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Bangkok Post
Bangkok Post
Business

SE Asia telecom mergers revolutionise industry: Indosat’s success story

Mr Soper, left, and Mr Sinha celebrate the partnership in Indonesia.

The telecom industry in Southeast Asia is experiencing a dynamic transformation following the merger of the region’s leading telecom operators. This consolidation is designed to improve the competitiveness and capabilities of the telecom operators by leveraging their resources to gain efficiency while building customer value.

The 2022 merger of Indosat Ooredoo and Hutchison 3 Indonesia created Indosat Ooredoo Hutchison (Indosat), the country’s second-largest mobile network operator, with more than 100 million customers and revenues equivalent to more than US$3 billion.

Thailand witnessed the recent merger of Total Access Communication and True Corporation, aiming to become a telecom-tech firm, keeping the name True Corporation while totalling a combined enterprise value of $20 billion. The transaction is the largest telecom merger in Southeast Asia by combined enterprise value, and financial analysts predict the consolidation will boost the health of the telecom sector, ushering in a new era of innovation and progress.

During the recent “Digital Transformation World Asia” event in Bangkok, president, director and chief executive officer of Indosat Vikram Sinha, together with head of Ericsson Indonesia Jerry Soper, spoke to the Bangkok Post about the keys to success for the Indosat merger, the digital transformation that will accelerate Indonesia’s digital economy, and the lessons for Thailand’s telecom sector.

MERGER BENEFITS

Mr Sinha started out by discussing key benefits of industry mergers.

“The most important aspect of the merger is not its success, but the purpose. We wanted to ensure we did something that was good for our customers, the industry, and most importantly the country,” he said.

“The whole digital economy depends upon how the telecom sector is doing. The Indosat merger is very good for Indonesia and even the Southeast Asia region. Our experiences and lessons learned can also be applied in Thailand.

“In the telecom sector, scale matters. Our merger gave us scale as we now have more than 100 million customers and can achieve the maximum benefit from the spectrum. The merger allows more effective utilisation of resources for the larger good, particularly regarding spectrum. I’m happy to relate that we have enabled a better experience for our customers. But we’ve got a lot more work to do.”

Mr Sinha also discussed the financial benefits, which contribute to Indonesia’s digital economy.

“By transforming to a digital telco, we aim to record double-digit growth in revenue, while adjacent revenue is projected to increase from 4% of total revenue to 20-25% in five years,” he said.

As of year-end 2022, Indosat’s total revenue increased 48.9% year-on-year to $2.97 billion, net profit rose 76.2% to $92.7 million and normalised earnings before interest, taxes, depreciation and amortisation surged 42.3% to $1.26 billion.

Mr Sinha said Thailand can expect to achieve similar benefits from its recent industry merger by focusing on the merger’s main purpose, customer experience through use of leading technology and network performance, strong partnerships, and having a clear roadmap for the future.

CUSTOMER EXPERIENCE

He said integrating two telecom networks was complex, with Indosat’s key goal to ensure its customers did not face any disruptions.

“For that reason, we wanted to work with a strategic, like-minded partner such as Ericsson, where our objectives and criteria are aligned,” said Mr Sinha.

Ericsson supported the integration of Indosat’s network in the densely populated Jabotabek region in Indonesia. The integration was completed in January 2023.

In the Jabotabek region, Indosat improved its indoor coverage by 20%, data speed by 27% and increased data traffic by 21%, compared with before the integration.

Mr Soper said Ericsson enabled Indosat to achieve its goal of delivering the best experience by deploying radio solutions that efficiently utilise Indosat’s spectrum, whilst boosting capacity.

“One of the most important considerations was to ensure the service was seamless and that customers couldn’t feel the impact of the work,” he said. “In addition to deploying our leading solutions, we also brought our global network integration experience to Indonesia, which saw us complete the integration project ahead of time.

“Our advanced radio solutions, our deployment experience and our lessons learned in Indonesia can be applied to benefit Thailand as well.

“What was planned to take 24 months was finished in 12 months. Based on the successful completion of the network integration, both our consumer brands IM3 and Tri will see full utilisation of spectrum and lower cost per gigabyte,” stated Mr Sinha.

EFFICIENCY GAINS

The most valuable and expensive asset for any operator around the globe is spectrum, said Mr Sinha.

“Spectrum is a national asset and through the merger we ensured it’s put to the best use,” he said.

Indosat’s combined spectrum following the merger offers greater capability and better coverage for faster download speeds.

Mr Soper said a key benefit of the Thai telecom merger is combining spectrum bands together to complement one another, which ultimately helps customers.

“As a result, customers can have a much more immersive or richer experience from the network,” he said.

Mr Soper said in Thailand the allocation of the 3.5-gigahertz band for 5G radio is important to prepare for growing demand in the future.

STRONG PARTNERSHIPS KEY

Mr Sinha said a partner-first approach provides customers with the best experience.

Indosat and Ericsson have a long-standing technology and services partnership in Indonesia covering 2G, 3G, 4G and more recently, live 5G trials. In 2021, Indosat launched its 5G commercial network in Jakarta powered by Ericsson.

In terms of their collaboration, Mr Soper said: “Both Indosat and Ericsson believe in a very open and collaborative style of working, where both sides discuss and agree on a clear plan, looking at the assets available on ground, and then execute.”

This method of collaboration recently led Indosat to name Ericsson as its “Network Partner of the Year (RAN)”.

TRANSFORMATION FOR THE FUTURE

Mr Sinha said Indonesia and Indosat are only at the beginning of their 5G journey, with the company preparing for the future.

“We are working with partners like Ericsson, other industry players and the regulator to accelerate 5G implementation in Indonesia,” he said.

Leveraging Ericsson’s “Digital Monetization Platform”, Indosat wants to simplify business processes and enhance the customer experience with personalised products and flexible integration of partner services.

Further collaboration will empower Indosat to monetise assets, meet customer demands, outpace competition, and reduce costs through streamlined operations, said Mr Sinha.

“With Ericsson, we want to maximise the full potential of our 4G and 5G network, partner with the ecosystem, and develop new business models and multi-channel engagements to deliver a marvellous experience to our customers, both consumers and enterprises. We believe digital transformation will contribute more to Indonesia’s economic growth in the future,” he said.

ENABLING A DIGITAL THAILAND

Mr Soper said 5G is a platform for limitless innovation and the benefits of digitalisation for emerging economies in Southeast Asia are compelling.

“Thailand’s 5G rollout, coupled with the development of the 5G ecosystem and the market consolidation taking place in the country, will enable Thailand to accelerate its journey towards becoming a digital economy,” he said.

“Ericsson’s experience with Indosat obviously places it in a strong position to support other telecom operators in the region, including Thailand, as they go through with mergers to improve competitiveness and enhance their customer value.”

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