Mobile phone market drops by 40%

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.