The arrival of a wave of predominantly Chinese fintech lenders, who often do not register and employ aggressive debt collection practices, is now alarming regulators. (Reuters Photo/Albert Gea)

SIM Card Registration Saves Telco's Money, No Impact on Growth


JUNE 21, 2018

Jakarta. Tighter registration requirements for prepaid SIM cards have helped Indonesian mobile operators save at least Rp 2 trillion ($142 million) annually, while having no negative impact on the growth in mobile data traffic.

Prior to the ruling, there was no limit on the number of SIM cards a person may possess, which prompted telecommunication operators to combine them with heavily discounted call and data packages. However, while this practice fueled growth for the companies as customers took advantage of it by using new SIM cards as so-called burn numbers, it also made it easier for people to engage in fraudulent activities.

This prompted the government to require all mobile phone customers to register a maximum of three prepaid numbers for every valid identity document between Oct. 31 last year and April 30 this year, or risk their numbers being suspended and permanently blocked.

This resulted in a 30 percent decrease in the number of prepaid SIM cards in use to 254 million by the end of that period.

Communications Minister Rudiantara said in May this year that the re-registration of prepaid SIM cards would reduce operators' costs. He estimated at the time that cellular operators would save up to Rp 2 trillion combined.

He said operators purchase about 500 million SIM cards from abroad every year, with each costing around or Rp 6,500.

He was of the opinion that operators could save up 50 percent on SIM card purchases, which could be allocated to repairs, maintenance, network expansion or customer service and product development.

Telecommunications operators have meanwhile all welcomed the government's effort to mitigate the misuse of SIM cards.

Ririek Adriansyah, president director of state-controlled mobile operator Telekomunikasi Seluler (Telkomsel), said the company's customer base is now gradually increasing from a slump during the registration period.

Telkomsel said it had 179.5 million subscribers in mid-June, compared with 150 million at the end of April.

The drop in SIM cards in circulation also has no impact on growth in mobile data traffic. XL Axiata, Indonesia second-largest listed mobile operator by market capitalization, noted that data traffic increased by 95 percent between June 8 and June 17, compared with same period last year.

Telkomsel said its data traffic jumped to 12.89 petabytes during the days leading up to Idul Fitri this year, doubling from the corresponding period last year.

Indosat Ooredoo reported a 73 percent increase in data traffic ahead of the Idul Fitri holiday.