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Study: 5G can bring $1.8B in revenue for Indonesian telecoms

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Fifth-generation (5G) wireless technology can boost Indonesian telecommunications operators’ revenues by 2025, with major contributions from enterprises, a recent study conducted by computer networking company Cisco and management consulting company AT Kearney suggests. MEDIATEK INC

Study: 5G can bring $1.8B in revenue for Indonesian telecoms

Although Indonesia’s adoption of fifth-generation (5G) wireless technology is to likely lag behind regional peers, it can boost telecommunications operators’ revenues by $1.3 billion to $1.83 billion in 2025, with major contributions from enterprises, a recent study suggests.

Enterprises can contribute 18 to 22 per cent to incremental revenue growth while individual consumers can contribute six to nine per cent, according to the study conducted by computer networking company Cisco and management consulting company AT Kearney.

“I believe Indonesia can reach this number because it has mature telecommunications companies and growing industries,” said Cisco Asean managing director of service providers Dharmesh Malhotra on Monday.

He added that to capture the possible market, the country would need to invest about $4 billion to $6 billion annually from next year to 2025, which is the highest amount among Asean countries as Thailand and Malaysia only need to invest about $2 billion and $1 billion.

The study also found that 5G market penetration can reach 25 to 40 per cent in some countries in the region, with a total of more than 200,000 subscribers. Indonesia is said to have the highest number, with more than 100,000 subscribers.

He said Indonesia would likely adopt the 5G technology starting in 2022 and would experience a subscription surge in 2023 onwards. While 5G in other countries such as Singapore and Vietnam would likely take off next year and in 2021.

With latency as low as one millisecond and speed up to 20 gigabytes per second, the 5G technology can be used for enhancing high-definition video streaming, adding more augmented reality and virtual reality (AR/VR) contents and providing a faster gaming experience.

“For enterprises, 5G technology can help with increasing precision in manufacturing and remote logistics monitoring,” Dharmesh said, adding that in the medical field, remote diagnosis and surgery would be available once it is fully established.

AT Kearney partner Hari Venkataramani said Indonesia still faces challenges in implementing the technology, such as the slow availability of spectrum and a possible price war between operators.

He said that Indonesia needs to address frequency availability as the 3.4 to 3.6 gigahertz range was being used by satellite providers. Meanwhile, according to the Communications and Information Ministry, the 2.6 GHz frequency was being used by a satellite television provider, Indovision, until 2028. So it left Indonesia with frequencies higher than 10 GHz.

Even though no official decision has been made yet, the government is preparing some policies regarding 5G. Indonesia is also expected to participate in the World Radiocommunication Conference in Egypt next month, after which it should be able to determine the possible spectrum for 5G in line with the international consensus at the conference.

In terms of pricing, Hari said that Indonesian consumers seem excited and willing to pay for 5G services. He predicted that as much as 15 per cent of consumers can be the target for premium pricing.

“So there will be no need for a price war among operators. Instead, they need to work together such as through tower sharing,” he said, adding that operators should offer bundling packages to attract more consumers.

Several telecommunications providers in Indonesia were also eager to test for 5G development.

PT Telkom, through its subsidiary state-owned Telkomsel, was the first telecommunications operator to test the technology during the Asian Games in September last year. Indosat Ooredoo then followed in November by demonstrating the ability of 5G to support 3D augmented reality.

Other providers, such as XL Axiata, have recently tested 5G in the use of the networks for online gaming and hologram displays. Meanwhile, Smartfren has also run a 5G test for logistics and manufacturing purposes.

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