XL AX­I­ATA TAR­GETS MIL­LEN­NI­ALS

Rep­u­ta­tion for pro­vid­ing fastest data ser­vice in In­done­sia at­tract­ing more users

New Straits Times - - Business World -

UBER driver Akhmad Andy Riyanto spends about three times more than the av­er­age user on his mo­bile phone ser­vice, here — and it has helped PT XL Ax­i­ata be­come Asia’s best-per­form­ing tele­com stock.

XL Ax­i­ata, a unit of Ax­i­ata Group Bhd, has ral­lied 39 per cent this year, the top stock in the MSCI AC Asia Telecom­mu­ni­ca­tion Ser­vices In­dex. In­vest­ments in a fourth-gen­er­a­tion (4G) net­work that over­shad­owed ri­vals’ spend­ing and a rep­u­ta­tion for pro­vid­ing the fastest data ser­vice in In­done­sia is bring­ing in more users.

“Peo­ple no longer want to watch YouTube and have buffer­ing,” said XL Ax­i­ata’s pres­i­dent di­rec­tor Dian Siswarini. “Cus­tomers had just wanted the cheap­est price, but right now they are look­ing for a bal­ance be­tween price and per­for­mance. They are more will­ing to pay.”

While the early years of in­dus­try com­pe­ti­tion were marked by in­tense price cuts, the fo­cus was now on faster con­nec­tiv­ity, said Dian, one of three women run­ning a pub­licly-listed com­pany on the MSCI In­done­sia In­dex. Falling rev­enue from voice calls also meant data was the fastest grow­ing busi­ness, she said.

Andy, 20, spends about 90,000 ru­piah (RM30) a month on data and voice ser­vices, com­pared with an av­er­age 35,000 ru­piah spent by users at XL Ax­i­ata. Sim­i­larly priced pack­ages from Telkom­sel and In­dosat of­fer less data.

While XL Ax­i­ata claimed a 15 per cent mar­ket share — half the size of its next big­gest com­peti­tor, In­dosat — its users spent an av­er­age 40 per cent more, ac­cord­ing to data from In­dosat and Ax­i­ata.

Telkom­sel cov­ers most of the 17,000 is­lands in the archipelago but XL Ax­i­ata has been ag­gres­sively ex­pand­ing its faster net­work.

Last year, XL Ax­i­ata more than dou­bled its data-ca­pa­ble trans­mit­ters to al­most 47,000 units, com­pared with a 43 per cent in­crease of third- and fourth-gen­er­a­tion net­works by Telkom­sel and a 20 per cent ex­pan­sion by In­dosat.

Telkom­sel had al­most 79,000 trans­mit­ters at the end of last year, while In­dosat had about 32,400 units.

“They have the small­est sub­scriber base out of the three, so that cor­re­sponds to more data ca­pac­ity per sub­scriber for XL Ax­i­ata,” said Niko Mar­ga­ro­nis, a telecom­mu­ni­ca­tion an­a­lyst at PT Cip­tadana Seku­ri­tas.

XL Ax­i­ata has twice as many trans­mit­ters per 1,000 cus­tomers than its ri­vals, al­low­ing its net­work to be less con­gested.

The firm’s data traf­fic grew 1.6 times last year, con­tribut­ing to 38 per cent of the com­pany’s to­tal rev­enue, af­ter the car­rier of­fered dis­counts when it in­tro­duced the 4G net­work. Data traf­fic growth at Telkom­sel was at 95 per cent, while In­dosat re­ported a 1.4 times jump last year.

The ag­gres­sive ex­pan­sion helped boost XL Ax­i­ata’s sales per cus­tomers, over­tak­ing In­dosat. The com­pany’s av­er­age rev­enue per user grew three per cent last year to 35,000 ru­piah a month, while In­dosat’s fell three per cent. Mar­ket leader Telkom­sel’s av­er­age user rev­enue grew by five per cent last year.

XL Ax­i­ata was also tar­get­ing mil­len­ni­als, which made up a third of In­done­sia’s 250 mil­lion pop­u­la­tion, as they con­stantly checked on their Face­book and Twit­ter feeds. In­done­sia ranked sec­ond in Asia in terms of num­ber of Face­book users, with al­most 78 mil­lion ac­counts as of May last year, ac­cord­ing to Statista Inc.

For Andy, the speed and cheaper rates mean he’ll re­main a loyal cus­tomer for now. Bloomberg

BLOOMBERG PIC

While PT XL Ax­i­ata claims a 15 per cent share of In­done­sia’s tele­coms mar­ket — half the size of its next big­gest com­peti­tor, In­dosat — its users spend an av­er­age 40 per cent more, ac­cord­ing to data from In­dosat and Ax­i­ata.

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