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Executive column: Ericsson considers Indonesia key market in region
Börje Ekholm (Courtesy of Ericsson)Amid the quest to have the highest 5G coverage in the world, Swedish multinational networking and telecommunication company Ericsson has caught up with the race between Chinese counterpart Huawei and Finnish equivalent Nokia, including in Southeast Asia
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Börje Ekholm (Courtesy of Ericsson)
Amid the quest to have the highest 5G coverage in the world, Swedish multinational networking and telecommunication company Ericsson has caught up with the race between Chinese counterpart Huawei and Finnish equivalent Nokia, including in Southeast Asia.
Operating in more than 180 countries and owning 49,000 patents, Ericsson is one of the world’s frontrunners in the telecommunication industry. As such, Ericsson is determined not to get left behind.
According to the company’s latest report, 5G is projected to reach 40 percent of the global population by 2025, with at least 1.5 billion subscriptions to its mobile broadband, pushing Ericsson to exploit opportunities in the new technology.
Ericsson CEO Börje Ekholm recently spoke to The Jakarta Post’s Made Anthony Iswara in Jakarta about how the company is preparing for expansion in Southeast Asia, including in Indonesia, and the deployment of 5G.
Question: Please give us a picture of Ericsson’s latest development. What are Ericsson’s latest strategic moves in its expansion in Southeast Asia?
Answer: Maybe we can take a step back and look globally first. Two years ago, we set out on a plan to focus the company on operators that provide mobile networks and address some of their key challenges. This includes on how to be more cost-efficient, ways to be a more digital enterprise and the identification of new sources of revenue. We also need to increase our footprint and market share. And we need to address our cost structure to be more cost efficient.
Basically, it’s the same priorities here in Southeast Asia. In the last two years, the company’s strategy has been to meet the needs of Southeast Asia because it is somewhat leading together with some other countries in the world when it comes to 4G.
In Indonesia, you can see that for yourself. The leading countries in Southeast Asia are among the top 20 when it comes to mobile broadband usage, which means that never has it been like today in Indonesia and Southeast Asia, where we need to talk more about the latest technology. That’s a big change because in the past, Southeast Asia was more of a follower but now it is leading because the consumers are leading in the adoption of 4G.
What is Ericsson’s current position in Indonesia?
If you look globally, we actually have regained market share. Data is not really available to exactly know about it, but we globally regained more than 1 percentage point last year and we continue to invest and regain a footprint in our customers. Likewise, we are working with major customers in Indonesia. In the last 18 to 24 months, we have increased our market share in Indonesia and obviously we want to continue to work hard to develop the market and to increase our market share.
What are the business targets in Indonesia?
We don’t break down targets by country, but rather when we look globally, Indonesia is a very interesting market for us — it’s clearly a large market with some very specific [traits]. The geographic dispersion is also big, meaning that it will benefit from mobile coverage and network. And we see that same thing that is happening here that is also happening in other markets where data consumption is growing.
So when you combine these aspects, it becomes a very interesting market for us to be a part of. You almost could say: Why shouldn’t you invest in Indonesia? So with the ambitions that we have globally, we need the interactions from Indonesia going forward.
Major companies are investing in 5G deployment. What makes Ericsson different?
What we are trying to do is to lead in 5G. Our hardware shipped since 2015 is actually software-upgraded into 5G. That gives our customers enormous advantage as they want to get into 5G because it’s a really new software upgrade. It’s a cost-efficient way to migrate into 5G, which is our determinant lead. We are investing in that as we want to make sure that the customers are ready when it is commercially right for that.
For Indonesia, we believe that by 2026, there will be an opportunity for the operators to increase their additional revenue by 30 percent, equivalent to US$6 billion.
What agreements have you made so far?
We are engaged in early discussions right now. One of the challenges with Indonesia is the spectrum that is required, for Indonesia still has to free it up. This is the discussion at the moment. We are working with early engagements with all major customers and operators here with 5G works. But of course, the government and regulators need to free up the spectrum so that we can really commence. It’s an issue in Southeast Asia and some parts of Europe. One example is Swisscom in Europe that has a 5G network built over several months, but they could only work with the spectrum as of two weeks ago, which allowed them to immediately convert to 5G.
However, we can’t disclose [the partnerships in Indonesia] at the moment. Normally when we officially have a contract, we will publish a press release and by then, we will inform the media. Globally, we have 18 5G commercial contracts with named customers, but we have numerous other agreements that we don’t control the disclosure of. Among the named ones, we have Optus and Telstra in Australia as well as KT and SK Telecom in Korea.
How much is Ericsson investing in 5G deployment in Indonesia?
We can’t disclose that, but it is a global product. So it’s very hard to say what is going into a specific market. But Indonesia is a key market. We have been here since 1907, and I think we were the first to introduce 2G, 3G and 4G. And we want to be the first to introduce 5G.
On a global scale, we currently have 25,000 in research and development, with 25 percent of our sales going to that sector. So for us, we invest very much in technology, which is within the range of billions of euro in global investment.
How can you ensure the Indonesian public that the advanced technology will not threaten their personal data and privacy?
The reality is that we provide the equipment for the network, and security is an important aspect of it. Not only does 5G connect smartphones, but also everything, so security will be more important than ever. However, when we provide equipment, we don’t really have access to the private data in the network, so it would be [the responsibility of] the operators to create the integrity of their own infrastructure. But we still invest quite a lot in that security because we recognize that the network has to be 100 percent secure.
In a global view, what is the direction of Ericsson going forward?
For us, it’s to continue to be a technology leader and that it is the only way for us to bring value to the customer. So if we can help the customer’s needs with leveraging technology, then we have a natural place in the ecosystem. That’s what we want to do.
