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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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