indonesia telecom companies

How to Obtain, Telecommunication Service Provider Licence / Content Provider Licence in Indonesia

  • InCorp Editorial Team
  • 6 August 2015
  • 4 minutes reading time

Telecommunication Service Provider Licence

Obtaining a Telecommunication Service Provider Licence in Indonesia

The telecommunication industry has played an important role in the development of Indonesia’s economy over the last few years – a great opportunity to establish Indonesia telecom companies.

Not only has it increased connectivity across the country, but it has also helped in stimulating other sectors of the economy like banking, finance, software, hospitality, and trade. The telecommunication sector in Indonesia comprises several segments, namely mobile cellular services, fixed-line services, internet, and broadband services, and network infrastructure services.

As of 2013, Indonesia was the world’s third-largest telecommunication market in terms of mobile cellular subscribers, after China and India.

2014 was a tough year for the industry because of lower subscriber growth, a fall in voice average revenue per user (ARPU), and forex losses. It was also a year of industry consolidation accompanied by the retreat of CDMA operators.

Data, internet, and broadband services accounted for a substantial portion of operators’ revenue in the year. 2015 looks to be more promising with estimated industry growth of around 7-8%, according to the Ministry of Communication and Information Technology. Going forward, Indonesia’s young population and rising per capita income, coupled with an increase in smartphone penetration and data speeds, will add to the growth of this sector

As the market’s rapidly growing, Foreign investors are now more attracted to pursue the big opportunity in Indonesia telecom companies. Many investors are establishing a Telco and Internet Service provider company. To be able to establish a Telecommunication and Internet service Provider Company. Investors need to apply for the Telecommunication Service Provider Licence / Content Provider Licence issued by the Ministry of Telecommunication and Informations. Before you are able to apply for this license, if you are PMA you will need first to spend US$ 1,000,000 investment in Indonesia and be eligible for Permanent Business Licence.

And here are the detailed process and procedures to obtain the license for Indonesia telecom companies:

A) Coverage of Telecommunication Service Licence

1)      Basic Telephony Service

2)      Added-value Telephony Service

a)      Premium Call

b)      Phone Card

c)       Call Center

3)      Multimedia Service

a)      Internet Service Provider

b)      Network Access Point

c)       Public Internet Phone Service

d)      Data Communication System Service

e)      Content Provider Service

 

B) Procedures to Obtain the Licence

1)        Principle Licence is a license issued to bring opportunity towards the provider to create and prepare the necessary facility/hardware in a certain time frame according to the category of telecommunication organizing

2)        Operational Eligibility Examination/Uji Laik Operasi (ULO) is a technical examination conducted by an accredited agency or team formed by Directorate General with the main purpose to conduct a system examination process both technically and operationally

3)        Licence of Conduct (Modern Licensing) is the final license issued after the holder of the principal license passed the Operational Eligibility Examination. This license is in form of a contract that consists of rights, obligations, sanctions, and reports of conduct. The license will be evaluated every 5 years

 

 C) Timeline for Indonesia Telecom Companies

  • Time Frame: 6 Months
  • Notes

o   From the time frame above, 2 months required to obtain Principle License and another 4 months for testing and examination until CP License is approved

o   During the Operational Eligibility Examination/Uji Laik Operasi (ULO) process this will be between Investor and Kominfo only since this is a technical step of the application.

o   The fee excludes Telecommunication Company Obligation fee and Contribution KPU/USO to Government for 1.75% of gross revenue

Cekindo is ready to assist our clients to obtain Telecommunication Service Licence from the Ministry of Telecommunication and Information to support our clients in reaching their goals in Indonesia.

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

Get in touch with us.

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Frequent Asked Questions

It should take between 30 to 45 days.

There are two main types, namely, primary business licenses and non-primary business licenses. The primary ones commonly apply to various industries, such as general and industrial business licenses. Additional non-primary ones are included, depending on the operations of your business. Examples of non-primary business licenses are operational and commercial licenses.

Yes, you must apply for it to be able to issue work permits for your foreign employees. This permanent business license is also a prerequisite for the applications for other business licenses and import licenses.

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.