Indonesia Tariff Survey: Hutch Pricing Comparisons

We collate below the Hutch Indonesia prepaid tariffs launched yesterday and compare it to all other prominent brands in Indonesia.
Headline Prepaid features: Approx 20-30% cheaper than GSM
Hutch off-net local rates are 31-34% cheaper compared to the average GSM for both peak and off-peak; and even 10% cheaper to Mobile-8 CDMA tariffs. They are slightly expensive compared to the Bakrie fixed wireless tariffs.
Hutch off-net long distance rates are 16-18% cheaper compared to the average GSM for both peak and off-peak. Slightly expensive to the Mobile-8 and Bakrie tariffs.
Hutch has priced its on-net plans extremely cheap, given the empty status of a new network. However we don't think on-net matters right now with no subscribers on the network.
SMS is however more expensive than any other operator.
Features Worth Noting: Free Talktime less than GSM incumbents, Chargeability on Per Minute Basis (A big turn-off for Indo subs)
The starter pack free talktime for other operators is Rp10,000 - for Hutch it is only Rp5,000 off-net. So the subscriber in gaining the cheaper tariffs, loses Rp5,000 worth of talktime (~10% of industry ARPU). There is another Rp10,000 free on-net talktime, but we would consider the on-net immaterial due to lack of subs in its network.
The chargeability is on a per minute basis where as KartuAs and Bebas are chargeable on per second basis; and all other GSM tariffs are on per 30 sec basis. Our understanding is that subscribers have shorter calling durations in Indonesia.
By charging on a per minute basis, Hutch is able to create the marketing headlines and at the same time attempts to generate a decent ARPU. However we think this will limit MOUs to 30-35 minutes, which at these tariffs will equate to Rp30-32k ARPU.
Implications:
The 20-30% cheaper rates are mostly as expected; and so is the per minute features. Hutch pricing strategy and discount is similar to that in Vietnam launched a few months earlier. These tariffs put Hutch in direct competition with the CDMA fixed wireless operators (same coverage and tariffs).
As highlighted earlier, these cheaper tariffs could lead to some short-term weakness in incumbents Telkom and Indosat stocks. However the lack of Hutch coverage (capex remains too low in our view), per minute chargeability (unattractive to customers in our view) and expensive SMS (important to Indonesians) are unlikely to cause any material impact on the incumbents this year.
The tariff survey is based on our Hutch Indonesia call center discussions and their website review.