Competition to increase market competition in the digital telecommunications industry is strongly supported by rapidly changing technology. Therefore, Telkom and its subsidiaries always support technological developments and respond to market developments by supporting new technologies. In practice, TelkomGroup continues to adapt and create new products, services, standards, and business models created with technological change. Furthermore, Telkom and its subsidiaries make large investments to develop additional products and services, so they can provide different values compared to competitors’ products and services.
Mobile Segment Market Share
Telkom’s subsidiary, Telkomsel, had 171.1 million cellular subscribers in 2019, including 110.3 million mobile broadband customers. The number is increase from 163.0 million cellular subscribers in 2018. Based on the number of subscribers, We estimate Telkomsel’s market share in 2019 for the cellular segment reached a 59.6% increase from 59.1% compared with previous year.
Indosat and XL Axiata are Telkomsel’s main segments in the Mobile segment. In addition to these operators, in 2019 Telkomsel saw an increase in competition in Indonesia from other cellular operators. Some of them are PT Hutchison 3 Indonesia (“Hutchison”) which is part of the Hutchison Asia Telecom Group and is operated under the “3” or “Tri” brand, as well as the Sinar Mas Group business group, namely PT Smartfren Telecom Tbk. (“Smartfren Telecom“).
Diagram of Market Share Telkomsel Cellular Customers and Competitors for 2017-2019
0.0 % 150.0 %
100.0 %
50.0 %
2019 2018
2017
59.6%
40.4%
40.9%
45.5% 54.5% 59.1%
Cellular Customer Market Share (%)
Telkomsel Competitors
Competition in the Mobile segment, in addition to being influenced by technological changes, influenced by business mergers, acquisitions, and consolidation among cellular service providers. Cellular operators have the potential to do so to reduce operating costs and increase broader spectrum allocation. Thus, cellular operators have greater resources and opportunities to increase business excellence. From the Government side, the Ministry of Communication and Information (MoCl) supports the merger, acquisition and consolidation efforts by not issuing new or additional licenses for cellular operators.
In addition to technology, the market share of the Mobile segment is also influenced by various other factors, such as price competition, competition with OTT that provides voice and text services, and the ability to expand networks. In contrast to previous years, the intensity of price competition in 2019 was slightly reduced. However, price pressures may continue in the future along with the increasing competition between cellular operators and OTT supported by the penetration of smartphone usage in Indonesia. In the face of competition in 2019, several competitors are also working to increase service coverage by expanding outside Java.
Of all the challenges that must be faced, the biggest challenge of Telkom and its subsidiaries in the Mobile segment is competition against OTT. Telkomsel is facing a rapid increase in customer acquisition by OTT, which is supported by the rise of new technologies that are more effective and efficient in providing voice and text services. This risks losing market share and can harm Telkomsel’s business, finance and operations.
Consumer Segment Market Share
In the Consumer segment, TelkomGroup has IndiHome’s main products and services that compete with other fixed broadband service providers such as First Media, BizNet Home, MNC Play and MyRepublic. Among competitors, First Media has the largest number of customers. In terms of customer segmentation, MNC Play and MyRepublic become competitors that target middle and upper-class household customers in Greater Jakarta, while BizNet is very competitive in the corporate market, especially in Java and Bali. In addition, XL Axiata and Indosat also started to enter home services by launching product namely XL Home and Indosat GIG.
Throughout 2019, IndiHome’s marketing and sales will continue to focus on potential customers in various segments throughout Indonesia. Despite facing competitive competition, by the end of 2019, TelkomGroup had won an additional 1.9 million new customers, leaving the total number of IndiHome subscribers to be 7.0 million subscribers. With this achievement, the fixed broadband market share is equal to 86.5% based on our internal calculations. This position is more than the previous year with a market share of 84.5%. This success in increasing market share is supported by an increase in the reach of access infrastructure, appropriate marketing strategies and the use of information technology that can improve service quality and customer satisfaction.
Diagram of Telkom Broadband Fixed Market Share and Competitors for 2017-2019
20.0 % 0.0 % 40.0 % 60.0 % 80.0 % 100.0 %
2019 2018
2017
86.5%
13.5%
15.5%
18.9% 81.1% 84.5%
Market Share Fixed Broadband (%)
Telkom Competitors
Unlike the case with fixed broadband, fixed voice products and services experienced negative growth during 2019. The number of subscribers from fixed wireline (POTS) decreased by 15.7% or 1.7 million customers in 2019. In recent years, through IndiHome products, TelkomGroup has sought migration of customers from home legacy products and services to IndiHome which combines fixed voice with fixed broadband, IP-TV and digital in one product and service. However, TelkomGroup still faces great challenges from the massive growth of OTT.
