Here's a statistic that might surprise anyone who has spent more than five minutes in Jakarta's malls: Only a quarter of Indonesia's 220 million people have a cellular phone or access to a cell phone service.
In other words, there's some serious potential out there. The country is likely to remain a lucrative market for any cell phone industry player for some time to come.
One relatively new player is Mobile-8 Telecom. Established in 2002, it rolled out its first service in 2003 and is now the fourth largest CDMA-based cellular operator in Indonesia. Its main brand, "Fren", has been promoted recently through a massive TV ad campaign.
Mobile-8 is a subsidiary of the Bimantara group and last November held an initial public offering, opening up 19 percent of its ownership and raising Rp 877 billion (US$96 million) in capital.
Last week The Jakarta Post spoke with Mobile-8's new chief operation officer, Chee Pok Jin, about the company's post-IPO plans and its take on Indonesia's mobile market.
Mr. PJ, as he's familiarly known, was formerly chef marketing officer at DiGi Telecommunications, Malaysia's third largest cellular operator.
Mobile-8 has held a successful IPO and you've been appointed the new chief operation officer. The company must have big plans for this year.
The IPO was indeed very successfully conducted, it was more than seven-times oversubscribed with 70 percent foreign subscribers, and the stock price has so far been trending quite well, having increased over 40 percent since the listing.
It gives us the opportunity to really be on track with our plans to roll-out nationally. About 57 percent of the raised funds from the IPO will be used for expansion, the remaining for working capital.
Our aim is to roll-out in key cities in Indonesia. We are going to Medan and several cities in Sumatra, Makassar in Sulawesi, Kalimantan, and also in Bali as well. And of course, we will also strengthen our coverage and capacity in Java, as this is currently our main business, all of our present subscribers are from Java.
So this will facilitate the strong growth that we have seen in the last six months or so.
What do think is Indonesia's market potential for cellular services? If we look at other countries -- Hong kong, Singapore, Malaysia, Thailand -- they already have market penetration of up to 70 to 80 percent of actual line owners, while Indonesia's is about 23 to 25 percent.
Looking at this, there are a lot of opportunities, we still look at the Indonesian market as being full of potential. More and more Indonesians will be using mobile phones as the prices of the devices come down and the services more compelling. All this will encourage a very big pick-up for the market in the next three years.
Our latest expansion plan is only the first phase, we expect to achieve 70 percent population coverage by 2007 from the cities I've mentioned. So there will still be phase two in 2008 and 2009 as well. We want to be equal in coverage and capacity with other operators, and as we expand to the new areas, we of course expect to get new customers as well.
Mobile-8's customers were 800,000 by the end of 2005, 1.8 million by the end of 2006, with post-paid service subscribers probably 2 percent of that. By 2007, we are targeting about 4 million customers, with 3 or 4 percent being post-paid.
We realize we have strong, established, world-class incumbent operator competitors, and we really cannot be like them, we cannot outspend them. So we have to be different and smart about this, in terms of using our resources and financial capabilities.
How do you plan to do this, given the limited resources you've just mentioned? We will continue to be very aggressive with our offerings. Our campaign for the "Fren" brand has been very successful, people already know about it from our TV ad campaigns even when it is not available yet in the region.
We also have to be very smart in our marketing, in the way we segment the market. The way we design our tariffs and promotions and manage our distribution channels. We need good consumer studies to gain maximum subscribers at minimum investment.
Another thing, realizing we are relatively newcomers, this actually gives us the opportunity to set new standards. The most important thing is consumers feel we are offering them new experiences like never before, in the way they subscribe, send text messages, use voice mail and buy a ring tone.
We have to make customers say: "Yes, it's different, and so good and so easy. I feel smart using the services, so I'll recommend them to my friends."
This is something we as an organization will focus on, to ensure we have this excellence and effectiveness in operation, from our sales, marketing, technical and customer service.
Speaking about the market again, Indonesia is still mostly GSM-dominated, while Mobile-8 is using the CDMA technology. Why? I think in larger countries, like India, both networks can coexist to give decent coverage of the country, and I think the Indonesian will be enough of a market as well for both. But again it will be the consumer's choices, what services fit their lifestyle and mobility needs.
We will try our best to offer compelling services which will make a difference in the way they work and carry out their lives.
The strength of the CDMA network is that we can offer very good experience in mobile data solutions, so we can target the higher-usage group of such solutions. And they will likely be younger people -- on the move, a lot of mobility, students will be among them, as well as those with very active lifestyles. Maybe not actually young, but also young at heart.
In fact if we look back to May 2006, Mobile-8 was actually the first to launch 3G-type services through the CDMA EVDO overlay technology. The technology gives the 3G experience, it's faster than the previous CDMA 2000-1x, it's faster then the GSM technology.
And how well have different operators been cooperating on this interconnection? I think the regulators are doing a very good job, and while we operators compete with each other, we also work closely with each other in to ensure interconnection issues.
There's a lot contact and dialogues among us and with the regulator. The Communication and Information Ministry holds regular meetings where all the operators can talk about areas to cooperate in. Telecommunications is after all a very important infrastructure for the country, so everyone is paying attention so there are no issues in interconnection.
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