of March 2013. Meanwhile, data traffic reported by major service providers has increased exponentially in the last four years. Data, internet and broadband services accounted for a substantial portion of operators’ revenue in the year. This has helped the operators in offsetting the decline being experienced in voice revenues.

Indonesia’s young population and rising per capita income, coupled with the improvement in telecommunication infrastructure and coverage bodes well for the sector.

Key Points:

• In FY12, mobile cellular subscriber base in Indonesia grew by 11% year on year. The big three mobile service players, namely Telkomsel, Indosat and Axiata, accounted for 83% of total cellular subscribers. Telkomsel led with 45% share. Telkomsel’s subscriber base recorded a year on year growth of 17% while Indosat recorded a year on year growth of 13.2%. XL Axiata, meanwhile, lost 1.3% of its cellular subscriber base.

• In FY12, fixed wireline subscriber grew by 3% year on year while fixed wireless subscriber base shrank by 2% year on year.

• The number of mobile broadband subscriptions touched 24million at the end of FY12.

• The mobile cellular penetration rate in Indonesia grew at a CAGR of around 30% during 2006-2011. It touched 117% at the end of FY12.