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BMI View: We maintain our generally positive outlook for the Indonesian telecommunications market in
our latest Q4 2016 report update. Current and ongoing investments will help improve the national
broadband infrastructure. Nevertheless, the geographical barriers to Indonesia's archipelagic nature and
high development costs will pose a downside risk to the government's plan to develop the national fixed
infrastructure. By engaging in 4G network and infrastructure sharing arrangements, Indonesia's mobile
networks operators will benefit from efficiencies that will not only boost LTE rollout speeds, but also help
the operators reduce costs. The proliferation of 4G mobile connections could have a dampening effect on
demand for fixed broadband services. However, we envisage downside risks to 4G service uptake, as the
new minimum local content requirements on LTE-enabled devices could have the effect of increasing
production costs and, consequently, the price of smartphones.
Latest Updates & Industry Developments
? Total subscriptions in the mobile sector grew to 337.5mn at the end of Q1 2016, for a penetration of
130.5%. Amid market saturation, mobile operators will aim to reverse downward trending ARPUs by
migrating subscribers on to post-paid plans and higher-value services.
? We estimate strong growth in the 3G/4G mobile sector as heavy investments by operators continue
to push technological uptake forward.
? Fixed broadband subscribers will grow by 18.3% in 2016 to reach 9.00mn, and this number is
expected to rise to 15.76mn in 2020. However, penetration will still remain low under 6.0% as costs
and topological factors limit expansion speed.