Indosat Ooredoo Hutchison President Director and CEO Vikram Sinha opened up on his strategy to transition the operator into a native AI technology company for lofty growth targets, and contribute to Indonesia’s ambition to become a developed nation over the next two decades.
The executive was speaking in a media briefing during TM Forum’s Digital Transformation World in Copenhagen, which took place earlier this month.
Sinha first broke down how Indosat Ooredoo Hutchison (IOH) has progressed since completing its merger in January 2022.
“This merger has benefited rural customers. In 2023 coverage expanded to 10 million more people which is significant,” said Sinha.
“Government policy makers understand the role which the telco sector plays, and they all understand how important it is for the larger purpose of the digital economy’s impact on GDP growth.”
The Indonesian telecommunications market grew by 5% in the last two years, noted Sinha, but he believed there is potential to grow closer to 8-10% while adding to Indonesia’s GDP due to the Indonesian landscape and the potential of AI.
“We very strongly believe that AI has a potential to help Indonesia grow faster in GDP, it will help Indonesia reach the golden vision of being a developed nation much sooner, if we get this piece right,” said Sinha.
Indonesia laid announced its Golden Vision 2045 plan five years ago. The plan is to transition from a developing agriculture and commodity based economy, to a technologically advanced developed nation in the next 21 years.
Sinha believed IOH, one of Indonesia’s oldest and largest enterprises, will have a key role in this development. He laid out three key pillars for IOH’s growth to aid in this wider strategy.
Three pillars
Firstly, the company wants to develop into a true so-called “AI Native Telco”, Sinha defines this as an operator that embeds AI into its core business. Starting with personalisation of customer and managing capex productivity.
AI will then be embedded into other organisational functions such as procurement, human resources, sales and marketing, essentially “every function”.
The technology will also save the company on millions of dollars through capex efficiency, claimed Sinha. He detailed that IOH spends around US$700 million a year on capex equating to almost a quarter (24%) of revenue, the aims to cut this down to 20% in 2024 by using AI for network capacity management.
“When we used to do it (network management) manually, capacity planning accuracy used to be anywhere between 75% to 80%, but when we started using AI, not even Gen AI, just AI machine learning - accuracy had increased to almost 98%.
“In Q1 this year, I was able to save close to US$10 million. On capacity itself, I spend anywhere between US$300 to US$400 million so this equated to 15% improved productivity,” said Sinha.
Sinha stressed that this is “not about saving money” as IOH has a “growth mindset”. Rather it’s about using AI to invest smarter.
The second pillar is becoming an ‘AI Native TechCo’, this pillar he explained is to “explore new businesses” and focus on providing technologies to financial institutions and energy providers.
Embarking on this TechCo transformation, IOH built a unified data platform with Google Cloud which took the operator almost a year to do. This is part of “getting basic steps right” or success in AI will be hard to gain.
Thirdly, IOH will invest into its people, an example of this is the operator opening its AI Centre of Excellence.
“We very strongly believe that AI has a potential to help Indonesia grow faster on a GDP, it will help Indonesia reach the golden vision of being a developed nation much sooner, if we get this piece right.
“We are putting a disproportionate focus on human capital development. But we will not be successful in using technologies such as AI as enablers of growth, if we don’t invest in our people,” said Sinha.
IOH growth targets
These are the pillars IOH will work towards for growth, Sinha said, “to empower Indonesia we need to have strong balance sheet and P&L”.
The chief executive laid out an “ambitious target” of doubling EBITDA from US$1.45 billion (IDR23.9 trillion) to US$3 billion by 2028.
Sinha said this large target is achievable due to multiple avenues of growth available Indonesia. First, there are 21 million new connections to be made from people who live in rural areas. Sinha noted “there are very few countries in the world with this kind of opportunity”. He also believed ARPU in Indonesia is under-indexed with users on average consuming 12-13GB of data, when in the region it operates, the average is 20-24GB.
“It's a clear opportunity that we can grow from our current ARPU level of US$2.8 to US$4 or US$5 dollar over the next two to three years,” said Sinha.
Another growth engine will be fibre-to-the-home (FTTH). Sinha noted there are around 80 million homes in Indonesia and this figure will rise up to 35% in the next four years. IOH set out a target of connecting up to 10% of Indonesian homes with a mix of FTTH and Fixed Wireless Access (FWA) broadband.
“Our targets are ambitious and bold, but we believe what we have demonstrated since the merger in the last 26 months the ability to execute this plan,” said Sinha.
