Indonesian telcos must invest in networks amid market fight: report

STIFF competition is set to persist in the Indonesian telecom market, but mobile operators will likely adopt "tactical pricing strategies", one analyst said.

That's as telcos also have to make pricey network investments over the next two years, to keep up with swelling demand for data services.

Data demand could jump on both the rise of unlimited data plans, as well as possible extension of a government data subsidy scheme from the pandemic, according to a report on Tuesday from Fitch Ratings director Janice Chong.

She expects competitive pressure - which has already put a crimp on mobile revenue growth in the second half of 2020 - to continue over the next 12 months.

"We believe mobile operators will continue to pursue tactical pricing strategies to bolster revenue in a challenging business environment," she said.

In the meantime, telcos must also invest in capacity expansion and fibre infrastructure, especially given the limits on available spectrum in Indonesia.

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Still, the Fitch research team suggested that new tower sales and the negotiation of lower tower rentals could help telcos manage cash outflows while increasing capacity, as the Indonesian telecom industry ramps up its passive network-sharing strategy.