As Indonesia shapes up to be the next digital powerhouse in Asia, Indosat Ooredoo Hutchison (IOH) aims to be a key collaborator to drive that ambition as the operator transforms into a digital powerhouse in its own right.
That was the key message from Vikram Sinha, president director and CEO of IOH, during the headliner session of TM Forum’s Digital Transformation World 2022 in Copenhagen.
Sinha shared Indosat’s three-year turnaround strategy that was capped off with the $6 billion merger of Indosat Ooredoo and Hutchison 3 Indonesia (H3I) into what is now IOH, Indonesia’s second-largest telco.
Indosat’s transformation journey
Indosat’s transformation journey started in 2019 with a three-year plan built on three main pillars: a superior network experience, execution excellence and leveraging the strength of its brand.
Sinha explained how Indosat beefed up its national network infrastructure with the rollout of 4,200 physical sites and increased fiberization for its sites – all with the aim of delivering a better network experience, an increasingly important competitive metric for telcos.
On the execution side, Sinha said, Indosat developed a strong regional structure and invested in more retail outlets. It also embarked on a number of cost-cutting initiatives to become a leaner and more efficient operation.
As for branding, Indosat had the advantage of having a 50-year-old brand to build on, enabling it to convert customer loyalty into base growth.
The results speak for themselves, Sinha said. By 2021, Indosat’s EBITDA grew to two times more than revenue compared to 2019. Moreover, Indosat was also outperforming the overall telecoms industry.
“By 2021, compared to 2019, Indosat’s indexed revenue growth was 7x vs the industry. Our indexed EBITDA growth was 4x vs the industry,” Sinha said. “On top of that, Indosat’s market capitalization improved over 4x by 2021 vs 2018.”
From Indosat Ooredoo to IOH
In September 2021, Indosat Ooredoo and H3I signed an agreement to merge into what is now IOH. The goal was to create a company with the scale, financial strength, and expertise to compete more effectively and deliver world-class digital experiences to its customers.
IOH was officially born at the beginning of January 2022. As of September, IOH is well ahead of its targets, with network integration being the biggest contributor of synergies, Sinha said.
“After eight months, almost 50% of sites are already integrated, and we are improving customer experience,” he said. “Our target is to finish network integration in 12 months. And we are on track to deliver on the higher end of $400 million in synergies.”
Sinha noted that IOH’s transformation is happening at a time when Indonesia is undergoing a digital transformation of its own. Indonesia is forecasted to become the tenth biggest GDP by 2030 and the fourth largest by 2045. The internet economy will play a major role in that growth. Indonesia’s internet economy by gross merchandises value (GMV) reached $70 billion in 2021. Its digital economy by GMV is projected to reach $146 billion by 2025.
Indonesia is a highly connected society, with 74% Internet penetration and 133% mobile connection penetration. Around 40% of the population is banked, and 29% make transactions with digital wallets. It also boasts a thriving and innovative start-up sector, with Indonesia having established half of Southeast Asia’s 24 unicorns.
“Gotong Royong” key to Indonesia’s digital transformation
IOH aims to accelerate Indonesia’s digital transformation, but not on its own, Sinha said.
“IOH was born with a purpose to connect and empower every Indonesian. And there’s only one way to achieve this – through the power of collaboration. In Indonesia, we call it ‘Gotong Royong’, a win-win collaboration spirit to reach a larger purpose together,” Sinha said.
To that end, IOH has been collaborating not only with the Indonesian government, but also with strategic global partnerships to bring the best digital solutions to Indonesia.
IOH has launched 5G in 6 cities, including the most recent 5G launch in Bali partnering with Huawei in support of G20 presidencies. Together with BDx and Lintasarta, IOH established BDx Indonesia to elevate Indonesia’s data center business. IOH recently also introduced the UMKM Super Combo package, in collaboration with Google Cloud, to provide cost-efficient solutions for MSMEs in Indonesia to develop their businesses.
Sinha concluded: “At IOH, I encourage the entire management team and our employees to think big and maximize Indonesia’s potential, stay focused on building and growing customer trust through strengthening our core business, and continue enabling and empowering communities.”
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