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Indonesia's Telkomsel - Grabbing Market Share
Over the last two quarters, Indosat and Excelcomindo, Telkomsel's two largest competitors, have both reported lower customer numbers, with the first losing 3.24m in Q1 and a further 4.4m in Q2 and the second, a rather more modest 1.12m and 220k. We would attribute Indosat's hawkish approach to a change of management control (the company is now a subsidiary of Qtel) while XL's numbers reflect a move to reporting on an active basis. So far, Telkomsel has, not experienced the same loss of connections and has, in fact, enjoyed another strong quarter, with 3.88m net adds. This takes it past the 75m mark (by 1.014m) and makes it the seventh largest single country operator in the world.
Telkomsel has managed to achieve this without any real diminution in the quality of its base. First half network minutes rose by 112% to 68bn compared to H1 08, with Q2 bettering Q1 by 6%. Although the price per minute has dropped by nearly 60%, following the "price war" of 2008, ARPU has only dropped by 25% year on year, from IDR63 to IDR47, thanks in part to the combination of higher SMS traffic (+43% H1 09 on H1 08) and higher SMS prices (+16% to IDR 95).
However, these achievements were not enough to produce higher profits. First half revenues rose by 4% to IDR 19.4bn, while higher operating expenses cut this back to a 3% gain at the EBITDA level. The 25% hike in depreciation killed off any chance of an increase at the operating profit level however . down 5% at IDR 8,781m . while the pre-tax figures were 6% lower at IDR 8,602m. The minimal interest charge these last two numbers imply indicates the strength of the company's balance sheet.
Telkomsel's management is confident, despite the circumstances. It suggests that "revenue for 2009 is expected to grow at mid single digit" which we take to mean 4-6%, in line with H1, while as far as customer growth is concerned the company states unambiguously that "we expect to grab 50% of the Big 3 total net add". In other words, as many as Indosat and XL put together. With 10.7m of the first half's 1.8m net adds already under its belt, this isn't hugely ambitious.
Posted to the site on 27th August 2009
This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World.
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