How is Indonesia preparing for 5G rollout?


In keeping with its position as the largest economy in ASEAN, Indonesia is expected to eventually capture the largest share of rising consumer and enterprise revenues as a result of 5G deployment. A study by global management consulting firm Kearney suggests that the technology could lift consumer revenue across the region by 6-9% before 2025, and enterprise revenue by 18-22%, as operators spend an estimated $10bn on infrastructure investments.

Indonesia is expected to be well placed to drive enterprise value as a result of state-owned Telkom Indonesia’s nationwide footprint and technical capability. The report also estimates that 5G could lift Indonesian telecoms companies’ revenue by between $1.3bn and $1.8bn in the same period. For consumers, 5G means ultra-fast mobile broadband and fixed wireless access, while enterprises can pioneer new business models as a result of low latency and power consumption. For example, Indonesian banks are preparing for 5G network slicing to enable seamless video conferencing and allow the use of facial recognition in know-yourcustomer procedures to facilitate the opening of bank accounts without entering a branch.


However, Indonesia lags regional peers in terms of 5G rollout as a result of regulatory hurdles, the archipelago’s topography, and political divisions between central and provincial governments that have hindered construction of infrastructure needed for the technology. Singapore aims to roll out commercial 5G services in 2020, as does Malaysia, while Vietnam and Cambodia are rapidly building out infrastructure. In Indonesia, 5G is expected to debut by 2022, with demand anticipated to come initially from the corporate sector as general data consumption is not yet at a level to justify high volumes of 5G services. However, competitive pricing and infrastructure improvements are driving a considerable increase in data volumes across the country. In February 2020 the country’s largest private telco, XL Axiata, reported a significant increase in data volumes in Central Java, West Java and Yogyakarta, as a result of demand for video streaming. The company is aggressively deploying upgrades to its fibre network to prepare for the eventual arrival of 5G.

Spectrum Requirements

Indonesia has yet to set a timetable for the auction of 5G spectrum to mobile carriers. It also remains to be seen on which frequency the technology will operate; however, the Ministry of Communication and IT reportedly favours the 3.5-Ghz middle band that is currently reserved for satellites.

The regulator must provide a spectrum of between 80 MHz and 100 MHz continuously for each operator in the main band, and about 1 GHz for each operator in the millimetre wave band. The government is cognisant of the importance of passing the new data-protection law, which is scheduled to be approved in 2020, ahead of the further development of data services.

In November 2019 Johnny Plate, minister of communication and Information Technology, told local media that once spectrum is allocated, the auction will be open to all bidders. “Indonesia’s telcos need time to recoup their 4G investments and will then focus on 5G,” Arwin Rasyid, founder of venture capital firm TEZ Ventura Indonesia, told OBG. Consolidation would help telcos manage the high cost of 5G rollout. Private telco players have been engaged in a battle to shore up their bottom lines after investing heavily in new infrastructure, and this appears to be working, with cost consolidation, asset sales and strong demand for data services improving financial performance.

5G Future

Key factors sure to dictate the speed of Indonesia’s development of 5G include the speed at which telcos can finance new spectrum – although many are prepared, with 5G infrastructure in place – and the pace of demand growth from consumers. This, in light of the success of preliminary 5G trials, signals promising potential for the ICT segment in a country that is known across the region for the strength of its digital economy and homegrown tech start-ups.

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