More rational competition with higher ARPU
Consolidation among telco players leads to more rational competition among survivors, with ARPU tends to increase. Telkomsel has raised its data package recently and we expect the pther players to follow. Meanwhile, voice segment will remain as value buffer despite its benign growth. We believe this is a new trend in Telco industry after tariff-battle over the last five years.
Asset light strategy
As telco players have gone through the consolidation process, carriers start to monetize its value by increasing the RPM. We foresee EXCL’s EBITDA margin to improve the most in 2016 after a severe setback post AXIS acquisition and mega tower spin-off. Meanwhile we expect EBITDA margin for TLKM and ISAT would relatively flat in 2016.
4G/LTE coverage and growing BTS
4G/LTE coverage in Indonesia will be deployed at current 2G spectrum of 1,800 MHz band which requires smaller cell sites and more BTS compared to the more superior brand (850 – 900 MHz). It requires more than three-fold number of BTS during the network evolvement from 3G to 4G, we believe the same color will also occur in Indonesia and definitely boost data plan demand both from urban and suburban city.
Lower smartphone price and tech-savvy
We found that most of the smartphone that available in the market are ranging from Rp 1-2 mn, which we deem as a reasonable price range for citizen in urban cities. The numbers have escalated quickly given new comers such as Oppo, Xiaomi and Advan etc. capturing low segment smartphone. Smartphone global average price has dropped by approx. 28% to USD335 from USD443 during 2011-2014. Smartphone avg. price will drop below USD300 next year, in our view.