Abstract :

The telecommunication industry in Indonesia has experienced significant changes, largely driven by the rapid growth of Over-the-Top (OTT) services such as WhatsApp, Facebook Messenger, and Telegram. These platforms have drastically impacted consumer behaviour, shifting preferences from traditional voice and SMS services to internet-based communication methods. PT Telkom Indonesia, a dominant player in the Indonesian telecommunications sector, has seen a decline in its interconnection business revenue, primarily due to this technological shift and the competition from OTT services. The primary objective of this research is to assess the current state of PT Telkom Indonesia’s interconnection business, identify the challenges and opportunities presented by the rise of OTT services, and propose effective business strategies to address the decline in traditional interconnection revenues. This study uses a qualitative research method, combining data from primary data which was gathered through in-depth interviews with key internal stakeholders. Secondary data came from industry reports, academic journals, financial statements, and regulatory documents. The research used various analytical tools like SWOT analysis, TOWS matrix, PESTEL analysis, Porter’s Five Forces framework, and VRIO analysis. PT Telkom Indonesia’s interconnection business has experienced a significant revenue decline of approximately 59.87%, dropping from IDR 4.76 trillion in 2018 to IDR 1.91 trillion in 2022. This decline is primarily due to the rise of OTT services, which offer cheaper and more flexible communication options than traditional interconnection services. External analysis using Porter’s Five Forces revealed high competition from the technology transition from Time Division Multiplexing (TDM) to Internet Protocol (IP) based interconnection, along with a strong threat from OTT substitutes. PESTEL analysis highlighted significant regulatory, technological, and social factors affecting the business. Internal analysis with the VRIO framework showed PT Telkom Indonesia’s strong infrastructure and large customer base but also identified a lack of innovation and agility in adapting to rapid market changes. The research concludes that PT Telkom Indonesia needs a comprehensive strategy to address the decline in its interconnection business. One of the initiative strategies for PT. Telkom Indonesia, due to the regulation about transition from Time-Division Multiplexing (TDM) to Internet Protocol (IP) based interconnection, is becoming an IP Hubber. By becoming IP Hubber, PT. Telkom Indonesia can leverage its existing infrastructure and expertise to maintain significant revenue from its interconnection business, especially in transit services, which are a major contributor to its current interconnection revenue. Investing in R&D is crucial to stay competitive, offer bundled services, and form partnerships with OTT providers to diversify revenue. Additionally, Telkom should implement a knowledge transfer program to retain expertise in TDM based interconnection and enhance skills in IP-based interconnection, ensuring Telkom maintains its competitive edge in Indonesia’s telecommunications industry

---

Keywords :

Business Strategy, Interconnection Business, IP-based Interconnection, OTT (Over The Top), Regulation., TDM-based Interconnection

---

References :

1. (2023). Laporan Tahunan 2022. Jakarta
2. Nurhayati-Wolff, “Number of mobile internet users in Indonesia 2020-2029,” Statista, Feb. 2024. [Online]. Available: https://www.statista.com/statistics/558642/number-of-mobile-internet-user-in-indonesia. [Accessed: Jun. 12, 2024]
3. Nurhayati-Wolff, “Penetration of leading social networks in Indonesia as of Q3 2023,” Statista, Feb. 26, 2024. [Online]. Available: https://www.statista.com/statistics/284437/indonesia-social-network-penetration. [Accessed: Jun. 12, 2024]
4. “WhatsApp Users by Country 2024,” World Population Review, 2024. [Online]. Available: https://worldpopulationreview.com/country-rankings/whatsapp-users-by-country. [Accessed: Jun. 12, 2024]
5. Telkom Indonesia. (2016). DOKUMEN PENAWARAN INTERKONEKSI (DPI TELKOM). TELKOM INDONESIA.
6. DWS, T. (2023). Business Performance Report
7. Ghezi, M. Georgiades, P. Reichl, N. Le-Sauze, and C. Di Cairano-Gilfedder, “Generating innovative interconnection business models for the future internet,” J. Policy, Regul. Strategy Telecommun. Inf. Media, 2013.
8. -H. Ahn, S.-P. Han, and Y.-S. Lee, “Customer churn analysis: Churn determinants and mediation effects of partial defection in the Korean mobile telecommunications service industry,” Telecommun. Policy, 2006.
9. Jun, “Government Role in Fostering Emerging Technological Industries: A New Perspective for Industrial Policy Research,” China Economist, 2023.
10. K. F. Bresser and C. Powalla, “Practical implications of the resource-based view,” J. Bus. Econ., 2012.
11. B. Barney and D. N. Clark, “Resource-Based Theory: Creating and Sustaining Competitive Advantage,” Oxford University Press, 2007.
12. T. Rothaermel, Strategic Management: Concepts and Cases. McGraw Hill, 2012.
13. E. Porter, “Competitive Strategy: Techniques for Analyzing Industries and Competitors,” Free Press, 1980.
14. A. Pershing, Handbook of Human Performance Technology. Pfeiffer, 2006.
15. Weihrich, “The TOWS matrix—A tool for situational analysis,” San Francisco, 1982
16. Kementerian Komunikasi dan Informatika . (2021). Peraturan Menteri Komunikasi dan Informatika Nomor 5 Tahun 2021 tentang Penyelenggaraan Telekomunikasi. BIRO HUKUM KOMINFO.
17. Menteri Komunikasi Dan Informatika. (2006). Peraturan Menteri Komunikasi Dan Informatika. Nomor : 08/Per/M.Kominf/02/2006. Jakarta: Menteri Komunikasi Dan Informatika.
18. Pahlevi, R. (2024, May). INFOGRAFIK: Kekuatan Baru dari Merger XL dan Smartfren. Retrieved from katadata.co.id: https://katadata.co.id/infografik/664d3cbf5bb51/infografik-kekuatan-baru-dari-merger-xl-dan-smartfren
19. (2023). Laporan Tahunan 2023. Telkomsel.
20. Dean, B. (2023, December 12). WhatsApp User Statistics 2024: How Many People Use WhatsApp? Retrieved from Backlinko: https://backlinko.com/whatsapp-users
21. Walalangi & Partners. (2024, Maret 13). W&P Newsletter – Initial Results of The 2024 Presidential Election: What To Anticipate? Retrieved from Walalangi & Partners: https://www.wplaws.com/wp-newsletter-initial-results-of-the-2024-presidential-election-what-to-anticipate/
22. Badan Pusat Statistik. (2024, Feb 5). Indonesia’s GDP Growth Rate in Q4-2023 was 5.04 percent (y-on-y). Retrieved from BPS-STATISTICS INDONESIA: https://www.bps.go.id/en/pressrelease/2024/02/05/2379/indonesias-gdp-growth-rate-in-q4-2023-was-5-04-percent–y-on-y-.html
23. (2024, February 7). APJII Jumlah Pengguna Internet Indonesia Tembus 221 Juta Orang. Retrieved from APJII (Asosiasi Penyelenggara Jasa Internet Indonesia): https://apjii.or.id/berita/d/apjii-jumlah-pengguna-internet-indonesia-tembus-221-juta-orang
24. Kemp, S. (2023, February 9). DIGITAL 2023: INDONESIA. Retrieved from Data Reportal – Global Digital Insights: https://datareportal.com/reports/digital-2023-indonesia
25. Badan Pusat Statistik. (2023). Jumlah Penduduk Pertengahan Tahun (Ribu Jiwa), 2022-2023. Jakarta: Badan Pusat Statistik.