Telco: Meeting with Komdigi: Pressing on new auctions; Pending Regulations and Vendors' Response (OVERWEIGHT)

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Telco

Meeting with Komdigi: Pressing on new auctions; Pending Regulations and Vendors' Response

We hosted Komdigi representatives, who shared updates on pending 1.4GHz regulation as vendors finalize 5G TDD compatibility and costs.
Komdigi plans to hold 2.6GHz and 700MHz auctions in 2025, prioritizing 2.6GHz for 5G, while 3.5GHz remains unavailable until 2028.
We believe MNOs currently hold greater strengths than future BWA players and maintain our view on MNOs’ growth through FMC strategies

Finalizing 1.4GHz spectrum regulation awaiting hardware equipment

Komdigi expects the 1.4GHz spectrum tender to take more time as it finalizes regulations on spectrum use, the number of licenses, pricing, and technical standards for BWA before moving into the provider selection process. Hardware vendors still need to complete 5G TDD compatibility in 1.4GHz (no benchmarks available) and assess costs for BTS, antennas, and modem/CPEs, with a target CPE price of ~Rp200k (we reckon with scale). Five providers have expressed interest, confirming the auction process. Tests show that a BTS serving 300 users within a 1km radius delivers speeds of ~10Mbps/ user, while an individual user can achieve up to 1.7Gbps on an 80MHz bandwidth.

Defining boundaries in 1.4GHz usage and ensuring providers open access

Komdigi aims to accelerate fixed internet deployment in Indonesia, with BWA complementing fixed BB to drive faster expansion. It requires eligible parties to hold a packet-switched Fixed Connectivity license without numbering, meaning providers cannot use it for cellular services. To further prevent mobile usage, Komdigi mandates that CPE devices must rely on electricity without battery support. Additionally, providers must share both the spectrum and available fiber backhaul (FO) with third parties through wholesale, ensuring fixed internet availability for households via spectrum sharing and FO open access. In the case of MNOs, they can join the 1.4GHz auction since they already hold a license to serve BWA.

Komdigi 5G cellular spectrum rollout plans within 2025

Komdigi supports the rollout of 5G TDD, recognizing its OPEX and CAPEX efficiency as well as its potential for industrial use cases (Exh.1). To enable this, it plans to auction off the 2.6GHz and 700MHz in 2025. The 2.6GHz spectrum can be finalized in 2025 for mobile services, pending resolution of a legal case. MNOs will likely prioritize 2.6GHz to maximize 5G advantages before turning to 700MHz, which is less ideal for 5G but can provide additional capacity. The 3.5GHz spectrum will only become available in 2028 (Exh.2). To support demand for new spectrum, Komdigi offers flexible payment terms by removing the initial double spectrum fees and allowing payments over an extended timeframe.

Manageable risk from BWA, MNOs can leverage own strengths

We currently have an OW rating on the Telco sector and continue to evaluate risks from upcoming spectrum auctions. The clear separation between BWA and cellular services in 1.4GHz allows MNOs to launch FWA using other cellular spectrums. New BWA providers pose a real risk to MNOs’ fixed market share, but MNOs can mitigate this with branding and FMC strengths. Additionally, BWA players must still prove their execution and service quality. A key risk remains the cost of the new spectrum.

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