Business Environment

Bringing Indonesian Lifestyles Online【Building a Business Ecosystem for the Entire Corporate Group】



Telecom Group Increasingly Branded Under PSBB

Although the entire food industry in Indonesia has been severely damaged by the restriction of non-essential outings, the closure of malls and the banning of in-store eating in independent stores after the implementation of the PSBB (Massive Social Restrictions) on April 10.

As most companies have adopted work from home (WFH), and as lifestyles go online to accommodate work, study, shopping, and other activities from home, telecom companies, online learning services, and service entities with collaboration platforms that oversee case management and web conferencing functions are seeing sales growth.

According to the 2020 brand rankings of Indonesian companies by Brand Finance, the UK's largest independent brand valuation consultancy, the top telecom (PT Telkom Indonesia Tbk) was $4.76 billion, 3% from $4.61 billion the previous year.

The reason is that Telecom's consolidated revenue in 2019 was 18.66 trillion rupiah (+3.5% y/y), which as a state-owned company exceeded Indonesia's economic growth rate of +2.97%, the brand strength index, which determines brand value in equal measure. The result is a comprehensive evaluation of the brand royalty rate, brand revenue, corporate brand and product brand.

Amazon, the most powerful brand in the world, with $220.79 billion (+17.5% y/y), Google in second place with $159.72 billion (+11.9% y/y), Toyota Motor Corporation in first place in Japan with $58.07 billion (+11.1% y/y), and NTT Group with $36.35 billion, more than seven times the amount of telecom However, NTT Group's sales declined by 12.8% year on year, showing the difference in momentum in Indonesia, a country where telecommunications is a driving force for economic development.

Looking at the Telecom Group as a whole, it is strengthening its digital business, including content distribution and entertainment, in addition to its mainstay telecommunications business.

Growth in two major sectors within the group contributed to consolidated revenues, with revenue growth of 16.3 per cent in the first quarter of 2020 (compared to the same period last year) and IndiHome, the fixed broadband business, also growing by 19.7 per cent.

Building a Digital Business Ecosystem

Erick Thohir, Minister of State Enterprise Ministry BUMN (Badan Usaha Milik Negara), whose father was one of the co-founders of the Astra Group and who himself founded the Mahaka Group, an integrated media group including television stations, radio stations and newspapers, and who is also known in Japan for his acquisition of Inter Milan, where Yuto Nagatomo was employed, in 2013 (all shares sold in 2018).

The appointment of Fajrin Rasyid, 34, co-founder and president of e-commerce unicorn Bukalapak, as Telecom's Digital Business Director last week made headlines in Japan, but it reminded me of a successful startup entrepreneur joining the board of directors of NTT or KDDI, with a decision-making speed and boldness that you wouldn't expect from a national company.

What Faslin is trying to address is the creation of a "business ecosystem" within telecoms, and he lists four specific things.

  1. Transforming Operational Process
    ⇒Application of digital technology to improve the efficiency of existing processes.
  2. Transforming Customer Experience
    ⇒The application of digital technology to meet the needs of customers through various channels.
  3. Transforming Business Model
    ⇒Applying digital platforms to the non-digital world (cloud, IoT, data centers, payments, etc.)
  4. Transforming Digital Service
    ⇒Digital technology to reach consumers' detailed needs.

In other words, Telecom's idea of a "business ecosystem" is to tackle social issues not only for Telecom, but also for Telkomsel, IndiHome and other group companies as a whole, leveraging Telecom's existing online connectivity infrastructure while building a new business platform using digital technology.