Indonesia’s 5G spectrum auction to widen coverage, capacity gap amongst carriers

The 700 MHz and 2.6 GHz allocation links coverage, capacity, and tower demand.

Indonesia’s auction of 700 megahertz (MHz) and 2.6 gigahertz (GHz) spectrum is set to reshape competition amongst mobile operators by widening differences in coverage and capacity, according to a UOB Kay Hian sector update dated 18 June.

The auction covers three nationwide blocks in each band. The 700 MHz band, used for wide-area coverage, is split into two 2x15 MHz blocks and two 2x10 MHz blocks. The 2.6 GHz band, used for high-capacity urban traffic, is divided into 80 MHz, 60 MHz and 50 MHz blocks.

Winners are expected before Indonesia’s Independence Day on 17 August 2026. Bidders are Telkomsel, a subsidiary of Telkom Indonesia, Indosat, and XLSmart.

The report notes that 700 MHz improves coverage efficiency, whilst 2.6 GHz increases urban network capacity. Together, they support broader 4G expansion and 5G rollout across Indonesia.

The auction framework has been revised, with upfront payments cut to two times annual spectrum obligations from three times previously. Allocation will consider price and rollout commitments.

Telkomsel’s existing spectrum base makes new allocation largely incremental whilst Indosat is most exposed to limited low-frequency spectrum. The report also noted that XLSmart enters with 850 MHz holdings, partly offsetting its 900 MHz return obligations.

The 2.6-GHz band is expected to boost capacity across all operators versus existing 2,300 MHz holdings, supporting higher 5G throughput.

Tower companies including Mitratel, Sarana Menara Nusantara, Tower Bersama Infrastructure, and Centratama Telekomunikasi are expected to benefit from mandated rollout obligations, including village coverage within five years and 5G deployment in selected cities.

Indonesia has about 3.8 towers per 10,000 people versus a global average of 8.1, indicating room for further densification. The report expects meaningful tower earnings impact only from mid-2027, given rollout timelines.

UOB Kay Hian maintains Market Weight on the sector, citing stable near-term earnings but divergence in longer-term competitive positioning based on spectrum outcomes.