Low ARPU and High CHURN - Indonesian Mobile Operators STILL manage High ProfitsIndonesian Mobile Market flying the rating chart, subsequently the mobile operators are busy positioning themselves as growth starts to slow and competition becomes more stiff. The operators have to offer best of its price to expand its subscriber base as well as to build market share. It is anticipated that new entrants in alliance with foreign partners will bring a change in the shape of the market.
According to sources, Indonesia has by far the highest level of CHURN, 11.2%. ARPU in 2Q, 2008 was USD 5.70, among the lowest in the world and ARPU declines accelerated to 23% YoY in 2Q, 2008, compared to -15.3% in 1Q, 2008. The Indonesia mobile market scenario is one of the most challenging in the world, with operators caught in a low-ARPU, high churn market environment. It posted EBITDA margins at 56 % in 2Q, 2008.
“With Cost of Acquisition increasing and increasing CHURN levels in Indonesia, There is a continuous need to insert most innovative LOYALTY programs and Strategies” Himanshu Jay, Senior Manager Global Operations added”.
If an Operator sets the RIGHT STRATEGY in terms of Innovative Data ( a little more than SMS ), Enhanced VAS Initiatives, Customized Tariffs, Services and reduced CHURN, We’ve forecasted an average EBITDA margin of 64.2% by 2010. Hence in mid-long term it’s not only important to ATTRACT niche customer segments through innovative services but also to RETAIN the existing base through effective LOYALTY strategies considering the direct impact of CHURN on EBITDA margins & revenue.
Notable Highlights:
- 95 % Prepaid Market represents High level of CHURN (>11%) with Increase in Figure by 2010.
- It is expected that, subscriber base in Indonesia to augment from the present 116.4 million in 2Q.2008 to 130.5 million in 2010.
- Average margins in the industry are now forecasted to be 64.2 % in 2010.
- The service revenue growth among Indonesian operators is anticipated by 17% in 2008 and gradually decline to 9.8% in 2010.
- Need of Innovative Data Strategies since mobile penetration is high and voice revenue totals approx. 85%.
For Best Practices/Case Studies on ARPU, CHURN and Loyalty. Please contact christina@wirelessfederation.com
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