Indonesian cellcos say they expect market shakeout

Nicole McCormick
03 Mar 2010
00:00
News
Daily News

The number of mobile operators in Indonesia is likely to be halved within three years, according to leading operator sources.

“Most of the smaller players are not viable and therefore will need to find solutions with better scale,” Wim Timmermans, CFO of third-ranked cellco XL Axiata (formerly Excelcomindo) told telecomasia.net.

“Indeed within the next three years, this [operators being halved] looks like the most probable scenario.”

Timmermans believes that some of the CDMA players are discussing M&A opportunities with each other.

“Also Hutch without doubt is a seller,” he said. “They have done so in other markets and will do so here.”

Timmermans comments echo Telkomsel’s president director Sarwoto Atmosutarno, who last week said that intense competition could lead to M&A among small players.

“In less than three years from now, there will be only five or six mobile phone providers as compared to 11 providers at present,” he told the Jakarta Post.

Timmermans says mobile tariffs are “more or less stable,” but “competition remains fierce.”

“Operators can still run a decent profitability so things look quite healthy to me for this market,” he said.

For its part, Telkomsel, Indonesia’s biggest operator, plans to spend $1.3 billion rolling out its 3G network to boost revenues.

Sister firm Metra, meanwhile, is entering the e-Health game, signing a deal to acquire a 75% stake in Indonesia’s largest health care administration provider AdMedika for 128.25 billion rupiah ($305.4 million).

Timmermans says he is “not so sure” if new business opportunities lay around the corner for cellcos.

“I guess the main development we are going to see here is a quick growth in data services,” he said.

“This started last year and momentum looks strong.”

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