IOH targets significant ARPU boost with new Ericsson platform

Communications service providers operating in low average revenue per user (ARPU) markets face tough investment choices. Returns from ARPUs as low as $2 or $3 per month can mean prioritizing investment in operational efficiency rather than in new systems and networks that could spur revenue growth.

The choice, however, need not be binary. In Indonesia, an ARPU of approximately $2.50 per month has not stood in the way of investment by Indosat Ooredoo Hutchison [IOH] in becoming a techco and targeting significant ARPU growth.

“Customers are not looking for cheap experiences. We are helping them do productive things,” said Vikram Sinha, President Director and CEO of IOH, speaking at TM Forum’s Innovate Asia 2024. Pointing to Thailand where ARPU is $7, Sinha is “confident we can go in that direction.”

Contributing to Sinha’s assurance is the Ericsson Digital Monetization Platform, which “gives us the confidence that now we are ready to monetize, and when 5G investment cycles start, we are going to make sure we do hyper personalization for our 100 million customers,” explained Sinha, adding that “sometimes it is good to be late on 5G; the ecosystem is getting ready.”

Sinha was clear from the outset that IOH had to move the company away from legacy business support systems (BSS) if it were to make the most of future technology and services.

“I think the legacy mindset will not work. The problem is … what you don't know is much bigger than what you know. So, I keep telling my leadership team that there is a lot happening when it comes to AI and the pace of change is incredible,” said Sinha.

AI, cloud and security are three current focus areas for the company. For example, IOH is looking to use AI to “revolutionize the financial services industry” in a market where 25% of Indonesians do not have a bank account.

Today, new services are already a source of strong growth: The company’s multimedia, internet and data [MIDI] business area increased 30.2% and now accounts for 14.1% of the company’s total revenues, according to its results for the nine-month period ended 30th September. Its overall revenues rose 11.6% year-on-year to reach DR 41,812 billion, while profitability rose 39.1% to attain IDR3,878 billion. Cellular services contributed 84% of the company’s revenues in the first nine months of 2024, after rising 9.5% year-on-year.

Partnering on services

IOH’s plan is that the Digital Monetization Platform will underpin a partner ecosystem that delivers hyper personalized services.

“We want to make sure that this Digital Monetization Platform opens up for APIs … [enabling] innovators to work together on making sure what we give is what customers want,” explained Sinha.

As the company looks towards service innovation with partners, Sinha emphasized the importance of “having the latest ingredients from the full stack offering from our side,” and of simplifying “the stack and make it control the data in a better way, making sure we can get faster offerings out to customers.”

IOH intends the Digital Monetization Platform to help it develop its enterprise business, notably in the provisioning of Internet of Things and private network services, including those that capitalize on 5G capabilities such as network slicing.

“We are trying to make life simple for our customers. If you want your customer to become your fan, you need to win their trust,” said Sinha, who pointed to the importance of “bringing everything into one place.”

Certainly, the need for simple, efficient architecture increases as services become more complex and data driven.

“You can’t do all these things with a complex architecture,” pointed out Per Narvinger, Senior Vice President, Business Area Cloud Software and Services, Ericsson, speaking during a fireside chat with Sinha and George Glass, CTO, TM Forum at Innovate Asia 24. “When you start launching new services like 5G SA … and network slicing, and you want to generate all that innovation, you need to have the data in one place to reap the benefits,” said Narvinger.

Features of the new Digital Monetization Platform system include a catalog driven architecture that replaces the previous legacy procurement driven approach, and IOH has seen performance improvement in multiple areas, from order activation to time to market.

Ericsson Digital Monetization Platform brings together Ericsson’s Charging, Billing, Order Care, Catalog Manager, Mediation, Digital Experience Platform along with TM Forum aligned Open APIs to deliver a comprehensive BSS solution that provides the cost efficiency, flexibility and speed necessary to monetize digital services.

A leap of faith

Getting the Digital Monetization Platform project off the ground, however, required not only business vision, but also a leap into the unknown.

“When I signed those contracts some of my friends called me from the industry and said ‘What are you doing? They are not ready,” recounted Sinha during his presentation at Innovate Asia 24. However, he said that his belief was that “when you want to do hard things you are not ready.”

Nonetheless, migrating 100 million customers from a legacy business support system (BSS) to a new Digital Monetization Platform is no small task and Sinha conceded that “it was a full rollercoaster”.

Yet the transformation was a success thanks to key elements provided by Ericsson OSS/BSS Services. A strong collaboration with a one-team approach between IOH and Ericsson was crucial, ensuring seamless communication and coordination. Ericsson’s IT Managed Services enabled proactive identification and resolution of potential issues with the right implementation of business KPIs monitoring.

The program’s commitment to a "first-time right" strategy facilitated a smooth cutover and migration, contributing to the achievement of migrating millions of prepaid subscribers in just 18 days, including an intensive 48-hour period, all without any disruptions. Furthermore, focus on automation streamlined operations and minimized manual errors, significantly enhancing efficiency and reliability during this complex transformation program.

Stressing the importance of the partnership, Sinha explained the companies have a joint target ambition of achieving a churn rate of less than 1% and moving towards ARPUs in the $3 to $5 dollar range.

During Innovate Asia 24 IOH and Ericsson signed a Memorandum of Understanding (MoU), which commits to co-developing innovations in generative AI (GenAI) and Machine Learning (AI/ML) within the Digital Monetization Platform and BSS ecosystems.

Going forward, Sinha sees the Digital Monetization Platform serving as a model for others.

“Our North Star is to make this a global lighthouse where Indonesia and Indosat get the full benefit [for] all … 100 million customers. But also, we want to make sure this is an instant repeat model, and that is where we are very focused and committed."

Watch the full discussion here.