M

obile operators will focus on expanding broadband this year following shrinking revenue from voice and text data services, according to an industry group.

Sarwoto Atmosutarno, chairman of the Indonesia Cellular Phone Provider Association (ATSI), said that the number of SIM cards in circulation topped 250 million in 2011, showing mobile penetration in Indonesia was at 110 percent, the largest in Southeast Asia, after Malaysia with 133 percent.

SIM cards, 95 percent of which used pre-paid plans, generated 180 billion minutes of voice traffic and 260 billion text messages (SMS) last year.

“Although we are an emerging market, data transactions were at an average of 27,000 terabytes, a remarkable increase of almost 55 percent,” Sarwoto said, attributing the rise to photos sent by cellular phone and to instant messenger service use.

However, he added, Indonesia’s average monthly revenue per user was one of the lowest in the world at Rp 20,000 (US$2.18).

The figure was low, as the local market, 65 percent of which comprises consumers in their productive ages, has decreased their voice and SMS use in favor of data services, Sarwoto said.

PT XL Axiata reported that voice-driven revenues decreased eight percent to Rp 5.8 trillion by the third quarter of 2011, while SMS revenues were up 18 percent following promotion campaigns and data and value-added service (VAS) revenue was up 50 percent due increases in user numbers and service.

The company attributed the popularity of networking applications such as Facebook, Twitter and instant messaging to growth in data users and usage.

As of the same quarter, PT Telekomunikasi Indonesia reported a 3.4 percent increase in operating revenue to Rp 1.7 billion, with a 19.1 percent rise in broadband revenue, which includes data, Internet and IT services.

Meanwhile, the company said voice revenue from cellular phones dropped Rp 741 billion or 3.4 percent, in line with industry trends.

Thus, Sarwoto said, the future for operators was in broadband, given the low level of market penetration. Only 70 million, 28 percent, of all SIM card users subscribed to broadband services.

“This gives us a brand new penetration to run with, beyond [regular] SIM card users, and that is mobile data users.”

However, operators would have to provide additional services, such as mobile content, mobile television and mobile payments, to capture the largely untapped broadband data market, he said.

To facilitate the move to broadband, operators reportedly plan to build 15,000 base transceiver stations (BTS) in 2011, including towers to connect devices to networks.

In 2011 alone, 97,000 BTS were in operation, including 22,000 stations designated for 3G, or mobile broadband, communication. Efforts to improve networks cost around Rp 30 trillion in 2011, he added.

“This is quite high and in 2012, operators will continue allocate 50 to 60 percent of their investments into broadband.”

Sarwoto added that market conditions, such as the relatively expensive price of 3G smartphones, were impeding the broadband push, given that most potential customers were in lower market segments.

“This is why we encourage handset manufacturers to provide affordable handsets priced around US$60 in Indonesia,” he said.

“This is highly important because significant investments in providing broadband will be futile unless society is ready.”

Broadband required content, including mobile payment systems, music and video, Sarwoto added.

Operators currently face a shortage in content, he said, after the Indonesian Telecommunications Regulatory Body (BRTI) prohibited operators from sending broadcast messages, including SMS, pop-ups and voice messages, on behalf of content providers.

The stop was ordered in October after consumers protested that they had their phone credits debited without their consent after receiving unsolicited messages.

The prohibition, he said, further reduced revenues as content providers comprised seven percent, or at Rp 5 trillion, of total revenue.

“Operators will only grow by one percent if they depend on voice and SMS data. Operators can grow between five and 10 percent, even beyond, if boosted by growth in the mobile data and content business,” he said.