The telco industry around the world has been undergoing a revolution. In Asia, Indosat Ooredoo Hutchison (IOH) is at the forefront of this revolution, transforming from a conventional telco to an innovation-driven technology company. This transition is being led by a series of strategic pillars that aim not just to adapt to the digital age but also to actively shape and empower the future of Indonesia.
In an exclusive interview with Telecom Review Asia, Vikram Sinha, President Director and CEO, IOH, delves into how IOH support Indonesia in achieving its full potential which is consistent with the role that the company plays in expanding the digital economy of the country, subsequently driving its development.
What are the key driving forces and strategies guiding IOH's transformation from a traditional telco to an innovation-driven techco?
With the ambition to foster a transformative journey, we at Indosat Ooredoo Hutchison have set our sights on a greater goal: Empowering Indonesia. The post-merger phase has propelled us into a phase of profound metamorphosis, marking a shift from mere integration to a complete transformation mindset. Our strategies have undergone a comprehensive overhaul, leading us to identify several pillars that have emerged as the cornerstone of our transformation:
The first pillar, ‘Empowering Indonesia,’ embodies our commitment to serve the burgeoning digital economy of the nation, underscoring our pivotal role in driving its progress.
The second pillar underscores our dedication to delivering a seamless and exceptional experience for all stakeholders, including partners, employees, and society at large. Our recent establishment of the Indosat Marvelous Xperience (MX) Center in July 2023 stands as a testament to our resolve to cultivate a collaborative environment for the co-creation of innovation and excellence, thereby contributing to the fortification of Indonesia's digital ecosystem.
The third pillar, our innovation engine, highlights our commitment to embracing cutting-edge technologies such as data analytics, AI, and cloud computing, catalyzing a robust investment influx from global technology partners.
Our focus on nurturing the next generation of leaders, equipped with digital proficiencies, represents the fourth pillar, ensuring the perpetuation of our transformational mission and fortifying our competitive edge in an increasingly tech-centric landscape.
Lastly, the spirit of 'Gotong Royong' or an authentic Indonesian term for ‘mutual cooperation’, has led us to cultivate partnerships with leading global technology giants to work hand-in-hand in unlocking the nation’s infinite possibilities. This collaborative spirit was prominently showcased in our recent "Empowering Indonesia Forum," a convergence of strategic partners aimed at fostering collaborative initiatives for Indonesia's economic growth.
How is this transition crucial for advancing the growth and development of Indonesia in the coming years?
Indonesia's promising trajectory toward becoming the world's fourth-largest economy by 2050, as detailed in our "Empowering Indonesia Report 2023" highlighting our role can play a pivotal role that our transformational journey in the nation's growth. The vast potential for expansion in Indonesia's digital economy, projected to reach IDR 3.2 trillion by 2027, driven by the rapid surge in e-commerce, fintech, mobility, and digital media, necessitates our transformative efforts to bridge the urban-rural digital divide.
Indonesia is not only in Java, Jakarta, or Bali, there are so many potentials outside Java that right now we are focusing on. By investing in the expansion of our 4G network and partnering with notable infrastructure and digital service providers, we aim to accelerate the nation’s access to connectivity, thus accelerating Indonesia's digital transformation. One of our biggest post-merger focuses is expanding our network infrastructure to the rural area, including Eastern Indonesia, which promises to unlock a new cohort of digital consumers and local entrepreneurs, thereby fostering inclusive growth and development for the community at large.
How is this transformative journey impacting the overall customer experience, with a specific focus on small and medium-sized enterprises and rural communities in Indonesia?
Indosat’s transformation journey so far is on-track. We completed the integration of existing sites and decommissioning redundant coverage sites ahead of plan. Right now, we focus on expanding our coverage and we have significantly enhanced the overall customer experience post-merger. The marked improvement in customer satisfaction metrics, reflected in the CSAT and NPS scores of IM3 and Tri, is a testament to our relentless efforts in expanding coverage and connectivity.
This enhanced connectivity has facilitated the growth of digital services among the previously underserved rural population, by empowering approximately 60 million unbanked rural residents. Furthermore, our collaborative efforts with global technology leaders attracted significant investment to Indonesia leading to the wider reach of sustainability programs expansion hence contributing to the sustainable growth of the digital ecosystem in Indonesia.
What pivotal role does IOH aim to fulfill in the process of empowering Indonesia, and how do you plan to address the digital disparities and bridge the connectivity gaps?
At the heart of our mission lies the empowerment of Indonesia's digital economy through the provision of robust mobile broadband connectivity. Our strategic investments in enhancing network quality and performance serve as the foundation of Indonesia's digital transformation, contributing to the improvement of productivity levels and improved standards of living across the nation.
Aside of our commitment to improve our network footprint across Indonesia. We have been contributing to creating digital talents across the country through IDCamp - an online coding scholarship program. Since 2019, we have been empowering 182.543 digital talents through provided courses. We also partnered with ITU and Cisco to offer a wider range of courses including cyber security.
Can you share any early signs of success or milestones achieved since IOH embarked on this transition?
Indosat is delighted to share that we reported robust operational and strong performance in the first nine months of 2023. This is confirming that we are on track to deliver our post-merger synergy value promise, which is around USD 300-400 million over 4 years. We have sustained our revenue growth momentum with the 8.5% increase YoY to IDR 37.5 trillion and importantly our normalized EBITDA is growing more than 2x of revenue increasing by 21.7% to IDR 17.5 trillion. We have also managed to deliver a consistent net profit of IDR 942 billion this quarter bringing the 9M’23 normalized net profit to IDR 2.2 trillion. This is our 11th consecutive quarter of generating a strong normalized net profit.
Some of the other highlights for the first nine months of 2023, is our EBITDA margin which increased by 5.1 percentage points to 46.7% while we have added 0.8 million subscribers compared to last year with our ARPU growing 2.5% compared to the prior year. Our own app is also seeing good traction as we have seen the number of monthly active users increase by 9 million so far this year.
Indosat market capitalization has surged, and our share price has experienced a substantial uptick, attesting to our strengthened market position and investor confidence. Moreover, we saw growing confidence from our strategic partners to collaborate with us and create bigger values for the business and community.
Our continued growth momentum has been underpinned by our commitment to delivering a marvelous experience and simple, affordable products to customers, together with the expansion of our network into underserved rural communities, particularly in Eastern Indonesia.
Looking ahead, what are IOH's long-term aspirations and vision regarding digital transformation and its contributions to the empowerment of Indonesia in the years to come?
Our commitment to sustainability and digital empowerment remains unwavering as we endeavor to extend mobile connectivity across every corner of Indonesia. In conjunction with our CSR (Corporate Social Responsibility) programs focused on women empowerment, digital literacy, and environmental conservation, we aim to foster a comprehensive social impact that transcends mere connectivity.
The expansion of our IDCamp program and the establishment of the Indosat MX Center stands as a testament to our enduring commitment to fostering digital talent and promoting digital innovation. Our steadfast adherence to Environmental, Social, and Governance (ESG) principles serves as the guiding force underlying our long-term vision, ensuring sustainable and responsible growth within Indonesia's telecommunications landscape.
