A Complete Guide to Indonesia’s Telecommunications Carrier Industry: The Fierce Competition Among the Big Three Companies and Starlink

Indonesia’s telecommunications industry is dominated by the three major carriers, Telkomsel, Indosat Ooredoo Hutchison, and XL Axiata, which are engaged in fierce competition. In 2024, Elon Musk’s Starlink entered the market, creating an environment where communication is becoming possible from anywhere. This article provides a detailed explanation of Indonesia’s telecommunications industry, including the characteristics of each company, market share, and the future outlook of the industry.

 

Overview of the Indonesia’s Telecommunications Market

Market Characteristics

• Population: Approximately 280 million (4th largest in the world)
• Smartphone penetration rate: About 75%
• Number of internet users: Approximately 200 million
• Digital economy growth rate: Around 20% as of 2022
• Mobile communication is mainstream (low penetration of fixed-line networks)

Indonesia has a vast territory (around 19,000 islands), making the development of fiber optic networks difficult. As a result, the country relies almost entirely on mobile internet for communication, placing mobile carriers at the center of the market.

Overview and Competitive Strategies of the Indonesia’s Telecommunications’ Big Three

① Telkomsel

• Parent Company: PT Telekomunikasi Indonesia (Telkom Indonesia, state-owned enterprise)
• Market Share: About 50%
• Subscribers: About 150 million

Strengths:

• The largest telecommunications infrastructure in the country (particularly strong in rural and remote island areas)
• Early deployment of 5G
• Collaboration with national projects

Weaknesses:

• Higher prices (disadvantaged in price competition, especially in urban areas)
• Slower decision-making compared to private companies

Main Strategies:

• Expansion of 5G and fiber optic infrastructure
• Further strengthening of the rural market
• Expansion of enterprise business (B2B market)

Telkomsel is Indonesia’s largest telecommunications company, with its greatest strength being robust infrastructure in rural and remote areas. As a state-owned enterprise, it is deeply involved in government projects and continues to grow steadily.

② Indosat Ooredoo Hutchison

• Parent Companies: Ooredoo (Qatar’s state-owned telecom company) & CK Hutchison (Hong Kong)
• Market Share: About 30%
• Subscribers: About 98 million

Strengths:

• Strong competitiveness in urban areas
• Relatively affordable pricing
• Investment capability through international capital

Weaknesses:

• Weaker network in rural areas
• Less reliable compared to Telkomsel

Main Strategies:

• Expansion of 5G and high-speed internet services for urban areas
• Entertainment business (partnerships with Netflix, Disney+, etc.)
• Cost reduction through synergy from the merger

In 2022, Indosat merged with Hutchison 3 Indonesia to scale up. Its strength lies in marketing to young urban users and its proactive introduction of 5G.

③ XL Axiata

• Parent Company: Axiata Group (Malaysia)
• Market Share: About 18%
• Subscribers: About 55 million

Strengths:

• Highly competitive pricing
• Well-developed data plans
• Strengthening of enterprise solutions

Weaknesses:

• Slightly weaker brand power compared to Telkomsel and Indosat
• Lower infrastructure investment

Main Strategies:

• Strengthening networks in regional cities
• Expansion of IoT and cloud services for enterprises
• Attracting younger demographics through price competition

XL Axiata maintains a certain market share with mid-range pricing and strong data packages as its key advantages.

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Prepaid System “Pulsa” is Mainstream on Indonesia’s Telecommunications 

In Indonesia, many people use a prepaid system (Pulsa) to access mobile phone and mobile data services.
Pulsa refers to prepaid (prepaid) call and data communication credit for mobile phones, and it has the following characteristics.

Characteristics of Pulsa (Prepaid Credit)

• Prepaid communication charges (you top up only the amount you want to use)
• Easily purchasable at convenience stores, street stalls, and online
• No need for monthly contracts, making it accessible for low-income users and students
• Internet is used by purchasing data packages (Kuota)

In Indonesia, prepaid systems overwhelmingly dominate over postpaid (monthly contract) options, with over 95% of smartphone users reportedly using Pulsa.

Formal Agreement with Starlink and Its Impact on the Indonesia’s Telecommunications Market

In 2024, Elon Musk visited Indonesia and held direct talks with government officials. To strengthen Indonesia’s telecommunications infrastructure, a formal agreement was signed to introduce Starlink.

As a result, high-speed internet will now be provided in remote and island regions that traditional telecom carriers have struggled to cover.

Starlink’s entry into Indonesia is expected to have a major impact on the domestic telecommunications industry.

Impacts of Starlink’s Entry into the Indonesia’s Telecommunications’ Market

① Intensified Price Competition

With Starlink offering faster and more stable connectivity, especially in remote regions, major telecom providers must reconsider their pricing strategies. Telkomsel, which holds a dominant position in rural markets, will likely be forced to adjust prices and improve service offerings to retain its market share.

