Indonesia's planned 5G spectrum auction will widen the coverage and capacity gap between the country's mobile operators, according to a report by Asian Business Review.

The core issue is financial. Spectrum awards in Indonesia have historically favoured the largest carriers, which can afford to bid aggressively for prime frequencies and then build out the radio networks needed to put that spectrum to work. An auction format repeats that pattern: it allocates airwaves to whoever pays most, not to whoever needs capacity most.

For market leaders, additional 5G spectrum translates directly into more capacity in dense urban areas such as Jakarta and Surabaya, where traffic loads are heaviest and where 5G deployments have concentrated so far. For smaller carriers, the auction poses a harder calculation. Paying up for new frequencies strains balance sheets already under pressure from network investment obligations, while staying out of the auction leaves them with less mid-band capacity than their larger rivals.

The result, as the report frames it, is a widening gap on two fronts. Coverage gaps persist because 5G rollouts remain concentrated in cities, leaving outer islands and rural regions on 4G or older technology. Capacity gaps deepen because operators that win more spectrum can deliver better speeds and accommodate more traffic on their existing urban footprints.

This dynamic matters for Indonesia's broader connectivity ambitions. The archipelago's geography — more than 17,000 islands — makes rural coverage expensive, and regulators have long wrestled with how to push operators beyond profitable urban markets. If spectrum policy concentrates 5G capacity among a few carriers, the divide between well-served cities and under-served regions could become structurally harder to close.

Spectrum auctions remain the standard mechanism for assigning frequencies across most markets, and regulators typically defend them as transparent and revenue-generating for the state. The trade-off, as the Indonesian case illustrates, is that auction outcomes tend to reinforce existing market hierarchies rather than narrow them.

How Indonesia's communications ministry structures the upcoming award — including reserve prices, spectrum caps and coverage obligations attached to new licences — will determine how far the gap widens. For now, the expectation is that the auction will leave the country's largest carriers with a stronger 5G position than their smaller competitors.