One Year Later, Post A Successful Merger Indosat Poised to Power Indonesia’s Digital Future

Kevin Casey

March 17, 2023

4 Min Read
One Year Later, Post A Successful Merger Indosat Poised to Power Indonesia’s Digital Future
Software development. System engineer. Programming. Digital transformation.

Vikram Sinha, President Director and CEO of Indosat Ooredoo Hutchison, is a big believer in the importance of being in the right place at the right time. And he thinks his firm, Indosat, is absolutely in the right place – Indonesia – at the right time, the early but accelerating stages of the country’s transformation into a prosperous and fast-growing digital economy.

Vikram Sinha, President Director & CEO of Indosat Ooredoo Hutchison

That was the opening theme of his recent media roundtable at Mobile World Congress 2023 in Barcelona, where Sinha shared Indosat’s recent successes and forward momentum, but also a vision for the company’s role in a much larger project: digitizing and modernizing Indonesia’s fast-growing population and economy.

Sinha joked that he sometimes has to correct people that Indonesia is more than just Bali, the nation’s world-famous vacation destination. The archipelago nation of 275 million people – which makes Indonesia the fourth-largest country in the world by population – actually encompasses more than 17,500 islands.

That kind of context is important to begin to understand the vast potential Sinha and many others see in Indonesia, which remains a fertile terrain for digitization and connectivity.

It’s also important to understand Indosat’s own recent history and growth: The firm recently marked the one-year anniversary of the massive $6 billion merger of Indosat Ooredoo with Hutchison 3 Indonesia. Sinha, who became President Director and CEO of the combined company, says the new Indosat emerged with the vision and purpose of connecting the people of Indonesia and catalyzing the company’s nascent digital transformation.

“This is good for the sector and also good for Indonesia,” Sinha said at Indonesia.

Indosat is now the second-largest mobile operator in Indonesia, with a growing customer base of more than 173 million subscribers. It added 3.6 mobile subscribers alone in Q4 of 2022, bringing its mobile customer base past the 100 million mark (to 102.2 million subs.)

The post-merger business results are similarly strong: Indosat reported IDR 46.7 billion (~US$ 3.05 billion) of total revenues in the fourth quarter of 2022. The company’s net profits increased by 76% to IDR 1.5 billion in the last year, and its data traffic nearly doubled in the same timeframe.

The results speak to Indosat’s significant role in Indonesia’s overall growth and transformation, which will rely heavily on connecting millions more of the country’s people and businesses to mobile, internet, and other technologies. The potential is vast, Sinha says.

Indosat recently released a report, “Empowering Indonesia 2023,” coinciding with the one-year anniversary of its merger, that offers a detailed analysis of that potential – it projects that the digital economy will account for 14% of total GDP by 2027 (up from 8% in 2022) and that Indonesia will become the world’s fourth-largest economy by 2050.

Operators like Indosat will play a vital role in making that a reality. The company plans to connect 21 million rural residents to internet and mobile services by 2027, for example. The potential is indeed vast: roughly 60 million rural Indonesians do not yet have access to banking or other financial services, for example – increased connectivity could help open up that and other markets.

Indosat and other mobile and technology firms will also be critical partners for connecting the country’s growing number of micro and small businesses, which Indosat expects to top 70 million in total by 2027. Just 30% of those businesses were digital in 2022, a rate that will more than double to 64% by 2027.

Large and medium enterprises are going through their own digital transformations – some 70% of them have yet to go digital, which is expected to change considerably over the next several years. That’s fueling lofty predictions about enterprise IT spending in the nation, such as a projected 27% CAGR increase in public spending between 2022 and 2027, when the market will hit IDR 36 trillion.

5G will be an important prong in the company’s strategy: Indosat will bid on C-band spectrum when regulators bring it to auction, and the operator has already launched 600 5G cell sites in six cities. Sinha also sees 5G mobile services as a viable alternative to fiber for home internet connectivity. That said, the company’s 5G strategy won’t come at the expense of its 4G services. Sinha noted that approximately three-quarters of Indosat’s subscribers are on its LTE network and that the company will continue to deliver new services there, even as more customers presumably migrate to 5G over time as connectivity and availability increase.

In the meantime, the post-merger Indosat appears to be very much in the right place at the right time. Sinha notes that the company benefits from its already strong brand in Indonesia. “People need a good experience, not a cheap product,” he said at MWC.

That gives it a visible advantage in terms of being a sought-after choice among consumers and businesses alike, especially amidst such massive projected socioeconomic growth.

“We’ve come a long way,” Sinha said.

The best appears yet to come.

To learn more about Indosat Ooredoo Hutchison, please click here.

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