Indonesia Gets Second 5G Operator but Spectrum Issues Remain

Indosat Ooredoo has become the second telecom operator in Indonesia to offer 5G commercial services. In May this year, Telkomsel became the country’s first commercial 5G operator. Further, XL Axiata and Smartfren are planning to conduct operational tests for launching their 5G services.

Indosat, which is using the 1.8Ghz band for its 5G service, sees the initial demand for the service coming more from the B2B segment, specifically the manufacturing, health, SME and supply chain sectors. By the end of this year, Indosat targets to expand its 5G coverage to 10 cities (around 2% of total cities in Indonesia) from the current five. These five cities are also covered by Telkomsel’s 5G network.

Longer time needed to achieve ‘ideal’ spectrum

However, in the context of initial implementation, the current bandwidths allotted for 5G to Telkomsel (30Mhz) and Indosat (20Mhz) are less than the “ideal” requirement. According to a GSMA recommendation, regulators should aim to assign a minimum of 80Mhz-100Mhz of contiguous spectrum for the first 5G mid-band.

More smartphones support Indosat’s 5G band

There are typically more smartphone models supporting the band that Indosat uses for 5G (1.8Ghz) than the one Telkomsel uses (2.3Ghz). We expect the demand for 1.8Ghz compatible smartphones to grow in the near term but probably not in a rapid manner due to a limited coverage area and the operator’s initial focus on the B2B market.

Merger with Hutchison 3 Indonesia (Tri) may benefit Indosat’s 5G

In December 2020, Indosat’s parent company Ooredoo Group and CK Hutchison Holdings entered an exclusive and non-legally binding MoU for a possible transaction to combine their businesses in Indonesia. The MoU’s exclusivity period is valid until June 30, after being extended from April 30. Indosat’s merger with Tri may help improve Indosat’s 5G service as Tri uses its 10Mhz bandwidth on the 1.8Ghz band. However, any impact of the merged entity’s spectrum also depends on the government’s view on the matter.


  • Since 5G networks in Indonesia are still in their early stages of implementation in terms of coverage and spectrum, Indosat and other operators may need time before they start generating significant revenues from 5G services.
  • This gradual spread of 5G connectivity will benefit smartphone brands as consumers would now prefer to buy a compatible 5G phone to use 5G services or in anticipation of getting 5G connectivity. Nevertheless, affordability is likely to remain a key issue considering the COVID-19 pandemic impact on the consumers’ purchasing power.
  • We think 5G technology will become much more compelling for the country’s telecommunication ecosystem (operators, consumers and devices) in 2022-2023, assuming Indonesia’s Ministry of Communication and Informatics is able to achieve its target to free up 1K Mhz bandwidth from mmWave bands for mobile broadband by 2022.

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