Enterprise Segment Market Share
Market competition in the Enterprise segment includes several types of products and services, including connectivity, satellite, IT services, as well as data centers and clouds. There have been changes in strategy that have included digital services such as the Internet of Things (IoT), cyber security, big data, and digital ads as part of the Enterprise segment.
For the Enterprise segment, TelkomGroup is estimated to have a bandwidth market share of 74% in 2019, an increase from 73% in the previous year. Through a subsidiary of Telkom Sigma, our estimation of market share for system integration achieved reached 41.3% in 2019, a decrease from 55.4% in 2018.
Diagram of Telkom Sigma and Competitors for 2017-2019 Market Share System Integration
25.0 %
0.0 % 50.0 % 75.0 % 100.0 %
2018 2019 2017
41.3%
58.7%
44.6%
41.0% 59.0% 55.4%
Market Share System Integration (%)
Telkom Sigma Competitors
Then from our internal calculation, the Business Process Outsourcing (BPO) market share acquired by Telkom’s subsidiary, Infomedia, increase from 41% in the 2018 reporting period to 43% in 2019. In terms of satellite products and services, as of December 31 2019, TelkomGroup recorded 44% of the satellite business market share, increasing from 37% in 2018.
As of December 31, 2019, TelkomGroup provided a total bandwidth of 1,571 Gbps to broadband customers and 1,425 Gbps for data communication service customers. The total amount increased by 3.3% compared to the previous year.
Wholesale & International Business Segment Market Share
The market share in the Wholesale & International Business segment generally includes the carrier traffic, carrier network, tower, and managed infrastructure services markets.
Carrier Traffic - Based on data and internal calculations, Telkom is still the leader in the voice interconnection market by controlling a 74% market share, although in terms of production Telkom has decreased by 16.3%. Likewise with the voice termination / origination market, Telkom has a 71% market share with a production decrease of 27.5%.
Carrier Network - Telkom is still the leader of the wholesale network market with a market share of 60% (for products such as Metro E, Leased lines etc. and also includes the Telkomsel market). The wholesale domestic market share for IP Transit products is currently at 10.6% (an increase from 2018 which was 9.3% according to internal data).
Tower - Mitratel as a subsidiary of Telkom competes with various companies in providing tower products and services.
Some competitor companies include PT Tower Bersama Infrastructure Tbk., PT Telekomunikasi Indonesia Professional, PT Solusi Tunas Pratama Tbk., PT. Inti Bangun Sejahtera Tbk., PT Centratama Telekomunikasi Indonesia Tbk., PT Gihon Telekomunikasi Indonesia Tbk. and PT. Bali Towerindo Sentra Tbk. Mitratel’s market share in 2019 increased 4.1%, from 19.8% in 2018 to 23.9% in 2019 based on internal calculations. The increased market share was triggered by the purchase of 1,017 Persada Sokka Tama towers in March 2019 and 2,100 Indosat towers by Mitratel in October 2019.
Diagram of Mitratel Tower Share Market and Competitors for 2017-2019
40.0 % 20.0 % 60.0 % 80.0 % 100.0 % 120.0 %
2019 2018
2017
23.9%
76.1%
80.2%
80.5% 19.5% 19.8%
Market Share Tower (%)
Mitratel Competitors
Furthermore, TelkomGroup will face major challenges related to regulatory arrangements that require telecommunications companies to share infrastructure and network capacity. At present, TelkomGroup has the largest network infrastructure capacity in Indonesia. The existence of these regulations will reduce the competitiveness of TelkomGroup because competitors can use the infrastructure network of Telkom and its subsidiaries with more affordable capital and expenses.
Digital and Other Segments Market Share
Competition in the digital segment is very broad and can cover various business sectors, such as transportation, retail, and finance. TelkomGroup has an e-commerce platform BLANJA.com which makes it easy for Indonesians to buy products online, including from sellers around the world through eBay. Our estimate is in 2019, BLANJA.com recorded a market share of 1.2% of the total value of e-commerce transactions in Indonesia. With around 62.9 thousand monthly active users, the number of BLANJA.com transactions reached Rp188.3 billion in 2019.
In 2018, TelkomGroup acquired 51% of PT Swadharma Sarana Informatika (SSI) which has 20 years of experience managing ATM management services for major banks in Indonesia. As of December 31, 2019, SSI was recorded managing no less than 23,000 ATMs throughout Indonesia. With this significant amount, Telkom and its subsidiaries can utilize the business portfolio strategically.