Mobile phone market drops by 40%
By I. Christianto
JAKARTA (JP): The previously brisk sales of mobile cellular phones has slumped as buyers have slashed their spending to cope with the falling rupiah.
General manager of PT Ericsson Indonesia, Franky Prionggo, said here yesterday that the mobile phone market had fallen by up to 40 percent in the last three months.
"The currency upheaval has affected everyone including mobile phone suppliers. The market has dropped by between 30 percent and 40 percent," he told The Jakarta Post during the Asia-Pacific Telecom 1997 forum which ended yesterday.
The monetary turmoil which has shaken several Asian countries since the last four months has caused a significant drop in the value of the region's currencies against the U.S. dollar. The rupiah, for example, has lost nearly 40 percent of its value against the greenback since early July. This makes imported products such as mobile phones much more expensive.
There are currently some 1.1 million cellular phone users in Indonesia. The figure is over 125 percent higher than the approximately 465,000 cellular subscribers booked in same period last year.
There are seven cellular 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).
PT Dian Graha Elektrika's deputy general manager Indrajanto Lohanata, who is the agent of German telecommunications company Siemens, told the Post that his company would see fewer sales this year.
"We are targeting to sell 100,000 units in the 1997/1998 period, but the figure will likely reach only 30,000," he said.
He said that in the current economic condition, the public's purchasing power was weakening, while the price of mobile phones was increasing.
"Although we are still able to lessen the increasing price rate, our sales are decreasing," he said.
Siemens is one of the top mobile phone brands in Indonesia in addition to Nokia and Ericsson.
The general manager of Nokia's Indonesian office, Alexander Lambeek, said yesterday that the currency turmoil had also affected his company.
"The growth in the number of new cellular users has been slowing. The impact has created a 30 percent drop in mobile phone sales," he said.
It was also because of the public's increasing consciousness over prices, he added.
The three cellular phone executives agreed that the cellular phone market in 1998 would still greatly depend on currency conditions.
"The drop will probably be bigger next year if a steep decline in the local currency continues," Prionggo said.
"The drop is temporary, depending on the rupiah's stability," Lambeek said.
Lohanata said, "the condition of the cellular industry will become better. But it depends on the country's whole economy."
The rupiah, nonetheless, dropped yesterday to 3,920 from 3,800 against the dollar Tuesday.
Lambeek predicted that there would likely be a slower growth rate in the number of cellular users in Indonesia next year.
"The worst scenario would have a range of between 600,000 and 700,000 new users, while the best scenario would be one million," he said.
Total cellular users in Indonesia in 1998 would be between 1.75 million and 2.1 million, he added.
Multi systems
Despite the ongoing unpredictable currency turmoil, cellular terminal makers will launch new innovative products in the country next year.
Siemens announced in Singapore Tuesday that it aimed to capture 20 percent of the GSM handset market in Asia in the next few years. The firm holds 17 percent of the market in Indonesia.
According to Lambeek, Nokia is one of the top three mobile phone companies in Indonesia.
Prionggo said that Ericsson, which currently controlled some 60 percent of the Indonesian mobile phone market, planned to introduce in the first quarter in 1998 the SH-888 handsets which would be able to work with the GSM and the Digital Cordless System (DCS-1800) technologies.
"In addition to being smaller in size, future handsets must offer a dual band," he said.
Future mobile phones would also be dual mode, Lambeek told the Post.
"Dual-band handsets are workable at different frequencies, while dual-mode handsets would support different telephone standards," he said.
Nokia plans to launch the Nokia 2180 by the second quarter in 1998, 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 with the cellular systems," said Lohanata.
He said that Siemens would launch a number of new products offering dual standards including E-10, E-11 and S-11 by the middle of next year.
Indonesia has approved the Code Division Multiple Access (CDMA), the DCS-1800 (also known as GSM 1900) and the Personal Handy-phone System (PHS) technologies as the additional cellular systems scheduled to enter the market next year.