XL Axiata president director, Dian Siswarini, anticipated “softer” business growth in the second quarter, affected by the government’s decision to require operators to block unregistered SIM cards by May 1.

“The impact of prepaid SIM card registration [to our business] will only be short term, as customers’ behavior will return to normal later,” Dian said on the sidelines of a breaking-of-the-fast event in Jakarta.

The government decided to block unregistered SIM cards gradually to prevent misuse or fraud. Cards not registered by April 30 were blocked on May 1, with users of unregistered cards unable to use all services, including sending, receiving call and text messages, as well as using internet data.

However, the government gave some room. After May 1, card users could still register their cards as long as their SIM card validity had not expired.

Amid tight market competition, most service providers have previously offered promotional prices for data packages for first time users. As a result, many Indonesians, especially those using dual SIM card phones, have bought a new SIM card to take advantage of the promo prices with the intention of later ditching it and buying a new one.

But with the requirement to register each SIM card, such behavior is predicted to decrease, as users find registering the cards an extra hassle. XL Axiata has prepared for a decrease in the company’s number of subscribers, but Dian remains confident that customer demand for telecommunications services, especially for data, will not reduce.

XL Axiata’s confidence is built on the fact that of its 54.5 million subscribers, more than 90 percent have registered their cards, which it claimed was ahead of other competitors.

“We have educated our customers for a long time, meaning that we have told them to register their cards early,” she explained.

“We also spent a lot for perks. So, we gave customers a lot of ‘sweeteners’ if they were willing to register their cards,” she added.

Furthermore, the company also used data analytics to observe high value subscribers and reach out to them to ensure they registered their cards.

The prepaid SIM card registration policy, however, was not the reason for the company’s disappointing bottom line in the first three months of this year, despite a slight increase in revenue.

XL Axiata booked Rp 5.5 trillion in revenue in the first quarter of 2018, up 4.5 percent from the same period last year. However, its net profit decreased by 66.8 percent from January to March of 2018 to Rp 15.4 billion, year-on-year (yoy).

“The decline in the first quarter was more because of seasonal factors, not because of the prepaid SIM card registration,” she said.

Observing these results, XL Axiata said that it would adjust its product prices and offer incentives for retailers, in order to support business growth.

In addition, the company will continue to focus on its current strategy of providing better services for customers by continuing to add base transceiver stations (BTS) to improve the quality of its 4G and 4.5G
networks.

Approaching the Idul Fitri holiday, the company has prepared its networks to ensure the majority of routes for homebound travelers throughout Java are covered with 4G services.

“Prior to Idul Fitri, we have prepared 8,500 new BTS to ensure wider coverage for 4G services along the routes,” Yessy Yosetya, XL Axiata technology director, said.

Previously, the Communications and Information Ministry restricted the ownership of cell phone numbers to three per person.

Cell phone shop owners protested the regulation, which they said had killed off their livelihood. Previously, the Indonesia Cellular Trade Association (KNCI) said the regulation had decreased their income to 80 percent.

The ministry has since lifted the cap from three per person to unlimited following protests from shop owners.

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