Market Trends of Indonesia B2B Telecom Industry
Connected Devices to Drive the Market
- Indonesia remains an Asian power in the oil and gas industry, with 606 kb/d in 2023, and the government is planning to offer up to 10 blocks in 2024, including gas blocks in the northern Sumatra region, to further increase production. IoT device applications in asset management, energy management, operation and production, and supply chain optimization while maintaining environment and worker safety are a few applications of IoT in the oil and gas industry. Wi-Fi networks are the most common method for IoT connection. With the upcoming oil projects and exploration, IoT application is expected to be driven in the oil and gas industry, ultimately fueling the B2B telecom market.
- Indonesia, a dominant force in Southeast Asia, showcases a burgeoning manufacturing sector. However, to stay globally competitive, it must pivot toward Industry 4.0 – the digital evolution of manufacturing. IoT sensors, with their ability to predict equipment failures, thereby averting costly downtimes and enabling real-time production monitoring for defect detection, are spearheading IoT's integration into manufacturing. Recognizing these benefits, the government has rolled out initiatives like 'Making Indonesia 4.0' to bolster industrial IoT adoption, propelling the demand in the IoT and B2B telecom markets.
- The Indonesian smart cities market is experiencing robust growth, propelled by a blend of technological advancements, urbanization, and government initiatives focused on elevating citizens' quality of life. Highlighting this, Indonesia's National Long-Term Development Plan (RPJPN) for 2025-2045 underscores the pivotal role of bolstering the economy and enhancing life quality through digital infrastructure and innovative public services. Currently, Indonesia boasts 25 developed smart cities, with a target to expand this to 100, all underpinned by green technology and sustainable infrastructure. These Smart Cities harness cutting-edge technologies like IoT, AI, and data analytics to streamline urban services, enhance infrastructure, and promote sustainable growth. Therefore, the growth in the application of IoT will result in increased demand for connectivity solutions, driving the demand in the market studied in the region.
- For instance, in December 2023, Thales, a leading European defense technology firm, saw promising prospects in Indonesia's ambitious smart city initiative for its new capital, Borneo. Indonesia's strategic move involves shifting pivotal governmental functions from Jakarta to the emerging hub, Nusantara, starting August 2024. The capital's development is in full swing, with an estimated construction outlay of IDR 466 trillion (equivalent to USD 30 billion).
- The COVID-19 pandemic underscored Indonesia's reliance on imported medical devices, with global competition intensifying for essentials like ventilators and oxygen generators. Protecting its 275 million citizens from infectious diseases, especially with 90% of medical devices and pharmaceuticals still imported, has become a pressing concern. In response, post-pandemic, Indonesia's government swiftly enacted the Health Act, Law No. 17/2023, initiating reforms set to reshape the nation's medical device landscape. As health services gain prominence and citizens prioritize well-being, Indonesia is witnessing a surge in imports and a notable uptick in digital medical innovations. From patient monitoring systems to connected inhalers, these advancements are not only meeting local needs but also positioning the Indonesian medical IoT market for substantial growth, ultimately benefiting the market studied due to the increasing demand for connectivity and internet-enabled communication solutions.
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Mobile Connectivity to Drive the Market
- Indonesia boasts one of the world's largest telecommunications markets, presenting ample room for growth. Guided by the Indonesian government’s Digital Roadmap for 2021-2024, the nation is pushing its digital agenda, with telecom companies focusing on transitioning subscribers to advanced 4G and 5G networks. However, the scarcity of available 5G spectrum has led to a cautious and gradual rollout of 5G networks, creating a significant opening for Indonesia's B2B telecom operators.
- There is a growing demand for high-speed internet access, and the growing digitalization, mobile users, and social media are the major reasons for this growth. OpenSignal, an independent analytics company, reported in October 2023 that Indonesia's 5G network boasted an average download speed of 58.3 Mbps and an upload speed of 23.2 Mbps. Notably, Indonesia lagged behind its Southeast Asian neighbors—Singapore, Malaysia, the Philippines, and Thailand—in 5G download speeds, holding the region's lowest average. The growing demand for high-speed connectivity is expected to boost the market studied in the region.
- The country is rapidly developing 5G technology. In May 2024, Ericsson launched its Ericsson Imagine Live 2024 roadshow in Indonesia, highlighting the company's cutting-edge technology solutions and 5G applications tailored for Indonesia's digital transformation. The GSMA projects that between 2024 and 2030, 5G is set to inject over USD 41 billion into Indonesia's GDP.
- By the close of the 2023 fiscal year, PT Telkom Indonesia Group boasted a total of 654 5G base transceiver stations (BTS). As Indonesia's premier telecommunications and network provider, Telkom Indonesia's services span fixed-line connections, cellular services, network and interconnection services, and internet and data communication.
- In December 2023: PT Telkom Indonesia (Persero) Tbk partnered with Huawei Indonesia, aiming to bolster its IT services. This strategic move underscores Telkom's commitment to staying at the forefront of the industry. Telkom and Huawei will delve into innovative digital services, cloud computing, and data centers, with a primary focus on enhancing their capabilities and driving revenue growth. The collaboration is poised to open up fresh revenue channels, with a particular eye on segments like UMKM, government entities, and conglomerates within Telkom's portfolio.
