TRANSFORMING THE COUNTRY THROUGH DIGITALIZATION

   

There are many reasons why Indonesia’s telecommunication industry will be the next lucrative market. Indonesia’s remote areas, including those considered left behind, forefront, and outermost, are still behind in their telecommunication developments. But with the country’s speed in technological adoption and an increasing need for digital connectivity, the telecommunication industry is boosting investment for expansion. This expansion will be driven by cloud use, mobile use, social media, and big data/analytics growth.

Technology use isn’t quite unusual despite its vast network of remote areas and challenging landscape. In 2020, according to Fitch Solutions, 4G and 3G wireless services raked in hundreds of millions of subscribers, estimated at 217.67 million and 99.32 million, respectively. Meanwhile, for 5G, the state-owned telecommunication operator, Telkomsel, was at the forefront, launching its service in May 2021 covering Jakarta, Bogor, Depok, Tangerang, Bekasi (Jabodetabek), Balikpapan, Medan and Surakata. Fitch Solutions estimated 44.8 million 5G subscriptions will be accomplished by 2025.

According to the mobile phone agency App Annie, Indonesia is now in second place with an average of 5.3 hours of smartphone use per day. In other words, Indonesians are spending more time online.

In some ways, the rapid growth in the telecommunication industry in 2020-2021 is a consequence of the pandemic. With students and workers encouraged to stay at home and study or work online, the demand and need for telecommunication increased. For many, if not most of the population, this is a drastic life style shift. Digital connection is now a necessity.

Ever since then, major telecommunication companies have quickly adapted to the changing market and are looking to expand their service and infrastructure, including developing BTS (Base Transceiver Station) or building more 3G and 4G infrastructures.

Adviser to the Minister I for Increasing Investment Competitiveness at the Ministry of Investment/BKPM Heldy Satrya Putera said that in the first semester of 2021, the telecommunication industry came second in the Top 5 investment realization. In the foreign investment category in the same period, the telecommunication industry was valued at USD1.8 billion or 11 percent of the total realization of FDI. Meanwhile, in domestic investment, it was IDR27 trillion or 13 percent of the total realization of DDI.

To accelerate this growth, a trending investment framework is the merger of telecommunication companies. Indosat Ooredoo, one of Indonesia’s biggest phone and data providers with nearly 60 million wireless subscribers, and Tri merged and became Indosat Ooredoo Hutchison (IOH) to strengthen both of their financial capacities. The agreement allows Tri to use Indosat’s tower to attach their BTS, expanding its network. Through this merger, they can also broaden outside Java, bringing digital equity to remote areas.

But telecommunication infrastructure goes beyond towers and BTS. Satellites and ground stations, fibre optic cables, radio links, and data centres are the building blocks for a fast and reliable digital connection. It’s no wonder that there’s a swift effort for building data centres in the country, which is to meet the rising demand for wireless connections.

In fact, in the third quarter of 2021, transportation, storage, and telecommunication hold second place as the biggest contributor for investment realization, which is at IDR26.6 trillion. “Out of the three, telecommunication is the biggest contributor to this sector,” said Minister of Investment/Chairman of BKPM Bahlil Lahadalia.

Offering plenty of attractive areas for investment, the telecommunication industry in Indonesia is set to flourish even more. Even though Indonesia’s vast archipelagic nation can be challenging, with millions of people in need of digital connection, building a network of digital infrastructure should be done now, more than ever.