Telco giant turns techco, aims for digital leadership in Indonesia

After the merger, Indosat Ooredoo Hutchison now has more than 100 million customers.

In an era defined by the relentless march of technology, telecom giant Indosat Ooredoo Hutchison (IOH) is transitioning from a traditional telecommunications powerhouse to a nimble and innovative “techco.”

The man at the helm of the company, CEO Vikram Sinha, says this shift from a connectivity-focused telco to a technology-centric techco is propelled by a broader vision of growth and innovation.

In this exclusive interview with Asian Telecom, Sinha explains the intricacies of this transformative journey, revealing the data-driven decisions, strategic shifts, and challenges that define Indosat’s progression.

Primarily, the techco aims to increase revenue from non-connectivity services from 4% to 20% by 2026, manifesting its commitment to diversification and staying at the forefront of Indonesia’s digital economy.

As it is, this sector is set to surge from IDR1.4 trillion in 2022 to IDR3.2 trillion in 2027. The core connectivity market easily grows at 5% to 6% annually, and when you look at the digital sector, you can expect to see a growth of 18%.

This beckons Indosat to play a pivotal role. “The ambitious target is to see revenue from non-connectivity services rise from 4% to 20% by 2026, emphasising the company’s commitment to diversification and staying at the forefront of digital evolution,” Sinha tells Asian Telecom.

Strategic model shift

Sinha draws a sharp distinction between the limitations of being an asset-heavy telco and the potential of an asset-light techco. “The transformation is not merely a shift in nomenclature but a fundamental change in approach,” Sinha said.

He points out that the key differences lie in the pace of innovation, growth potential, and agility to explore adjacent opportunities. The core remains connectivity, but the techco model relies on a robust technology platform, strategic partnerships, and investments in R&D.

Indosat’s transition rests on five pillars: Empowering Indonesia, delivering a “Marvelous Experience,” fostering innovation, nurturing talent, and embracing Gotong Royong or mutual cooperation. 

By creating a flexible, asset-light model, the company is poised to redirect capital towards technology and innovation. Initiatives like the Marvelous eXperience (MX) Center underscore a commitment to democratising innovation, with 30 ongoing projects aimed at enhancing various facets of the Indosat experience.

A higher purpose

Sinha tells the magazine that the merger of Indosat Ooredoo and Hutchison 3 Indonesia in 2022 was not merely a corporate maneuver but a strategic step towards a digital Indonesia. The company’s purpose extends beyond being a telecom enabler; it aspires to be a key player in Indonesia’s digital transformation.

The merger, providing scale and resources, strengthens the 4G network and addresses the urban-rural digital divide, he explains.

Post-merger, Indosat’s customer base has already surpassed 100 million, making it one of only 11 telcos globally with such a vast subscriber count. Expansion into rural areas is a pivotal focus, with plans to create 23 million new internet-connected customers in underserved regions.

“Strengthening the 4G network in Eastern Indonesia showcases the commitment to unlocking infinite possibilities for digital consumers,” Sinha says. 

Whilst harnessing new scale and resources post-merger, Indosat faces the challenge of expanding network infrastructure into underserved rural areas. Investments in 5G technology require careful consideration of monetisation strategies.

The focus on creating a complete ecosystem before the 5G rollout signifies a thoughtful approach to adopting the technology.

IOH’s commitment

Indosat’s commitment to delivering a marvelous customer experience hinges on technological innovation. In this sense, the Marvelous eXperience (MX) Center acts as a hub for collaboration and innovation.

Strategic partnerships with global tech giants like Ericsson, Nokia, and Google Cloud provide access to cutting-edge technologies. The emphasis is not just on being a connectivity provider but on creating an ecosystem of experiences for customers.

The Growth Stack, powered by data and AI, is the cornerstone of Indosat’s innovation engine. “Our Chief Data and Analytics Officer democratises data across functions, enabling personalised experiences,” Sinha said.

Success metrics include becoming a differentiated experience provider; growing revenues from adjacencies to over 20%; reducing the cost to serve customers through technology; growing the enterprise business to 20%; and generating 15%-20% of revenue from services launched in the last five years.

As Indosat pivots towards a tech-oriented and experience-focused approach, Sinha follows an outline of plans to deepen partnerships, empower businesses, nurture digital talent, and contribute to Indonesia’s economic growth.

With agility, innovation, and sustainability being the essentials of Indosat’s new direction, there is no doubt that the company has well positioned itself as a trailblazer in the evolving landscape of the telecommunications industry.

As a parting shot of the interview, Sinha stressed that Indosat’s desire to be the leading techco is a dedicated response to the digital evolution shaping Indonesia’s future. “With data, technology, and customer-centricity at its core, Indosat is poised to redefine the boundaries of connectivity and experiences in the archipelago,” he says.