PROPOSED BUSINESS STRATEGY IN OTT-DOMINATED ERA TO COUNTER THE DECLINING INTERCONNECTION BUSINESS OF PT.TELKOM INDONESIA

• Main Author: Lilin
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/83993
• Institution: Institut Teknologi Bandung

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. This study aims to provide a comprehensive analysis of both the internal and external business environments, considering how regulatory changes, technological advancements, and market shifts affect PT Telkom Indonesia’s position in the Indonesian telecommunications sector. By understanding these factors, the research aims to formulate strategic initiatives that will enable PT Telkom Indonesia to adapt and succeed in the evolving telecommunications industry. This research uses a qualitative research method, combining data from primary and secondary sources. The research used various analytical tools like SWOT analysis, TOWS matrix, PESTEL analysis, Porter’s Five Forces framework, and VRIO analysis. These tools were applied to understand the competitive landscape, evaluate internal resources and capabilities, and identify strategic opportunities and threats. The research design provides a comprehensive view of the current state and future possibilities of the interconnection business for PT. Telkom Indonesia. The findings show that PT. Telkom Indonesia's interconnection business has seen a significant decline, with revenue decreasing from IDR 4.76 trillion in 2018 to IDR 1.91 trillion in 2022. This represents a decline of approximately 59.87%. This decrease is due to the rise of OTT services, which offer cheaper and more flexible communication options than traditional interconnection services. An external analysis using Porter’s Five Forces revealed high competition due to the upcoming technology transition from Time Division Multiplexing (TDM) based interconnection to IP (Internet Protocol) based interconnection and a strong threat from OTT substitutes. PESTEL analysis highlighted important regulatory, technological, and social factors affecting the business. Internal analysis with the VRIO framework showed that while PT Telkom Indonesia has strong infrastructure and a large customer base, it lacks the innovation and agility needed to keep up with rapid market changes. iii The research concludes that beside the rapid growth of OTT services, the regulatory environment has significantly influenced these interconnection business dynamics. The Ministry of Telecommunications and Information Technology Regulation Number 5 of 2021 requires the transition from Time-Division Multiplexing (TDM) to Internet Protocol (IP) based interconnection. This shift presents both opportunities and challenges for PT Telkom Indonesia. On the positive side, it sets new technical and operational standards that can enhance efficiency and enable new services. However, it also increases competition from other telco providers in Indonesia. An opportunity 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. This role can centralize and optimize IP interconnection traffic routing, enhancing service delivery efficiency and creating new revenue streams by positioning the company as a national IP traffic hub. 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.