Shares of PT Telekomunikasi Indonesia (Persero) Tbk. or Telkom moving fast throughout the Tuesday (Nov 17), driven by the investment sentiment made by the company to Gojek. For those who do not know Telkom Indonesia, or Telkom in short, the 164 year old company is the largest telco in Indonesia and has thus branched out to media, property and fintech.
Telkom through its subsidiary PT Telekomunikasi Selular (Telkomsel) has just signed a cooperation agreement with Gojek, and invested around USD 150 million or around Rp2.10 trillion.
Through this investment, it’s said that Telkomsel and Gojek will focus on developing innovative products and programs that can provide cost savings such as joint promotions and product bundling – so far that I can think of is probably a bundling of mobile data with GoPlay subscription. GoPlay is the on demand video streaming service, provided by Gojek.
Just earlier this year, Telkom came to public said that the company is preparing Telkom Fund, an investment managed by MDI Ventures, around USD 500 million to support the digital transformation of Telkom Group. One of their strategies is to invest in Indonesia-focused startups.
And we can tell that Telkom is the driving force behind the state-owned company’s digital transformation efforts.
In recent years, Indonesia has made the transition of large SOEs to a fully digital paradigm. State owned banks, for example, have released various technological innovations since 2018 and some have even launched their own online lending platforms for SMEs. State-owned banks have also established key partnerships with many fintech startups such as Privy, Oy, LinkAja, and ModalRakyat.
Challenges to address
Telkom itself doesn’t really have a good history when it comes to managing digital business. Some of their innovations collapsed. Most recently, a collaborative platform with ecommerce giant eBay, Blanja, was finally shut down.
It might be a different story this time as they have Fajrin Rasyid, Co-Founder of Bukalapak on board as their Director of Digital Business.
Though Gojek the investment is actually a good action – government trying to support local startups and presumably borrowing their expertise to create a better digital ecosystem for SOEs, it is easier said than done.
Previously, Telkomsel owned T-cash, an e-wallet with a sticker on your phone to tap during the transaction which around 2 years ago merged with state owned banks’ e-wallet. Now, this T-cash has become LinkAja.
It is interesting to know that prior to the Gojek investment news, LinkAja was reported to raise USD100 million from Grab. Maybe Gojek will use the Telkomsel investment to invest in LinkAja as well?
It wasn’t easy for Telkomsel to manage T-cash as it is not their expertise. However, they could easily on board people as it’s connected with their phone number – bear in mind that Telkomsel has the biggest user base in Indonesia.
If we see other telcos investments outside Indonesia, in the Philippines for instance, Globe (a major telecom company) owns Gcash. Gcash itself is a financial app which provides easy access to do transactions as well as money transfer to do investment.
Gcash’s (thus far) success is a result of a good partnership of Globe, Ayala, and Ant Financial. It is a proven way that in order to branch to other sectors, these telcos giants need a good partner who understands the industries and the region well.
Addressing the willingness of SOEs to go “more digital” and on board Gojek in the process, it is a good shot. However, they need to work on the probability of cultural clash – SOEs are famous for their inefficient operations and organisations, struggle to control corruption, and are reluctant to change.
The investment they put in Gojek is “clearly” an effort to borrow Gojek tech expertise in order to help create a better digital ecosystem for SOEs. Gojek itself might need more funds as Grab has been aggressively taking its market share in Indonesia, while Gojek’s own international efforts are not yielding any positive results.
We predicted that ecommerce and mobile wallet players in Indonesia will consolidate in 2020. While a pandemic threw a lot of things upside down, this trend is firmly gathering pace at the end of the year.