Indonesia's telecom sector is showing signs of saturation, but the market's operators still have room for growth, according to Fitch Ratings.
Spending on 3G and 4G rollouts coupled with declining core voice and SMS revenues could squeeze operators' bottom lines and free cash flow next year, The Jakarta Post reported.
But the ratings agency expects Indonesian operators to report average revenue growth in the mid-single digits due to growing data use as more subscribers purchase low-cost smartphones. IDC projects that Indonesians will have bought 24 million smartphones this year, up 62% from 2013.
The Globe quotes PT Telkom president director Indra Utoyo as predicting that voice services will eventually become free, with operators achieving the bulk of their revenues from data services.
By comparison, Fitch expects operators in Singapore, Thailand and Malaysia to report revenue growth in the low single digits.
For Singapore, revenues are being squeezed by cannibalization of voice and text revenue, while the Thai and Malaysian markets are in the grip of intense competition.
Profit margins are meanwhile expected to decline in Indonesia, the Philippines and Malaysia on the back of competitive pressures.