Indosat sees ARPU lift from AI services

• Indosat Ooredoo Hutchison (IOH) reports significant growth in its first quarter
• It expects an uptick throughout the year and is on course to revise its guidance
• The launch of AI-enabled services is helping to drive higher average revenue per user (ARPU), with more services and growth to come, say the telco’s executives
• The ‘AI-native telco’ is also starting to report revenues from its AI Neocloud infrastructure

Indonesia’s second-largest telco, Indosat Ooredoo Hutchison (IOH), has reported a strong start to 2026 thanks in part to the launch of AI-enabled services, and it expects such services to drive an ongoing increase in its average revenue per user (ARPU) levels during 2026. 

The operator, which with 94 million mobile customers is second in the market only to Telkomsel (160 million mobile customers), reported a 12.1% year-on-year increase in first-quarter revenues to 15.22tn Indonesia Rupiah (IDR) ($870m) – “the highest quarterly revenue in the company’s history”, it noted in this earnings announcement – and a 12.9% increase in earnings before interest, taxes, depreciation and amortisation (EBITDA) to IDR 7.25tn ($410m). 

The operator also boasted “continued momentum in its core mobile business, with blended ARPU increasing by 15% year on year to IDR 45,000 [$2.58], reflecting improved monetisation and stronger customer value.”

That ARPU growth is significant for a few reasons. IOH’s monthly ARPU had been stuck at around IDR 39,000 until the end of 2025 but now, following the launch of AI-enabled services, such as its anti-spam and anti-scam solutions, the key metric has increased significantly.

At the same time, IOH continues to add to its AI services portfolio: During the first quarter of this year, it started offering access to Google’s Gemini AI Plus as part of its mobile data bundles; and it launched Sahabat-AI, a “locally developed large language model designed to better understand Indonesian languages and context… Built on a multi-model and multi-modal AI approach, the platform is designed to lower barriers to AI adoption in Indonesia, while expanding access for individuals and organisations to use AI in practical and relevant ways.” 

During the company’s recent earnings call, Syed Kazmi, chief commercial officer at IOH, noted that the reported Q1 ARPU number was the average for the first three months of this year but that the ARPU at the end of March had reached IDR 48,600, “so it continues to trend positively,” he noted. “It’s early days, but through new services like Gemini, we see a clear upside on ARPU… We plan to have such significant launches on an ongoing basis, and that would be one of our drivers of ARPU growth.”

For the telco’s CEO, Vikram Sinha, these developments are reflective of IOH’s determination to evolve from being a traditional service provider to becoming an AI-native telco. 

“We used to be in the connectivity business for decades – now we have the opportunity to democratise intelligence and also monetise that,” he noted on the earnings call. “That journey has started. Our partnership with Gemini Pro has given some good early numbers, and that will help us on ARPU growth in the coming quarters. And there are more AI products in the pipeline, which gives us a lot of confidence that the ARPU growth journey will continue.”

Having developed a strong relationship with Nvidia, IOH has also been investing in AI infrastructure over the past few years. It is one of the most vocal supporters of the AI-RAN concept – it is working with Nokia and Nvidia on those plans and the trio have opened the AI-RAN Research Center in Surabaya – and it has been building what it calls a “distributed AI Grid” by positioning its datacentres, AI hubs and network infrastructure as the “backbone of Indonesia’s AI ecosystem,” it noted in this recent announcement. “By distributing AI computing capabilities across multiple locations, this infrastructure will bring AI resources closer to developers, enterprises and communities throughout the country,” stated the operator. 

IOH is currently referring to its AI datacentre facilities as its AI Neocloud, noting in its earnings announcement that it reported revenues of $28m in 2025 from the use of that high-performance compute platform, but added that revenues from its AI Neocloud during the first quarter reached $16m and that it has contracts valued at $170m already signed that cover service delivery for the next three years. That momentum, noted CEO Sinha during the earnings call, puts IOH “well on track to achieve the full year revenue guidance [for AI Neocloud revenues]... of around $60m for 2026.” 

The CEO also stated that, despite ongoing supply chain issues that are impacting the availability of vital compute and storage chips, IOH has “been able to get support on the whole supply chain” as it plans its Neocloud expansion, and added: “Having set the foundation in 2025, we are ready to scale in 2026 and [we are] getting a lot of demand in this business – we will share more updates in the coming months.”

Sinha also hinted that, if trends continue as expected during the current quarter, it is likely that IOH will need to positively revise its full year forecast which, when initially shared, put the company on course for full year revenues and EBITDA growth in the mid- to high-single digit range. He explained guidance is set to be reviewed at the end of June and there’s a good chance it will be revised up, as there is a great deal of confidence that “we are heading towards a very strong double-digit growth for full year”. 

- Ray Le Maistre, Editorial Director, TelecomTV