Indonesia’s telecom sector is experiencing growth that is by any measure exceptional. The market dynamics create for a highly competitive industry in which the consumers are reaping the benefits. Whereas penetration rates indicate mobile phone penetration is close to 50% of the population (115 million subscribers), realistic penetration factoring in the number of mobile phone users with multiple handsets would adjust down that number closer to 30% (70 millions subscriber). Solidiance highlights some best practices local operators need to look at to survive in one of the most competitive and price sensitive market.

1. Indonesia:
mobile
telecom
industry
Solidiance examines a telecom template for
something déjà vu
July 2009

2. Indonesia : Mobile Telecom Industry
Solidiance examines a telecom template for Indonesia’s mobile telecom market
“
Whereas there are no clean cut comparisons to
the rapid democratisation of the mobile phone as
we are seeing in Indonesia, the latent demand in
rural markets is something that telecom providers in Refine your process, strive for
other parts of the world have capitalised on in the
dominance, and build a brand.
”
recent past (and present). In India, for example,
the market is highly competitive with nearly the
same number of providers as in Indonesia. ARPU is
similarly falling, and providers are scrambling to
Sunil Bharti Mittal – Chairman, Bharti
keep churn low, and profitability stable. An
example for Indonesian providers to look at is Bharti Airtel
Airtel, which has been able to carve out the
largest segment of India’s mobile telecom market.
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3. Indonesia : Mobile Telecom Industry
Solidiance examines a telecom template for Indonesia’s mobile telecom market
Indonesia’s mobile telecom industry
Dramatic Growth
Indonesia’s telecom sector is experiencing growth
that is by any measure exceptional. The market
dynamics create for a highly competitive industry
in which the consumers are reaping the benefits.
Whereas penetration rates indicate mobile phone
penetration is close to 50% of the population,
realistic penetration factoring in the number of
mobile phone users with multiple handsets would
adjust down that number closer to 30%. The
democratisation that is occurring in the market has
set up the Indonesian market to see dramatic rises
in mobile phone usage over the next three to five
years. The competitive landscape coupled with
the ever increasing capabilities of mobile phones is
priming Indonesia for a major societal change as
more Indonesians are becoming mobile phone
users.
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4. Indonesia : Mobile Telecom Industry
Solidiance examines a telecom template for Indonesia’s mobile telecom market
Indonesian market not unprecedented
Success in a similar market It had soon become associated with desirable
Bharti Airtel is the preeminent service provider in attributes such as ‘cool’ and ‘creative’ that also
India’s highly competitive mobile telecom market. translated into increased market share.
It is able to retain a large market share and reap
profits by implementing a comprehensive strategy This strategy by Bharti Airtel in an Indian market
aimed at gaining new customers while retaining that closely parallels the current Indonesian mobile
existing customers. The strategy hinges on offering telecom market has lessons for operators that
industry leading customer service, tailored plans for hope to duplicate its success. In addition to
customers, aggressive rollouts of new technology, branding, Bharti Airtel has other ‘best practices’
and an extensive branding campaign. that will be covered in subsequent article
commentaries over the course of the next two
Extensive Branding: The ‘Express Yourself’ months.
campaign by Bharti has been a major effort to
add an emotional component to its brand. Mobile
phone communications are, by their nature, often
“
tools for consumers to ‘express themselves’ to
others. The ad campaigns have had strong Differentiating merely on network,
emotional components to them, and touch on coverage and SMS is just not enough. You
themes such as national pride. By creating an
need to go behind all the rational
association between past successes of Indians and
Bharti Airtel’s services, customers no longer view indentifies – which are prerequisites in any
Bharti’s service offerings as undifferentiated. case- and connect at a deeper level. We
Additionally, the brand campaign was meant to needed a strong differentiator in an
tie together all of Bharti Airtel’s offerings under one increasingly commoditised and crowed
unified ‘face’ to consumers. This consistency and
market...We believe ‘Express Yourself’
brand positioning have been keys to Bharti’s
success in the Indian mobile telecom market. The allows us to connect at a deeper level
and create a long term platform for the
”
purpose of the extensive branding campaign by
Bharti was to create brand relevance in a market brand.
that was predominantly defined by price. It aimed
to lessen the influence of price on consumer’s
Atul Binda – Chief Marketing Officer, Bharti
decision making process, and raise the influence
of the brand itself. Catchy campaigns, and Televentures
affiliations with the likes of A R Rahman, who was
signed to create a unique Airtel ring tone, served
to position Bharti Airtel as the most favourably
placed brand in the industry. 4

