Southeast Asia’s largest carrier Telkom Indonesia adopts ‘wait and see’ approach to Huawei 5G

A 5G display at the Smart China Expo. Photo: AP. Sketched by the Pan Pacific Agency.

JAKARTA, Sep 26, 2019, Bloomberg. The largest Indonesian phone operator says it will wait to see how the dispute between US officials and Huawei Technologies ends before picking suppliers for 5G wireless equipment. Southeast Asia’s largest market for telecom services is still several years from launching 5G, allowing PT Telekomunikasi Indonesia, commonly known as Telkom Indonesia, time to decide whether to pick Huawei as a supplier, President Director Ririek Adriansyah said, reported the South China Morning Post.

The US, which is locked in a trade war with China, is campaigning against Huawei equipment, saying it poses security risks for countries because the company is too close to China’s government.

“We’re still waiting to see what’s going to happen with Huawei and the US and China and the US,” Adriansyah said. “We use all major vendors in the world, so we can wait and see. We can go in any direction that we believe to be the best option for us.”

The Trump administration has blacklisted China’s largest technology company while accusing it of aiding Beijing in espionage. The US has also curbed sales of technology Huawei has used in some of its phones and telecommunications equipment, creating the risk that customers of the company will not be able to update software in its devices.

Huawei has been one of the Indonesian carrier’s key equipment suppliers.

With smartphone penetration estimated at only 70 per cent and far-flung regions in the vast archipelago still using 2G services, Indonesia will be behind regional markets such as Singapore, Thailand and South Korea in introducing 5G services, Adriansyah said.

Telkomsel, the state company’s mobile unit, had 168 million subscribers at the end of June, with two-thirds of them using smartphones. The digital business accounted for 62 per cent of the unit’s revenue in the first half and was set to grow at a steady pace, Adriansyah said.

The Indonesian carrier may post an increase in net income this year that is “slightly better” than the group’s revenue growth guidance of mid-to-high single digits, said Adriansyah, who took over as the group CEO in July. An end to a bruising price war among operators has allowed the company to selectively increase prices, he said.

Intensifying competition for mobile services last year saw operators from PT XL Axiata, PT Indosat and PT Smartfren Telecom posting losses. But the tide has turned with the operators now maintaining stable subscriber bases, Adriansyah said.

The market may become healthier if the government succeeds in nudging operators to consolidate, Adriansyah said.

“The sooner the consolidation happens the better for everyone,” Adriansyah said. “The market will be getting healthier and there would be no price war.”

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