Indosat Ooredoo has emerged as one of Asia’s fastest growing telecom operators. Additionally, they also recorded the highest EBITDA growth in Q1 2021. We caught up with Vikram Sinha, Director & COO of Indosat Ooredoo to find out what makes them tick.
Twimbit: What driving this revenue and profit growth?
Vikram: I think if you look at Indosat Ooredoo performance, we have been having a very consistent back-to-back growth from the last 10 quarters. What is really making us do this in a consistent and sustainable manner is the way we look at our market, instead of looking at competition, we start with customer at the heart of everything, and then we take decision in terms of our product simplification, and the other important thing is a very disproportionate focus on customer experience. A lot has been done on improving the indoor customer experience. This whole techno commercial strategy which goes hand in hand with a very solid execution go-to-market is giving us this result. If you look at our H1 performance, our revenue, year on year is close to 12% up, and then what is very encouraging for us, is also the EBITDA, which is double of revenue close to 24%. The whole revenue is very nicely flowing up to EBITDA level and then when you look at our net profit for H1, we have delivered a net profit of close to 386 million US dollar. So, overall, it has been a good run for us.
Twimbit: How will you drive continued growth?
Vikram: As I said, this question of sustainability came to us few times in our analyst call in the end of 2019, the beginning of 2020. But now, we are more confident, and why I say so, look at our last 10 quarter performance. Our fundamentals are very solid not only top line and EBITDA but our important input metrics are also growing in a very sustainable manner. Whether it is 4G unique user, data traffic, net promoter score, customer satisfaction, all those things, give us confidence that we are on the right track, and we will keep building on this momentum.
Twimbit: Your enterprise business has seen good growth. What is the long term view on the impact of enterprise to overall business?
Vikram: I think this is a very good question. In quarter two our enterprise business grew faster than cellular revenue. Let me tell you, that Indosat Ooredoo is a very strong brand, and especially with Lintasarta our subsidiary, we have a very strong footprint and a very important role to play on the enterprise side. I think there’s a lot happening on that side. Today, enterprise and B2B contributes to around 16-17% of our revenue mix, we believe that this will take a quantum jump in next five years. Especially with IoT, machine learning, analytics, and a lot of new use cases, which we expect will come from 5G on the enterprise side, which will help us solve a lot of problems where our customers are working with us. So, we are building focus on those areas. We believe that enterprise will be a strong growth engine for us, we are in a good place. We are preparing for that specially with our partner ecosystem, we are getting ready to capture this opportunity.
Twimbit: What are your views on capturing growth in adjacencies such as financial services, commerce, gaming etc?
Vikram: Again, this is very close to my heart personally as telco and as Indosat Ooredoo specifically, our vision is that Indosat Ooredoo should be the digital life cycle partner of our customer. To do that, it is very important that we play a very critical role when it comes to financial services and other things like content and gaming. So, let me give you a few examples, we have already seen some quick win in this working with some of our partners. We are also looking at micro-financing, how do we ensure that we help the SMEs and all those customers, which we have. We are also working on taking our gaming strategy to next level. At the end of the day these adjacencies have to come to the mainstream the next five years, these will contribute incremental revenue, which is 15 to 20% of our revenue stream. This is the approach that we are taking, and we believe that the only way to do it is to have a very collaborative approach, we can’t do everything ourselves, we need to have right partners with us to tap onto this opportunity.
Twimbit: Cost efficiency has helped deliver improved EBITDA. How much more cost efficiency is possible?
Vikram: I think, if you look at our last 10 quarter journey, we have taken some very structural initiative on getting our cost structure right. From making sure that our total cost per site is very competitive so, we have seen some significant improvement there. The other thing, which is helping us is our digitalization approach whether it is the commissions, whether it is doing things differently, all those things have been really working well. Having said that, we still see a lot of opportunity, we feel that there is a clear opportunity, where we can further improve our cost structure. We want to make sure that we set a clear benchmark in the industry when it comes to some of these ratios around cost to service and CAPEX to revenue ratio. So, all these things we are watching very closely, but without cutting corner, our prime objective is we stay with a growth mindset. While doing that, we ensure that our cost structure and cost initiatives are supporting us in that journey.
Twimbit: Can you comment on customer experience related investments?
Vikram: When we started this three-year turnaround journey, we said that we will invest 2 billion US dollars, especially improving our 4G footprint and improving our customer experience. I’m happy to share that in terms of our investment, we are on track and we have already invested close to 1.5 billion US dollars. We have seen some very good results especially if you look at any third-party report, you will see quantum jump on Indosat Ooredoo performance in terms of customer experience. We have put a lot of focus on indoor coverage experience. COVID has really transformed the way people look at companies like Indosat Ooredoo, the way people look at the telco industry. I think COVID has been a silver lining for this industry. We all understand that, and especially at Indosat Ooredoo, we understand that we have a big role to play, to ensure that we keep the country going through our connectivity, we keep our customer always connected, we support SMEs to do their business while they are under these. Similarly, we are helping children and students who study from home, and so on, so forth. So, the point which I’m trying to say is all these things are only possible when you put a lot of focus on superior customer experience. This strategy of us is helping in terms of making sure that people are happy with our customer experience focus.
Twimbit: What is your view on cloud and what does that mean for your company?
Vikram: Post-COVID the whole focus on cloud and cloudification has taken a quantum jump. Also, it is important that the telco industry and companies like Indosat Ooredoo have a clear roadmap for our cloud strategy. So, we are looking at it in different buckets. One, what is our strategy of cloudification, how we can move things to cloud, and which is the best partner to do with which brings cost efficiency and more agility at the same time to our enterprise business. We have a lot of data centres, what do we do, in terms of taking it to next level, all these hyperscalers are coming into market. So, overall, this is a very interesting area and in last six to eight months, it has really taken a lot of focus and there is a lot of growth opportunity here. We are getting ready both ways, in terms of our IP network, our overall cloud strategy and the journey. We have a clear roadmap and we are working with partners, we want to make sure that we get a head start there, we get the right partner. Similarly on our enterprise side with our subsidiary Lintasarta we want to make sure that we are able to serve the country cloud need on ensuring that we have the right partner and the right strategy for the enterprise space.
Twimbit: Can you share your 5G rollout strategy and also your partnership with the municipality of Solo?
Vikram: We started our 5G journey from Solo city. Solo is very symbolic for two reasons. One, Indosat Ooredoo is the customer market share leader, we are number one there. Second, the mayor of Solo city, he is very entrepreneurial, he wants to work and make sure that how 5G can support SMEs. Solo is very rich on culture and heritage. So, we wanted to work with the SMEs and see how 5G can help solve some of the challenges which they have, how 5G can help kickstart the support which is needed to the SMEs. SMEs contribute to 60 to 65% of Indonesia’s economy. This was the reason why we started from Solo. It’s just a start of the journey, by this year-end we are looking at five cities. We will be commercial launching in Jakarta very soon then we will be doing it for Surabaya and then we will be doing in two more cities. This is just a start of a journey. 5G is more about collaboration, it is about making sure that the ecosystem is getting ready. We are working with all the partners, the government, and regulatory bodies to make sure that 5G is able to create the right positive impact for the country. For us, as Indosat Ooredoo, we don’t want to get into a speed game when it comes to 5G. 5G has to be much more than just talking about speed, we are more focused on the relevant use case. While we implement and work on all those things, we also want to make sure that Indosat Ooredoo gets the fair share coming out of it. So, it is a very exciting journey that we have just started.
