On the sideline of MWC 2023, Barcelona, Vikram Sinha, CEO of Indosat Ooredoo Hutchison (Indosat), delivered a presentation titled “The story of Indosat, the most successfully merger that empowers Indonesia”, delving into Indosat’s merger and its impact on connecting Indonesians and elevating the country’s economy.
Indonesia is the fourth largest country in the world with a population of about 275 million. Home to 62 million SMEs and the highest number of unicorns in Southeast Asia, Indonesia is also one of the fastest-growing economies in Asia and an emerging digital powerhouse.
To better serve the connectivity needs of Indonesia, Indosat Ooredoo and H3i merged to form Indosat in 2022. The strategic move marked the successful start of a win-win collaboration to yield 1+1=11, Vikram Sinha, CEO of Indosat shared.
As a major digital telco in Indonesia, Indosat has been a major growth engine to drive the nation’s digital ambition. The merger capitalizes on a larger market share and reduced operating costs, amongst other benefits, to grow its competitiveness and deliver greater value to customers. This complements Sinha’s ongoing efforts to reinvent the telco in 2019, when it embarked on a 3-year digital transformation journey to deliver world-class digital experiences, connecting and empowering every Indonesian.
“We are confident of delivering synergistic value through the merger, with annual savings amounting to $300-$400 million over the next 3 to 5 years,” Sinha elaborated.
Indosat taps on the synergistic value of the merger to capture growth and fuel the country’s digital economy. As a digital enabler, Indosat plays a major role in catalyzing digital disruptions, advancing enterprise digital transformation, growing the middle class and unleashing growth opportunities in the rural areas.
Already, Indosat showcases stellar performance one-year post-merger. In 2022, Indosat’s total revenue increased by 49% year-on-year, reaching IDR46.752 billion, while net profit soared 76.2% year-on-year, amounting to IDR1,459 billion. Additionally, Indosat’s EBITDA reached IDR19.754 billion, growing by 42.3% year-on-year.
Sinha cited growing customers and customer satisfaction as other indicators telling of a successful merger just one year on. In the fourth quarter of 2022, Indosat’s subscribers increased by 62.5% to reach 102.2 million subscribers. Data traffic nearly doubled, increasing by 91.8%.
Highlighting the importance of growing Indonesia’s digital economy by providing quality customer experiences to both rural and urban areas, Sinha expressed that the merger had bolstered Indosat’s capability to scale and positively impact connectivity beyond major cities. He noted that Indosat added 21 million first-time subscribers in rural areas in 2022.
However, Indosat’s merger was not well-received when it was first announced in late 2021. Credit rating agencies had their reservations, citing “integration and execution risks”, as well as “uncertainties over future financial policies” as reasons for concern.
Yet, Indosat’s strong financial performance in the past year bears testimony to Indonesia’s inherent growth potential and Indosat’s core direction to focus on powering greater connectivity to boost overall productivity. Favorable national policies prioritizing digitalization have also been critical to Indosat’s success.
Elaborating on his approach, Sinha stressed that cultural integration has been key.
“The management is tasked to do what is right and build on the capabilities of the employees,” said Sinha. “Our goal is raising customers’ digital experiences and enabling communities.”
Collaborating with Like-Minded Partners to Unleash Indonesia’s Growth Potential
According to research by Indosat, Indonesia’s Internet economy will grow by 20% from $70 billion in 2021 to $146 billion in 2025. Total IT spending will increase from IDR300 trillion in 2022 to IDR459 trillion in 2027. During this period, Indonesia’s digital economy is projected to grow from IDR1 trillion to IDR3,216 trillion, accounting for 8% and 14% of the country’s GDP, respectively.
The support of ecosystem partners is instrumental in serving Indosat's larger purpose to contribute to Indonesia’s digital transformation and economy. Recently, Indosat acknowledged the support of ecosystem partners during its first-year post-merger by debuting the Marvelous Partner Awards.
Through a partnership-first approach, Indosat looks to forge strategic collaborations with industry partners to co-create superior digital telco experiences that shape the country’s digital roadmap.
“We are committed to growing with partners as we drive Indonesia’s digital economy forward,” Sinha commented. “As we continuously innovate, we are looking for like-minded partners to embark on this journey together.”
For now, Indosat’s merger journey proves to be a very promising start. In the near future, Indosat is projected to grow by another 8-9%.
As Indosat continues to embrace digitalization, Sinha is confident that Indosat will thrive in the digital age and radically impact lives. He concluded that Indonesia holds immense potential as a digital stronghold and Indosat is determined to maximize this growth together with like-minded industry partners.
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