5. Indonesia : Mobile Telecom Industry
Solidiance examines a telecom template for Indonesia’s mobile telecom market
A model for success
Establishing brand relevance
Bharti Airtel’s branding strategy entailed extensive use of all advertising channels. With a major slant towards
television commercials, Bharti took an aggressive approach similar to alcohol producers in the United States. Rather
than focus on promoting individual products and services, Bharti focused on selling the Airtel brand. Many television
advertisements include India’s largest Bollywood stars, and aim to be memorable rather than sell anything.
GSM Subscribers (Millions) 2007-2008
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6. Indonesia : Mobile Telecom Industry
Solidiance examines a telecom template for Indonesia’s mobile telecom market
Lessons can be learned
Creating a brand Lessons for Indonesian providers
Bharti Airtel did not differentiate themselves from Bharti Airtel did not enter the market as a premium
other providers in India simply through offering service provider, and did not have any clear
superior quality, but through making a concerted competitive advantages over its competitors.
effort at positioning themselves favourably in the What it realized is that competing on price in a
mind of consumers. This concerted effort entailed highly competitive and saturated market would
putting forth a large amount of resources to make not be an effective long term strategy. Rather that
a real change in how Bharti Airtel was viewed worry about being undercut by low cost providers,
compared to alternative mobile telecom service Bharti Airtel focused on creating brand relevance,
providers. In 2007-08, Bharti Airtel increased its and selling its brand to consumers rather than the
advertising expenditure by 40.7% and saw a Airtel commoditised services. This has proven to be an
Revenues and Profits corresponding 44.4% rise in effective strategy, and has helped Airtel retain
sales. In 2008, Airtel had the second highest and grow its customer base. Additionally, through
advertising spend out of any INR (Millions) its extensive brand campaign, it has been able to
company in India (based on television and print change the market dynamics by making pricing a
advertisements). It spent nearly $48m in 2008, component of customer decision making rather
second only to Hindustan Unilever. It Solidiance than the singular decision making factor.
Library 2009 understood the societal dynamics,
namely India’s love of its Bollywood actors, and
created ad campaigns featuring several ‘A list’
stars.
Airtel Revenues and Profits
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7. Indonesia : Mobile Telecom Industry
Solidiance examines a telecom template for Indonesia’s mobile telecom market
Solidiance is a marketing and innovation strategy consulting firm with focus on growth in Asia Pacific. We are devoted to working side-by-side with our
clients to outpace the competition, close gaps in growth and deliver breakthroughs in performance and profitability. Our Asia focus provides our
clients with a better understanding of intrinsic regional issues.
To subscribe to further white papers and to learn more about Solidiance please visit: www.solidiance.com
Mark Lee - Principal Osman Syed – Consultant
Mark is a Principal based in the Singapore office with
more than eight years of consulting experience. Mark
has a strong focus on quantitative based projects. Osman is a Consultant based in the Singapore office.
Previous roles include being regional manager for He is focussing on emerging technology, telecom and
Synovate Business Consulting in Singapore, handling media industries tracking developments and
projects for MNCs across Asia, focused predominantly benchmarking metrics. He is currently focusing on the
on the market and competitive strategy side. Mark telecom industry, across South East Asian markets. With
managed most survey-based projects for MNCs where a passion for combining numerical and qualitative
he advised international companies on market entry, analytics, Osman is interested in advanced market
customer segmentation prioritization and growth segmentation and size forecasting models to help
strategies. Having worked for five years in the M&A clients identify and prioritize market opportunities and to
team of a Korean Conglomerate in Spain, Mark also has develop growth strategies.
vast experience with mergers and acquisitions in Osman graduated in 2008 from the Ross School of
Europe, Asia and Africa. Mark is fluent in Korean, English Business with a Bachelor in Business Administration.
and Spanish. He holds a BS in mechanical engineering,
from the Worcester Polytechnic Institute (United States)
and a MBA from the University of Rochester.
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