Moody's Sees Lower Revenue Growth for Indonesian Mobile Sector

Indonesia Finance

Tuesday, 27 September 2011 20:19

Written by Patrick Chang

Theindonesiatoday.com - Moody's Investors Service expects the Indonesian mobile sector to experience lower revenue growth in 2011-12 and be in line with the country's GDP growth rate.

"As market penetration rises, the era of easy top-line growth from adding subscribers is coming to an end, and subscribers will have to focus on mobile data services to offset slowing subscriber growth," says Nidhi Dhruv, a Moody's Associate Analyst.

Dhruv was speaking on the release of a special comment on the Indonesian mobile sector, which she authored. The report highlights that data services will lead the next phase of growth and that improved technology will raise efficiency. "Lower growth prospects coupled with a renewed regulatory push to share infrastructure should result in better controlled capex, and channel fresh investments into growth areas like 3G," Dhruv adds.

"Hence, leading operators are moving away from price competition to a "value of service" proposition, in order to better manage margins and avoid a repeat of earlier price wars that raised subscriber numbers without commensurate gains in earnings," says Laura Acres, a Moody's Vice President -- Senior Credit Officer, and co-author of the report.

"Operators are looking to improve operational efficiencies and offer differentiated customer service through investments in the latest generation of billing and service-management infrastructure," adds Acres.

Moreover, consolidation in the industry has yet to gain momentum. According to the report, while early signs of consolidation have appeared, larger carriers have shield away from acquiring smaller players because of overlapping coverage and subscriber bases. The report also states that increased regulatory activity will bring in operating efficiencies.

Indonesia's regulator, Badan Regulasi Telekomunikasi Indonesia, has become more active in the past couple of years. For example, it has introduced guidelines to effectively make the sharing of tower infrastructure mandatory.

Moody's rates four telecommunications companies in Indonesia: Telkom (Baa1/stable), Telkomsel (Baa1/stable, Indosat (Ba1/stable), and XL (Ba1/stable).

Telkom ended higher by 0.69% Tuesday, while XL Axiata surged 7%. Bakrie Telecom closed flat, while Indosat dropped 2.73%. (Theindonesiatoday.com)

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