XL AXIATA TARGETS MILLENNIALS
Reputation for providing fastest data service in Indonesia attracting more users
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
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.