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Solusi Tunas Pratama Tbk (STP) | Mr Nobel Tanihaha
Mr Nobel Tanihaha

Our approach is focused on developing more advanced and smarter towers, such as those that tap into LTE technology, to meet the rise in data demand in areas of high volume telecom activity.

Mr Nobel Tanihaha, President Director

PT. Solusi Tunas Pratama is a leading owner and operator of telecommunication towers in Indonesia. Having recently initiated an expansion strategy that will see the company operate 4,000 towers by the end of this year, what can you tell us about STP’s background and its strategies going forward?

I founded this company in 2006, and we were first involved in the construction of CDMA towers for the telecommunications industry. We shifted our focus towards buying towers upon coming to decide that the slow construction process placed a limit on our ability to pursue rapid expansion. Our first acquisition was the entire network of Axis towers in Jakarta, followed by Bakrie towers located throughout Indonesia. Last year we added to our network with the purchase of towers from privately owned mobile telephone operator Hutchinson. In keeping with this strategy of expanding via acquisition, we also bought towers from smaller independent operators. In October 2011 we went public to fund our continued development. In the future, we plan to supplement our activity in acquisitions and achieve organic expansion by constructing our own towers. Our company now has 3,500 telecommunication sites and what differentiates us from other telecom companies is that we offer a fibre optic network.

How has your company’s move into fibre optics changed its approach to the Indonesian market?

When the iPhone was launched in America, I visited the country to see how major providers coped with sudden growth in data demand. Their course of action largely centred on the construction of micro cell towers connected by fibre optics that allowed for the base transceiver station [BTS] to be located 10 km away. This meant that they didn’t need a large space at the tower site. Traditional towers require line of sight to the BTS as they use micro waves to transmit, and this is not the case for fibre optics. As long as they are built within a 10 km radius of the BTS, fibre optic towers can be put up in any location and require less land – a key advantage due to the difficulty of obtaining land in Jakarta.

We thus made it our goal to move into fibre optics and were able to do so in 2012. Our company is now less constrained in putting up towers within the crowded confines of major cities. We expect that this technology will drive the future of Indonesia’s telecommunications industry, and intend to continue to expand our capabilities in this field as opposed to following some of the other leading players who prioritise coverage. Our approach is focused on developing more advanced and smarter towers, such as those that tap into LTE technology, to meet the rise in data demand in areas of high volume telecom activity.

Given the context of a high potential consumer base in which owning more than one mobile device and SIM card is commonplace, what is your outlook for the sector for the coming years?

Indonesia is a unique market for mobile phones. When consumers here purchase a new SIM card, they usually also receive free airtime as part of the deal. Consumers are thus given the incentive to purchase new SIM cards even if they already own one, and because of this many people here have two or more mobile phones. This is what fuels the high churn rate here. While the market for voice and text related telecom services is already relatively saturated, there is substantial room to grow for data. Smartphone penetration is still low, at less than 10%, and as such there is still a low penetration for internet usage on mobile phones. Should the number of smart phone users in the country rise; the expansion of data usage will be huge.

Indonesians at present tend to only use mobile internet for Facebook, Twitter and applications that do not require much data. This will change as the infrastructure is put in place to allow for them to stream television shows directly onto their devices and enjoy other more data-intensive services.

What are the main challenges faced by companies in Indonesia’s telecommunication tower industry?

We continue to contend with issues related to regulations, in that there is a lack of consistency between autonomous regions of Indonesia. Varying laws across the archipelago can make it difficult to obtain the necessary permits for construction. Another challenge to our industry is the ongoing price war that has made Indonesia one of the cheapest places to get access to mobile phone services. It is very hard for operators to survive when low prices impinge upon revenue. When I founded this business there were eleven operators in the market and now there are only seven, two of which are struggling. Further consolidation in the industry for telecommunication tower operators is thus going to take place. The sooner the consolidation takes place, the sooner the price will be able to stabilise and increase to a point that we will be able to carry out a faster expansion of infrastructure.

When it comes to improving upon the infrastructure for telecommunications, where do you see the most potential in Indonesia?

Most tower operators are focused on developing infrastructure in the eastern regions of the country, based on the projection that over the course of the next five years, 30-40% of income will come from this newly emerging area of the market. However, many of these eastern islands have a much lower population density than Java and it is our company’s belief that it is necessary to first concentrate on improving infrastructure here. As previously mentioned, this improvement does not need to entail the construction of more traditional towers but instead should prioritise the implementation of LTE technology as the existing 3G system will not be sufficient going forward.

How is your company positioned towards cooperation with foreign investors and international partners?

Restrictions to foreign involvement as it relates to working with Indonesian telecommunication tower operators only apply to local companies that are privately owned. As a public company, our company is open to cooperating with international entities and in fact has foreign shareholders that are allowed to own a minority stake. We thus welcome foreign companies to enter the market and take advantage of its immense potential. From a synergy point of view, we believe that foreign companies most likely to be successful in Indonesia are those that commit to manufacturing parts here to save costs.  

As a final message, what would you like our readers to remember about your company?

We are one of the frontrunners in the telecommunication tower industry in Indonesia, and are always willing to purse unique ways to develop infrastructure going forward. Those that are interested in the industry should pay close attention to our initiative over the next few years to merge infrastructure for telecommunications and media.

Global Business Guide Indonesia - 2014

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