Why Starlink’s foray into Indonesia is so important

Yesterday, May 19, Starlink announced market approval from the government of Indonesia to provide satellite internet across the world’s largest archipelago. Comprising ~17,000 islands, Indonesia is the fourth most populous country after India, China, and the United States. The island nation has a growing economy – the 16th largest gross domestic product in the world – and has aggressively invested in connectivity infrastructure to bring its population online.

In our Starlink report and financial model, Quilty Space identified Indonesia as a future “needle mover” for Starlink subscriber growth. Here’s why:

-         A growing middle class. In just 30 years, 80% of Indonesia’s poor rose out of poverty, according to the World Bank. The country now counts 115 million people in its middle class, of which the World Bank classifies 52 million as “economically secure.” This presents a large addressable market for Starlink, as internet connectivity is a frequent early investment for newly minted middle-class households.

-         Treacherous terrain. As the world’s largest island nation, Indonesia is notoriously difficult to connect via traditional terrestrial infrastructure, like fiber and cell towers. Connecting the islands, especially smaller and more rural ones on the country’s eastern half, can be prohibitively expensive. For this reason, satellite operators have flocked to Indonesia as installing satellite antennas is easier and simpler.

-         USO familiarity. BAKTI, an arm of Indonesia’s Ministry of Communication and Information, has invested heavily in commercial satcom for Universal Service Obligation (USO) programs to bring internet to far-flung corners of the country. The most prominent example is BAKTI’s backing of the SATRIA-1 GEO satellite with local operator PSN, and the purchase of half the capacity on PSN’s Nusantara Lima satellite. BAKTI continues to issue tenders for satcom and fiber projects (including one just two days ago). We expect Starlink will soon be involved in Indonesian USO programs, through BAKTI or other avenues.

More than half of Starlink’s ~2.7M subscribers are in the United States, but that number has been ticking down as more countries and territories authorize the service. On May 19, Starlink said it also received authorization in Fiji, bringing the number of countries, territories, and markets that can access the service to 99 (note: how Starlink defines territories and markets is unclear, as eight weeks ago, the company said it had 72 countries approved).

Indonesia could be the country that tips Starlink’s international subscribers over the 50% mark. Already Starlink has a deal with the Indonesian government to improve connectivity for health and education sectors. The nation’s fledgling middle class presents a target-rich market for consumer connectivity. And, with Indonesia’s proximity to the five busiest cargo harbors in the world (four in China, one in Singapore), it's a key market for maritime connectivity, a sector where Starlink has swiftly gained market share.

With Indonesian market access secured, the last big needle-moving country awaiting authorization is India, the world’s most populous country. Starlink is reportedly close to gaining the last required Indian government approval, completing a lengthy and famously difficult process for foreign satellite operators. 

SOURCE: https://apnews.com/article/indonesia-bali-elon-musk-starlink-internet-service-8444ca8b5da4f4a9973a66f8fd1d3e0f