Indonesia＇s geography has posed a challenge to the mobile industry in the region, as it is the world’s largest archipelagic country where large population spreads over 17,000 islands. Now, however, Indonesia provides a good condition with which a variety of technologies and services are developing. Among others, mobile communications industry is advancing fast. It has a huge potential for further growth backed by economic development and government policies that promote market competition.

Mobile users in Indonesia recorded 68 million at the end of 2006 and will grow to 94.7 million in 2007. The industry will post about 18% of CAGR starting in 2008, and the number of users will increase to 133 million by 2010. In other words, about half of its total population of 250 million will be mobile users, becoming the 3rd largest mobile market in Asia following China and India.

[Figure] Indonesian Mobile User Growth Forecast (2007-2010, in thousands)



Source: ROA Group

Indonesian mobile market is driven by a variety of factors. The service coverage will expand rapidly thanks to aggressive investments in the infrastructure. Some mobile operators have introduced radical tariff plans although it is a growing industry, hinting that more and more middle and low income users will sign up to mobile services. The government continues to promote competition among the players and foreign capital will steadily grow, encouraging market development. In particular, the mobile operators, which have obtained the license to provide nation-wide services, are expected to expand their service coverage rapidly. In the metropolitan areas, PT Telkom and PT Indosat, the comprehensive telecommunications companies, will lead the introduction of bundled services and mobile convergence. In 2008, the mobile operators will utilize aggressive marketing strategies to maintain their position amid increases in bundled products and convergence services.

The CDMA operators, Bakrie Telkom and Mobile-8 in particular, will utilize radical measures to lure new users over the next 2-3 years. They have been appealing to users with attractive tariff plans, and will progressively release low-priced handsets in the market.

This report is to project the size of future mobile market of Indonesia which is posting remarkable development. For carrying out the research, ROA Group conducted time series analysis about the current and future market environment, regulations and policies, technology developments and business strategies of each mobile operator in the Indonesian market.