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Abstract
Smartphone revolution, the rise of OTT (Over the Top) technology, and growth of mobile application drive explosion in data demand and erosion of legacy service, which voice and SMS (Short Messaging Service) revenue. It forces mobile telecommunication operators to explore new revenue sources through new business development by taking the opportunity across technology, media, and telecommunication (TMT). Telkomsel Mitra Inovasi (TMI), Telkomsel Corporate Venture Capital (CVC), conducts non-organic business development through investment in an early-stage startup from TMT sectors. January 2020, TMI followed in Series B1 funding of the Internet of Things (IoT) startup. The investment evaluation utilizes two factors which capital gain and incremental revenue to existing Telkomsel business. There is uncertainty in financial return on high-risk investments in a new startup company, and existing Telkomsel IoT provides smart connectivity services. However, connectivity will become increasingly commoditized, declining from 9% of total IoT revenue in 2018 to 5% in 2025. Consequently, Telkomsel IoT should expand its role to seize the incremental revenue opportunities. This research project uses discounted cash flow (DCF), secondary data to predict expected financial return after capturing possible risk investment for sound management decisions.
Highlights
In the past few years, mobile telecommunication companies' business has shifted from legacy services which voice and SMS (Short Messaging Service) to data service
Methodology of Research The methodology of this final project is using a quantitative method by calculating fair projection incremental revenue through free cash flow, net present value, and terminal value
Indonesian government recognizes the benefit of Internet of Things (IoT) to support implementatio n of Making Indonesia 4.0 program
Summary
In the past few years, mobile telecommunication companies' business has shifted from legacy services which voice and SMS (Short Messaging Service) to data service. The change shifts towards a digital business with the support of the smartphone revolution, Over-The-Top (OTT) technology maturity, and bubble of a digital technology startup. The smartphone revolution has led to an explosion in data demand. Digital technology startup brings real service through the mobile application to fulfill people's daily life needs, such as food delivery, transportation, personal loan, shopping, mobile money, and payment. Mobile telecommunication operators must make more contributions to the digital world to gain more benefits. Otherwise, they will only become the dump pipe
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