Cellular phone industry suffers slump

Cellular phone industry suffers slump

JAKARTA (JP): Sales of cellular phones are projected to slump
80 percent this year as consumers slash their spending to cope
with rising inflation.

The general manager of mobile phone company PT Ericsson
Indonesia, Franky Prionggo, said yesterday sales were likely to
fall to between 180,000 units and 200,000 units this year from
about one million units last year.

"The currency upheaval has affected everyone, including mobile
phone suppliers. The market is likely to shrink 80 percent this
year," Franky said in a cellular phone workshop yesterday.

He also said 60 percent to 70 percent of mobile phone
subscribers used their phones less due to rising usage rates.

Some, he added, had even stopped using their phones
altogether.

According to Franky, there are currently 1.2 million cellular
phone users in the country, up slightly from 1.1 million as of
December 1997.

Sales have suffered, he said, mainly because of sharp price
increases of mobile phone units at a time when people's
purchasing power was dwindling.

Prices of cellular phones have more than doubled from their
precrisis levels since the rupiah's sharp depreciation.

Most cellular phones are imported.

The rupiah has depreciated 75 percent against the U.S. dollar
since July last year.

"Although we are still able to slow down the rate of the price
increase, our sales are still decreasing. It's also because of
the public's increasing consciousness over prices," he added.

Franky declined to reveal Ericsson's sales figures, but said
the company had been experiencing a significant drop this year.

He predicted, however, that the mobile phone industry in
Indonesia would improve slightly next year, mainly because of
rapid growth in the use of prepaid subscriber identity module
(SIM) cards.

"The prepaid SIM card has become increasingly more popular
because it allows users to control their bills."

Ericsson, which controls about 40 percent of the country's
cellular phone market, plans to launch several innovative
products next year, including the SH-888 mobile phone which
utilizes GSM and digital cordless system (DCS-1800) technologies.

"Dual-band handsets are workable at different frequencies,
while dual-mode handsets support different telephone standards,"
he said.

"It's the trend. We have to follow the technology and people
will be forced to use the dual-band or dual-mode handsets if they
want to be more accessible within the cellular systems."

Franky said Ericsson had conducted several marketing
strategies to attract new buyers and take more control of the
slowing market.

He said the company had introduced an "X-Change" program in
May which allows customers to trade in their used Ericsson
cellular phones for newer models.

The company also has a drawing for new buyers who could win
various tourist packages.

There are seven cellular phone providers in the country,
operating three systems: the Advanced Mobile Phone System (AMPS),
the Global System for Mobile communications (GSM) and the Nordic
Mobile Telephone (NMT). (gis)