Fluid licence on affiliated companies: An explorative strategy to consolidate Indonesia’s telecom industry

It is time for Indonesia to consider a regulatory breakthrough.

Indonesia stands at a pivotal crossroads in its digital transformation journey. With over 345 million active mobile subscribers and 17 million fixed broadband customers, the nation’s digital economy surpassed $90b in 2024 and is projected to more than $110b by 2025.

Yet, despite this growth, telecom revenue and market capitalisation have stagnated due to duplicated infrastructure deployments and declining margins on traditional network investments.

Compounding the challenge, the telecom licensing framework remains fragmented by legal entities. Multiple subsidiaries within the same corporate group often hold overlapping licences for networks and services, creating inefficiencies, duplicated capital expenditures, and disjointed customer experiences.

It is time for Indonesia to consider a regulatory breakthrough: the fluid licence,  a model that allows telecom groups to share licenses seamlessly across their affiliated subsidiaries. Inspired by the Binding Corporate Rules (BCR) framework in data protection law, which enables multinationals to transfer personal data across jurisdictions under a single compliance umbrella, fluid licensing could serve as a domestic counterpart, tailored for telecom operations.

If BCR can function across multiple countries, regulators, and corporations (and become a global “gold standard” for data protection) then a fluid licence should be far more achievable within a single jurisdiction and corporate group, provided that it remains under robust governance.

From fragmentation to integration
Currently, telecom licences are attached to individual legal entities. Large telecom groups operate through subsidiaries with separate licences for fixed networks and internet services. If one subsidiary seeks to leverage another’s licence, it must undergo a lengthy approval process, incurring delays and additional compliance obligations.

This rigidity hampers innovation. The rollout of Fixed Mobile Convergence (FMC), integrating fixed broadband and mobile services, has been slowed by redundant licensing requirements, even though the services are delivered within the same corporate group.

Under a fluid licence, however, a group’s existing licence could be shared across subsidiaries legally and transparently. One licence, multiple entities – within one corporate family.

Strategic value of fluid licensing
In economic efficiency: According to the Indonesian Internet Service Providers Association (APJII), there are 1,320 registered ISPs with another 500 awaiting licences. The government has already imposed a moratorium on new ISP licenses, citing unhealthy competition and redundant infrastructure.

Fluid licensing addresses this problem at the root. Instead of subsidiaries duplicating networks, groups could pool infrastructure, reducing capital expenditure and operating expenditure by billions of rupiah annually. This model also enables faster expansion into underserved regions, improving asset utilization and reducing the inefficiencies caused by fragmented operators.

In agility and service innovation: With fluid licensing, operators can launch cross-entity services without bureaucratic delays. Beyond FMC, this framework would accelerate fixed wireless access (FWA), satellite-mobile integration, and cloud-based telecom services. Customers benefit from a one-stop ecosystem: unified portals, consolidated billing, and standardised service quality across multiple services.

In governance and regulatory oversight: For regulators, fluid licensing simplifies oversight. Instead of monitoring hundreds of small ISPs or fragmented entities within a group, the government can focus on group-level compliance. Obligations such as non-tax state revenue (PNBP) contributions and Universal Service Obligation (USO) would remain, and calculated on a consolidated group basis by reflecting total revenue, growth, and subscriber count. With integrated reporting, oversight becomes more transparent and data-driven.

Challenges to anticipate
Despite its promise, fluid licensing carries risks that must be managed through careful regulatory design. One concern is market concentration, as large affiliated groups could consolidate market power. This makes it essential to establish competition safeguards and fair access measurements to maintain a level playing field.

Another key factor is inter-ministerial coordination, since implementing fluid licensing will require close collaboration between the Ministry of Communication and Digital Affairs (Komdigi), the Ministry of Finance (Kemenkeu), and the Competition Commission (KPPU).

Legal adjustments will also be necessary because current telecom regulations are entity-based. Revisions will be required to legitimise license sharing at the group level and ensure regulatory clarity.

Finally, accountability must be addressed through a collective sanction framework so that if one subsidiary violates the license terms, the entire group bears responsibility.

Unlocking Indonesia’s opportunity
The global precedent is clear: regulatory innovation works. BCR has become the gold standard for cross-border data transfers in data protection law, proving that multi-entity compliance frameworks are possible.

Indonesia can adopt a similar philosophy domestically by creating a fluid license regime, flexible within corporate groups but firmly controlled by regulators.

With Southeast Asia preparing for the next wave of technologies such as 5G-Advanced, 6G, and satellite-based connectivity, Indonesia has the opportunity to position itself as a regulatory pioneer in ASEAN.

Fluid licensing offers a pragmatic solution to the long-standing fragmentation that has hindered Indonesia’s telecom sector.

By adopting a governance model that is fluid, efficient, yet controlled, Indonesia can ensure that its digital infrastructure develops faster, more evenly, and sustainably, unlocking the next chapter of growth in its digital economy.