Since 2002, the country’s telecommunications sector has been undergoing major regulatory restructuring to liberalize the telecommunications sector. The monopoly of major operators in Indonesia – PT Telkom, PT Indosat, and PT Satelindo was terminated. PT Telkom’s exclusive right in operating domestic and long-distance fixed lines was terminated. PT Indosat and PT Satelindo lost their exclusive rights to operate international services. At present Indonesia has around nine million fixed-lines telephones, representing a teledensity of around four lines per 100 people. To stimulate the development of country’s teledensity rate, PT Telkom, PT Indosat, PT Bakrie, and PT Smart Telecom deployed CDMA fixed-wireless service.

The Indonesian cellular market is heating up and potentially lucrative as demand for mobile phones continues to increase. With around 160 million postpaid and prepaid subscribers (cellular and fixed-wireless) by December 2010, there is a penetration rate of 66 percent. In reality, the penetration rate is only around 50-55 percent as many subscribers have two or more cellular numbers from different operators. Subscribers seek lowest rates for “on-net” calls and/or free internet access bundled with the subscriptions.

The new services offered by operators are using inexpensive handsets capable of browsing the internet, chatting, and accessing social networks websites such as Facebook and Twitter. These services will generate more ARPU (Average Revenue Per User) for the operators, much more than the voice calls. The operators are also upgrading their networks and base stations to be able to sell more bandwidth to users using 3G and CDMA technologies. The local content or multimedia services is still lacking, and only a limited e-transaction system like m-banking is available.

CAPEX for nine operators (GSM and CDMA) is expected to reach $7 billion in 20110. The shape of the market is expected to undergo change as a number of new operators, with foreign partners, like Singapore Telecommunications Limited (Singtel), SingaporeTechnologies Telemedia (STT), Telecom Malaysia, Maxis, and Hutchinson, Qatar telecom enter the market. New players such as AMDOCS, Telecom Italia, France Telecom, Deutsche Telekom, Sofrecom and DeTeCon are also coming into the market, bringing new technology and business tools to upgrade the networks and systems, e.g. billing system, value added services, and technology deployment management.

The trend to go “full IP” which will enable seamless implementation to 3G and new applications based on the internet, has opened new opportunities, like new BTS, handsets, backhauls, service platforms, and even new billing software.

Base transceiver stations, switching, ancillary and transmission equipment, and cellular handsets, content providers, broadband wireless access, 3G/UMTS base stations, Wimax Base Stations, and Wimax CPE.

Indonesia’s telecommunication infrastructure market has good potential for wireless equipment, services and content provider companies. The rapid expansion of the country’s cellular and fixed-wireless networks has driven increased spending for telecom infrastructure. The entry of international firms as investors poses opportunities for American firms to parlay their relations with international firms into business to improve the equipment and infrastructure in Indonesia. New services, functionality (applications), and enhancement of older technology, on top of existing infrastructure, are attractive to both operators and subscribers.

Indonesian State Ministry of Communication and Information:

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