In an exclusive media roundtable at the DTW24 Ignite forum in Copenhagen, Denmark, Tony Eid, CEO of Telecom Review Group, conversed with Vikram Sinha, President Director and CEO of Indosat Ooredoo Hutchison (Indosat/IOH), gathering insights into the future of telcos in the era of AI.
The discussion unveiled crucial perspectives, shedding light on the driving forces, strategic initiatives, and aspirations behind Indosat's transformation. This dialogue not only provided a deeper understanding of the evolving environment in Indonesia but also offered a broader view of the global telecommunications industry's future.
Indosat's Visionary Strategy
Sinha began by highlighting the success of Indosat's merger, emphasizing its positive impact on customers, the country, and employees. He noted significant network expansion, with 10 million new coverage areas added in 2023, benefiting rural customers significantly. Post-COVID, policymakers have increasingly recognized the critical role of the telecom sector in driving Indonesia's digital economy.
The company's impressive performance includes a 56% total shareholder return in 2023 and a 22% EBITDA growth, placing Indosat among the top telcos in Asia. With over 100 million customers, Indosat is one of the few operators globally to achieve such scale.
Sinha then discussed the transformative potential of AI, highlighting the rapid growth seen in applications such as the App Store and ChatGPT. He stressed that Indosat is committed to leveraging AI to democratize innovation and aims to empower every Indonesian and boost the nation's GDP. Indosat's AI strategy is built on three pillars: integrating AI into core operations, creating new business opportunities in sovereign cloud security, and focusing on human capital development through an AI Center of Excellence.
Looking ahead, Indosat aspires to double its EBITDA from USD 1.5 billion in 2023 to USD 3 billion by 2028. This ambitious goal will be achieved by expanding core services, growing home broadband penetration, and enhancing AI, cloud, and security offerings. Sinha underscored the importance of maintaining a strong balance sheet and aligning initiatives with the company's larger purpose, which entails empowering Indonesia.
He also expressed confidence in Indosat's execution capabilities, which are bolstered by strategic partnerships with Google, Cisco, and Mastercard, and a shared vision with employees and stakeholders.
Pioneering an AI-Native Approach for Sustainable Innovation
A critical question was posed to Sinha about how the AI center fits into IOH's long-term vision and strategic roadmap for technological innovation.
Sinha responded by outlining Indosat's AI strategy, which is built on three foundational pillars. These pillars represent the strategic backbone of Indosat's AI initiatives, categorized into three key roles: AI Native Telco, AI TechCo, and AI Nation Shaper, collectively known as the Indosat AI North Star.
He emphasized the importance of adopting an AI-native approach across the organization rather than focusing on isolated use cases. Sinha explained that they decided against picking one or two use cases, as that approach wouldn't scale or be reusable. Instead, they created a comprehensive platform to support hundreds of use cases across the organization.
The first pillar involves embedding AI into Indosat's core operations to enhance personalization for customers and improve operational efficiencies in areas such as CapEx productivity, procurement, HR, sales, and marketing.
The second pillar focuses on the development of a sovereign cloud. Sinha highlighted the growing regulatory requirements for data sovereignty, with 40% to 70% of workloads in various countries needing to be handled locally. Indosat aims to meet this demand by partnering with local entities to provide end-to-end solutions for government and financial sectors.
The third pillar revolves around building AI capabilities within Indonesia through an AI Center of Excellence. Sinha revealed ambitious targets, including training a million individuals in digital skills, with 30,000 specializing in generative AI (GenAI). This initiative is set to commence in October, reflecting Indosat's commitment to fostering human capital development alongside technological advancement.
Sinha concluded by reiterating that these pillars are integral to Indosat's mission of empowering Indonesia, ensuring that the company not only adopts cutting-edge technology but also invests in the people who will drive its future success.
IOH's Future and Shareholder Engagement
Sinha was also asked about IOH's recent milestone performance following the merger and what message he had for shareholders regarding the future of telecom and technology in Indonesia.
In response, he emphasized the importance of timing and strategic alignment, noting Indonesia's potential to increase its telecommunications penetration significantly. He highlighted the role of technology as a key enabler in this growth, highlighting the need to democratize access beyond urban centers. Sinha outlined IOH's commitment to rural investment, through which the company aims to connect 21 million new users over the next three years.
Regarding human capital, Sinha underscored the necessity of investing in skills development, both within IOH and across Indonesia. He identified a significant skills gap and advocated for collaborative efforts between public and private sectors to address it effectively.
Reflecting on shareholder satisfaction, Sinha reiterated IOH's strong financial performance—a notable 56% total shareholder return—emphasizing that financial success aligns with the company's larger purpose rather than being an end goal in itself. He expressed gratitude for shareholder support and emphasized IOH's commitment to driving positive impact beyond financial metrics.
As the discussion concluded, Sinha underscored Indosat’s commitment to narrowing Indonesia's digital divide through strategic AI initiatives and partnerships. Indosat has made significant strides in advancing AI capabilities in Indonesia through a strategic partnership with NVIDIA. This collaboration marks a pivotal step towards establishing an artificial intelligence center. By partnering with NVIDIA, a global leader in AI and GPU computing, Indosat aims to leverage cutting-edge technology to drive innovation across various sectors in Indonesia.
Mentioning collaborations with Tech Mahindra and the ITU, Sinha emphasized Indosat’s Sahabat AI initiative, which leverages a base large language model (LLM) to enhance citizen services in local languages, starting with crucial sectors like tax services.
He expressed confidence in IOH's role in advancing Indonesia's technological landscape, ensuring equitable access to technology across diverse communities. Sinha concluded with a pledged commitment to fostering digital literacy and inclusive transformation nationwide, reflecting IOH's dedication to leveraging innovation for societal benefit.
