Code JDMBA2b: Motorola Going After Small Towns To Increase Sales

Tuesday, May 24, 2005

Motorola Going After Small Towns To Increase Sales

Here is as interesting article from the Jakarta Post:
http://www.thejakartapost.com/detailbusiness.asp?fileid=20050523.P04&irec=3

There should be some positive implications for Both IIT and TLK here.

"He said that Motorola's strategy was to "connect the unconnected" with new low-cost but high quality cell phones. The firm targets the small towns because only around 8.5 million of Indonesia's 220 million population (about 3.9 percent) have access to fixed-line phones, which are mostly in urban areas"

"Therefore, Motorola aims to double its cell phone sales this year by introducing products priced below Rp 400,000, or less than its international standard of US$40, to rural areas."

"Motorola sells low-cost cell phones to migrant workers and their families to enable them keep in contact at least through SMS. Moreover, the company has been working closely with cellular phone operators, by following their moves in establishing infrastructure in new areas where they provide services. The growth of cellular and fixed wireless services has been quite remarkable over the course of the year, with the number of cellular subscribers increasing faster and recording 25 million by last October, up by about six million from the end of 2003. Giants PT Telkomsel and Indosat dominated the sector with a combined market share of 83 percent, followed by PT Excelcomindo Pratama (XL) and a few new players like PT Bakrie Telecom and PT Mobile-8 Telecom."

"A whopping $1 billion was invested this year by cellular operators to build new infrastructure and upgrade services, including launching new products and brands. 'Indonesia is among two or maybe three left untapped markets. Together with India and Bangladesh, Indonesia has a huge population with low penetration,' Van Tilburg said. He went on to say that this year Motorola aimed to sell over one million cell phones -- double last year's sales -- with about two-thirds of them being units priced below Rp 1.5 million. If Motorola achieves this, it may be able to achieve its ambition of taking second place after Nokia in holding the biggest cell-phone market share in the country."

Disclosure: I am long TLK. I do not own IIT now but have owned it in the past. I may be buying more IIT shares (assuming the right price point) in the near future.

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