Indonesian telecom minister slams operator inefficiency

Operators in Indonesia have been warned by the country’s telecoms minister that their licences could be revoked unless they consolidate or improve their build-out efforts.

Minister Rudiantara – who follows the Indonesian tradition of using a single name – has set out the consolidation goal of no more than four operators by the end of his term in 2019. To achieve this, he has advised smaller operators to either merge with rivals or leave the market.

Rudiantara worked at two of the largest operators in Indonesia prior to his appointment to the government. “My background is in the private sector, so I’m pragmatic. I will suggest they consolidate to have the capability to invest and retain their permits”, he said. “Each permit has requirements for the operator to invest and to build, so if they don’t build anything, I can revoke their permit.”

There are currently seven players in the Indonesian market; at the end of Q4 15 Telkomsel took the lead with around 153.3 million connections. It is tailed by Indosat with 69 million, 3 Hutchison with 51.2 million, and XL Axiata with 40.8 million. At the lower end of the scale are Smartfren with 12.5 million connections, Bolt with 2.4 million, and Ceria with 68,688.

Rudiantara’s frustration with the inefficient coverage in Indonesia is widespread throughout the upper echelons of government. Without identifying specific companies, the minster has hit out at operators for not delivering on promises to develop and build out infrastructure, adding that the government had already fined some firms for this transgression.

“So far we’ve handed them fines and penalties, but my job isn’t to accumulate funds for the government,” he said. “I only need to enforce the permits and I’m prepared to do that, but I’d rather take a friendly approach and suggest they merge to keep operating.”

Indonesia has over 300 million mobile connections. The country’s five largest operators have stated that they will begin offering 4G services over 1.8GHz spectrum following investment in the technology.