Telecom mergers in Southeast Asia revolutionise the industry landscape: The Indosat success story
The telecom industry in Southeast Asia is experiencing a dynamic transformation following the merger of the region's leading telecom operators. This consolidation in the telecom sector is designed to improve the competitiveness and capabilities of the telecom operators, by leveraging their resources to gain efficiency while building customer value.
A successful example of consolidation is the 2022 merger of Indosat Ooredoo and Hutchison 3 Indonesia to create Indosat Ooredoo Hutchison (Indosat), now the country's second largest mobile network operator, with over 100 million customers and revenues equivalent to over $3bn.
Thailand also saw the recent successful merger of Total Access Communication and True Corporation to become a new telecom-tech giant, True Corporation, with a combined enterprise value of $20 billion. The transaction is the largest telco merger in Southeast Asia by combined enterprise value, and financial analysts predict that this consolidation will boost the health of the telecom sector and usher 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 Ooredoo Hutchison Vikram Sinha, together with Head of Ericsson Indonesia Jerry Soper, spoke to the Bangkok Post on key success factors of the Indosat merger, the digital transformation that will accelerate Indonesia's digital economy, and the learnings for Thailand’s telecommunications sector
Benefits of the merger
Mr Sinha started out by discussing the key benefits of industry mergers.
“The most important aspect of the merger is not just the success of the merger. For me, the purpose is important. We wanted to make sure that we do something that is good for our customers, good for the industry, but importantly good for the country. 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. And our experiences and learnings can be applied in Thailand.” said Mr Sinha.
“In the telecommunications business scale matters. Our merger has given us scale as we now have over 100 million customers and are able to get the maximum benefit of the spectrum. The merger brings better and more effective utilisation of resources for the larger good, in particular, spectrum. I’m happy to share that we have enabled a better experience for our customers. But we’ve got a lot of more work to do.”
Mr Sinha also shared the financial benefits, which contributes to Indonesia’s digital economy. "By transforming to a digital telco, we're aiming to record double digit growth in revenue, and adjacent revenue from 4% of our total revenue to 20-25% in five years,” said Mr Sinha. By the end of 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 EBITDA surged 42.3% year-on-year to $1.26 billion.
Mr Sinha said Thailand can expect to achieve similar benefits from the recent industry merger, with the key learnings being to focus on the main purpose of the merger, customer experience through leading technology and network performance, strong partnerships and having a clear roadmap for the future.
Ensuring the best customer experieince
Mr Sinha said that integrating two telecommunications networks was complex, and Indosat’s key goal was to ensure that their customers did not face any disruptions.
“For that reason, we wanted to work with a strategic, like-minded partner like Ericsson, where our objectives and criteria are aligned, because this is challenging work,” he stated.
Ericsson supported the integration of the Indosat’s network in the densely populated Jabotabek region in Indonesia and the integration was 100% completed in January 2023. In Jabotabek region, Indosat has 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 their ambition for delivering the best experience by deploying radio solutions which efficiently utilise Indosat’s spectrum, whilst boosting capacity.
"One of the most important things that we had to consider was to make sure that the service was seamless and that the customer couldn’t feel the impact of the work underway," Mr Soper said. “So 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 learnings from Indonesia can be applied to benefit Thailand as well,” Mr Soper said.
"What was planned for in 24 months has been done in 12 months. Based on the successful completion of the network integration, both our consumer brands IM3 and Tri will get full utilisation of spectrum and lower cost per gigabyte,” said Mr Sinha.
Efficiency gains drive better network performance
The most valuable and expensive asset for any operator in the world is spectrum. “Spectrum is a national asset and through the merger we have ensured it’s put to the best use,” Mr Sinha said.
Indosat's combined spectrum post the merger offers a wider capability and better coverage for faster download speeds.
Mr Soper said that this is one of the key benefits for Thailand, where the telecom merger brings spectrum bands together to complement one another for the benefit of customers. “As a result, customers can get a much more immersive or richer experience from the network.” he said.
Mr Soper said in Thailand the allocation of 3.5GHz for 5G radio is important to prepare for the growing demand in the future.
Strong partnerships are key
Mr Sinha stated that a partner-first approach provides their 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.
Speaking on their collaboration, Mr Soper stated that “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 way of working recently led Indosat to naming Ericsson as their ‘Network Partner of the Year (RAN)’.
Transformation for the future
Mr Sinha said that Indonesia and Indosat are just at the beginning of its 5G journey, however, Indosat is preparing for the future.
“We are working with partners like Ericsson, other industry players and the regulator to accelerate the 5G implementation in Indonesia,” Mr Sinha said.
Leveraging Ericsson's "Digital Monetization Platform", Indosat is aiming to simplify business processes and enhance the customer experience with personalized product offerings 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.
“With Ericsson, we want to maximize the full potential of our 4G and 5G network, partner with the ecosystem, develop new business models and multi-channel engagements to deliver a marvellous experience to our customers, both consumers and enterprises. We believe that digital transformation will contribute more to Indonesia’s economic growth in the future,” states Mr Sinha.
Enabling a digital Thailand
Mr Soper said 5G is a platform for limitless innovation and the benefits of digitalization for emerging economies in Southeast Asia are indeed compelling.
“Thailand’s 5G rollout, coupled with the development of the 5G eco system and the market consolidation taking place in the country, will enable Thailand to accelerate its journey towards becoming a digital economy.”
“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 their mergers to improve the competitiveness and enhance their customer value,” Mr Soper added.
Article credit- bangkokpost.com