Telkom Satellite Error Causes Problems at Indonesian ATMs
Since Friday (25/08) many Indonesians are having trouble to use ATMs (for withdrawing money and conducting various payments). Last week the Telkom-1 satellite started to suffer technical difficulties as a shift on the satellite's pointing antenna disrupted transponders. Considering most of Indonesia's major banks use this satellite, owned by Telekomunikasi Indonesia, for their telecommunication network, thousands of ATMs - hence millions of Indonesians - are affected.
Indonesia's state-controlled Telekomunikasi Indonesia (Telkom) has since been shifting their clients to other satellites. However, there are still reports of non-responding ATMs. The Telkom-1 satellite is a geosynchronous satellite that follows an orbital period similar to the earth's rotation. The satellite, produced by US company Lockheed Martin, was launched in August 1999. It has an optimal lifetime of 15 years and therefore is already "old".
The majority of banks in Indonesia use a satellite connection for their networks because it is faster, cheaper and more efficient compared to a connection through optical fiber across the world's largest archipelago. This particularly involves ATMs in remote areas and in shopping malls where it is difficult to create a connection through optical fiber.
Major Indonesian banks Bank Mandiri, Bank Negara Indonesia (BNI) and Bank Central Asia (BCA) are heavily affected by the technical difficulties of the satellite. Therefore, BCA is now offering its clients free cash withdrawals at other banks' ATMs. Under normal circumstances BCA charges IDR 7,500 per transaction when a BCA client withdraws money from an ATM owned by another bank. BCA management further informed that it will migrate 3,700 ATMs to the Telkom-3S satellite and 2,000 ATMs to the Apstar satellites. However, this migration process can take up to two or three weeks. BCA, Indonesia's largest private bank, rents five satellites: Telkom-1, Measat-3A, Apstar-5, Telkom-3s, and Apstar-9.
Bank Rakyat Indonesia (BRI) and Bank Tabungan Negara (BTN) are possibly the least affected major banks in Indonesia. BRI launched its own BRIsat in mid-2016. However, it is still in the process of migrating its ATM units and BRI working units to the new satellite. Therefore, over the weekend, there still were 321 BRI ATMs and 124 BRI working units affected by the Telkom-1 turmoil. Meanwhile, BTN, the market leader in Indonesia's mortgage sector, is relatively unaffected by the satellite turmoil because it moved its communication network to 4G.
Besides profit taking (after Indonesia's benchmark Jakarta Composite Index touched a record high at the end of last week), and rising concerns about geopolitics involving North Korea's latest missile test over Japan, the satellite issue contributed to overall falling shares in Indonesia's banking sector so far this week (as well as weaker shares of Telkom). However, losses are not too drastic with the exception of BRI. During the first trading session on Tuesday (29/08) shares of BRI were down as much as 2.13 percent, before slightly recovering (however, BRI is among the banks that is least affected by the Telkom-1 satellite malfunction).
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