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Indosat targets loyal customers with 4G

XL Axiata Axis capital Group Jakarta PT Telecom news , Telecommunications operator PT Indosat launched on Monday its Long Term Evolution high-speed data service, commonly known as 4G, following in the steps of its competitors PT Telkomsel and PT XL Axiata.

As a starter, Indosat will target its first-tier customers in the country, which has seen rapid growth in Internet users.

Indosat CEO Alexander Rusli said his firm would initially roll out its 4G network on 900 MHz in Jakarta and would seek to expand it to Yogyakarta and Bali at the end of January next year.

“We want to initially focus our 4G on areas that are most ready,” he said after the launch on Monday, adding that the company’s 32,000 base transceiver stations (BTS) were 4G-ready.

Alexander told reporters that his firm would first target around 900,000 post-paid customers to migrate to 4G. Post-paid customers are considered high-value customers as they usually spend more than prepaid customers.

Nitin Mahajan, an expert with Singapore-based strategy consulting firm Roland , said 80 percent of profits for telecommunications operators came from the top 20 percent of customers. “[Operators] have to make sure that those customers are identified and you need to predict their requirements,” he told The Jakarta Post on Monday.

Indosat had 54.2 million subscribers as of September this year and aims to make it 60 million by year-end. Of the total subscribers, around 50 percent are data users regarded as potential 4G customers.

Two other major cellular operators, PT Telekomunikasi Selular (Telkomsel) and PT XL Axiata (XL), previously rolled out their commercialized 4G on the same frequency as Indosat’s.

Telkomsel said that it installed more than 200 BTS to provide 4G network in 200 high-data traffic locations in Jakarta and Bali. XL, meanwhile, has rolled out its 4G network in Bogor, West Java, Medan, North Sumatra, and Yogyakarta.

While Telkomsel expects to have 3 million 4G mobile broadband-service users next year, Indosat’s Alexander said that his firm did not expect much in terms of the number of customers.

“The thing is that the 4G Internet speed on the 900 MHz frequency can be slower than that of 3G due to limited spectrum in the frequency,” he said, adding that the Internet speed in the frequency could hit only 35 Mbps.

Alexander said, however, the launch was important as it would encourage device makers to market their 4G handsets in Indonesia.

There were currently around 2 million 4G ready-handsets of various brands circulating in the country, but only a few of them were in the hands of consumers, he said.

Indosat expected there would be more affordable 4G ready-handsets once the government opened the 1,800 MHz frequency next year. The frequency would provide maximum Internet speed for 4G devices, he said.

Indosat, which recorded a net loss of Rp 1.32 trillion during the first nine months of this year, predicted its revenues would grow by only around 1 percent this year, Alexander said.

The firm had to deal with a number of challenges, such as low revenue from data services and currency depreciation, he said.