② Expansion of Rural Markets

The Indonesian government aims to enhance internet access in rural and remote islands, aligning with Starlink’s service coverage. This development is expected to unlock new opportunities in online education, telemedicine, and IoT adoption in agriculture and fisheries.

③ Impact on the B2B Market

Industries such as mining, tourism, and logistics, which require internet in remote areas, may adopt Starlink. This could affect the corporate service offerings of Telkomsel and Indosat, particularly in remote operations.

④ Coexistence with 5G

Although Starlink uses different technology than mobile networks, a division of service is likely—urban areas may lean toward 5G while rural areas benefit from Starlink. In response, providers like Telkomsel and Indosat are expected to accelerate 5G deployment in cities.

Rising Competition and Emerging Trends of Indonesia’s Telecommunications

① Price War

Indosat and XL Axiata are lowering prices to compete with Telkomsel, focusing on affordable prepaid plans and large data packages.

② 5G Rollout

Telkomsel is leading the 5G rollout, with Indosat and XL Axiata also ramping up efforts in major cities.

③ Expansion of Digital Services

Telecom providers are transforming into digital service platforms. For example:

• Telkomsel is pushing LinkAja (e-payment).

• Indosat is strengthening partnerships with platforms like Netflix.

④ Rural Market Development

Many rural areas in Indonesia still lack sufficient network infrastructure. While Telkomsel has the upper hand, Indosat and XL Axiata aim to expand into these regions—facing new competition from Starlink’s entry.

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Outlook for Indonesia’s Telecommunications Sector

Growth Opportunities for Indonesia’s Telecommunications 

• Rising demand fueled by the digital economy

• New services emerging from 5G adoption

• Network expansion in rural areas to gain new users

Challenges for Indonesia’s Telecommunications 

• Profit margins shrinking due to intense price competition

• Potential for tighter government regulations (e.g., price controls)

• Adapting to rapid technological changes like AI, IoT, and cloud computing

 

 

Future Strategies for Indonesian’s Telecommunications

Telkomsel is expected to leverage its strong infrastructure to reinforce its position in 5G and enterprise markets.
Meanwhile, Indosat and XL Axiata are likely to focus on competitive pricing and expanding digital services to grow their market share.

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Glossary of Terms Used in This Article

• Starlink: A low-Earth orbit satellite internet service provided by SpaceX. It enables high-speed internet access without relying on ground infrastructure, making it ideal for remote and island regions.
• Telkomsel: The largest telecommunications company in Indonesia. It is a state-owned enterprise with strong coverage in rural areas.
• Indosat Ooredoo Hutchison: A major Indonesian telecom operator known for its competitive pricing and strong presence in urban areas.
• XL Axiata: A Malaysian-backed telecommunications company in Indonesia. It offers competitive mid-range pricing and strong business-to-business (B2B) services.
• Pulsa: The dominant prepaid credit system in Indonesia used for calls and mobile data. It can be purchased easily at convenience stores, kiosks, or online.
• Kuota: A mobile data package system in Indonesia. Users buy a set amount of data in advance and use it until it runs out.
• 5G: The next-generation mobile communication technology offering ultra-fast speeds. Its deployment is currently focus on urban areas.
• B2B Market (Business to Business): Telecommunication services offered to businesses. This sector may be impacted by Starlink’s entry into Indonesia.

 

 

FAQ (Frequently Asked Questions)

Q1. How much does Starlink cost in Indonesia?

A. Starlink’s monthly fee varies by country. In Indonesia, it is expected to cost around USD 100 (approximately IDR 1.6 million). Additionally, there is an upfront cost for the required antenna and router.

Q2. Which is better in Indonesia: local telecom providers or Starlink?

A. In urban areas, Telkomsel and Indosat’s 4G/5G networks offer better cost performance. However, in rural and remote regions, Starlink may deliver faster and more stable internet. The best choice depends on your location and intended use.

Q3. How widespread is 5G in Indonesia?

A. 5G was officially launched in 2021 but is currently limited to major cities. In rural areas, 4G coverage is still the priority. Full nationwide 5G coverage is expected to take several more years.

Q4. Why is prepaid (Pulsa) so common in Indonesia?

A. Postpaid plans often require a credit score or bank account, which many people do not have access to. Pulsa, or prepaid credit, is widely used because it allows users—especially those with lower income or students—to pay in advance only for what they need.

Q5. How will Starlink’s entry affect Telkomsel and other telecom providers?

A. In rural areas, competition is likely to intensify, prompting major telecom companies to expand their networks or adjust pricing. In urban areas, providers may accelerate their 5G rollout to differentiate themselves. Some telecom providers may even explore partnerships with Starlink.

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