Indonesia's new telco launches with big coverage goals

Indosat Ooredoo Hutchison has started life as a merged entity in Indonesia and from the outset is tasked with some fairly weighty mobile coverage obligations.

CK Hutchison and Ooredoo announced the completion of their Indonesian merger on Tuesday, having received the required shareholder and regulatory approvals. While the telcos themselves talked up their increased scale and ambitions to become the provider of choice in the country, the regulator’s comments on the merger made it clear that they have had to agree to a fair amount of network development work in order to gain the green light.

The telcos have two main commitments to adhere to, according to a statement from Indonesia’s Minister of Communication and Information Johnny G Plate.

The first is to grow the number of new mobile sites in the country by at least 11,400 by 2025, putting their total number of sites at 55,885 or more. Given that we’re already at the beginning of 2022, that’s a fair undertaking.

Secondly, Indosat Ooredoo Hutchison is obliged to expand its coverage area to at least 7,660 new villages and sub-districts over the same time frame, the minister said, increasing coverage to the best part of 60,000 villages and districts. The telco must also improve service quality, boosting download throughput by 12.5% or more and upload by 8%, also by 2025, he added.

“Mergers and acquisitions in the context of consolidating the Indonesian telecommunications industry are increasingly supported, so that we can obtain a more productive and more efficient telecommunications industry climate in Indonesia, providing support for the national digital transformation,” he said, in a local language statement.

This is presumably information the telcos were well aware of, but nonetheless, it’s a reminder that there is plenty of work to be done.

Naturally though, their public communication is all about the opportunities for the newly-merged business and its customers.

“Today marks the start of an exciting new chapter for Indosat Ooredoo Hutchison. I am honored to lead a united, larger, and more competitive company backed by world-class experience and proven local expertise as we seek to connect and empower every Indonesian,” said Vikram Sinha, the new chief executive of Indosat Ooredoo Hutchison, who formerly served as COO of Indosat Ooredoo.

“Indosat Ooredoo Hutchison is well-positioned to become the most preferred digital telco of Indonesia and a critical contributor to the nation’s 5G ecosystem and digital transformation,” Sinha said.

While the canned statements from the new operator are exactly as hype-filled as one might expect, let’s not overlook the fact that there is a big opportunity here for the new telco. With close to 100 million customers – Sinha told an investor call when the companies announced the deal in September – Indosat Ooredoo Hutchison is a strong second-placed operator in Indonesia behind incumbent Telkomsel, whose customer base is closer to the 170 million mark. Its new scale will give it a leg up and should boost competition and quality in the market.