Latest Development: Indosat Ooredoo Hutchison (IOH) has signed a deal with Nokia to expand its 4G and 5G networks, marking its latest effort to accelerate the adoption of emerging technologies. For Nokia, this represents another step in their strategy to focus on emerging economies, which are experiencing relatively higher uptake rates compared to developed counterparts.
Market Implications: This development has caused a moderately upwards revision to our 4G and 5G forecasts, where much of the momentum is due to reside within the short term (2025-2027). We now forecast that 4G and 5G subscriptions will reach 167.6mn and 218.6mn, respectively, by the end of our forecast period in 2033. Consequently, there will be a corresponding decline in lower-speed technologies (2G and 3G), with 2G expected to be phased out by the end of 2028 and 3G by the end of 2029. With this revision, our outlook remains steadily positive; however, we maintain the view that the rate of growth will be somewhat modest, reflecting the saturated mobile market in Indonesia.
The main challenge to 5G uptake remains the elusive consumer interest in the technology, which consequently dampens operators’ and tower companies’ motivation to upgrade their sites. Organic growth within the market would be difficult, particularly against the largest mobile player, Telkomsel. Despite this, Indosat is focusing on expanding connectivity into rural areas, in an effort to reduce the digital divide between urban and rural regions. This is within their scope due to their strong position among the youth with their youth-focused prepaid plans, which offer data at low prices.
The evolving telecommunications landscape in Indonesia is poised for a significant change with the new partnership between Indosat and Nokia. This collaboration is set to bolster network infrastructure, offering improved connectivity and fostering greater access to high-speed internet services across the nation. As one of Indonesia’s leading telecom operators, Indosat’s strategic alliance with Nokia is anticipated to accelerate the deployment of advanced network solutions. Such advancements are critical in supporting the country’s burgeoning digital economy and increasing mobile penetration rates.
The profound impact of this partnership could spark a revision of Indonesia’s mobile market forecasts, suggesting potential upside movements. Improved infrastructure and deployment of 5G technology are key components in enhancing service quality and user experience. This could lead to increased subscriber growth and higher data consumption, thereby driving revenue growth for both Indosat and other mobile operators. This partnership is a testament to the potential growth in Indonesia’s telecom sector, aligned with global technological standards.
As Indonesia continues to navigate the evolving digital landscape, infrastructural improvements become crucial. The Indosat-Nokia partnership exemplifies a forward-looking strategy, setting a precedent for similar collaborative ventures in the region. With a strong focus on sustainable and scalable solutions, this partnership could act as a catalyst for market growth and innovation. The positive ripple effect on the broader economy could help position Indonesia as a digital hub in Southeast Asia, driving socio-economic advancement through enhanced connectivity and digital inclusion.
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