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1 Indosat IR - New Template v23 1220.pptx
PT Indosat Tbk Nine Months 2012 Results
2 Indosat IR - New Template v23 1220.pptx 2 Indosat IR - New Template v23 1220.pptx
2 Indosat Presentation 9M 2012
Agenda
Financial and Operational Results
Management Focus and Key Updates
Supplemental Information
3 Indosat IR - New Template v23 1220.pptx
Financial and Operational Results
4 Indosat IR - New Template v23 1220.pptx 4 Indosat IR - New Template v23 1220.pptx
4 Indosat Presentation 9M 2012
YoY Overview
Consolidated Revenue growth of 7.6% to IDR 16.51 trillion
EBITDA growth of 5.5% to IDR 7.65 trillion, EBITDA Margin declined -0.9 ppt to 46.3%
Profit Attributable to Owners of The Company increased to IDR 1.63 trillion
Free Cash Flow increased 111.1% to IDR 4.75 trillion
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5 Indosat Presentation 9M 2012
QoQ Overview
Consolidated Revenue growth of 13.6% to IDR 6.13 trillion
EBITDA growth of 8.9% to IDR 2.77 trillion, EBITDA Margin declined 2.0 ppt to 45.1%
Profit Attributable to Owners of The Company increased to IDR 1.76 trillion
Free Cash Flow increased 210.2% to IDR 3.53 trillion
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6 Indosat Presentation 9M 2012
Solid financial results
15,349 Operating Revenue
EBITDA
EBITDA Margin
Profit Attribution to Owners of the Company
16,509
9M-11 9M-12 YoY
7.6%
7,246 7,647 5.5%
47.2% 46.3% -0.9ppt
1,047 1,628 55.5%
5,400 6,132
2Q-12 3Q-12 QoQ
13.6%
2,541 2,768 8.9%
47.1% 45.1% -2.0ppt
(149) 1,760 1,285.3%
In IDR billion
• Improvement in the top line during third quarter driving positive EBITDA growth
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7 Indosat Presentation 9M 2012
Strong annual growth in cellular and fixed data businesses
Operating Revenue Breakdown
in IDR billion
610 636739 672
699
730
2Q-12
+13.6% QoQ +15.5% YoY
3Q-12
6,132
5,124
278
5,400
4,447
254
1Q-12
4,977
4,080
225
4Q-11
5,213
4,160
314
3Q-11
5,307
4,357
315
2Q-11
5,168
4,259
299
Cellular
Fixed Data
Fixed Voice
9.4% / -11.7%
4.4% / 14.8%
15.2% / 17.6%
• Improvement in commercial execution driving strong growth in cellular business in 3Q-12
QoQ / YoY
8 Indosat IR - New Template v23 1220.pptx 8 Indosat IR - New Template v23 1220.pptx
8 Indosat Presentation 9M 2012
Cellular revenue driven by strong voice and SMS revenue development
Voice
SMS
Data
VAS
-5.9%
YoY
70.2%
6.5%
-69.9%
15.5%
QoQ
31.5%
0.2%
0.3%
Successful IM3 Seru Anti Galau campaign and Promo 3 hari 3 malam
Successful SMS campaigns driving growth together with newly implemented SMS interconnection
Data value propositions currently focused on increasing number of data users and traffic
VAS revenue development impacted by uncertain market conditions
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9 Indosat Presentation 9M 2012
Strong growth in customer base
55.550.952.151.751.5
47.3
3Q-12
+7.8% YoY +8.9% QoQ
2Q-12 1Q-12 4Q-11 3Q-11 2Q-11
Number of cellular customers
in million
4.5
-1.2
0.40.2
4.3
1.5
3Q-12 2Q-11 2Q-12 1Q-12 4Q-11 3Q-11
Net customer additions
in million
• Successful campaigns and distribution improvements key to increased net adds • Improving churn trend
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10 Indosat Presentation 9M 2012
ARPU improving on higher voice and SMS traffic
Voice traffic and MOU
18.115.013.814.114.213.4
+27.3% YoY
3Q-12
+20.4% QoQ
2Q-12 1Q-12 4Q-11 3Q-11 2Q-11
Voice Traffic
in billion minute in minute/subscriber
115
989190
9896
MOU
• Third quarter commercial programs resulted in positive voice traffic & revenue elasticity
ARPU and ARPM
30.826.925.125.229.729.7
2Q-12 1Q-12 4Q-11 3Q-11 2Q-11
+14.5% QoQ +3.7% YoY
3Q-12
ARPU
in thousand IDR (ARPU) in IDR (ARPM)
125130137152
166160
ARPM
in IDR/minute
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11 Indosat Presentation 9M 2012
Improving SMS traffic trend; data usage picking up
Data usage
in TByte
4,032
3,4233,2402,842
2,5202,337
+17.8% QoQ +60.0% YoY
3Q-12 2Q-12 1Q-12 4Q-11 3Q-11 2Q-11
SMS delivered
in billion
7167
58636667
+8.0% YoY
3Q-12 2Q-12
+7.0% QoQ
1Q-12 4Q-11 3Q-11 2Q-11
• Good growth in SMS traffic in third quarter • Data usage showing good improvement, monetization focus short/medium term
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12 Indosat Presentation 9M 2012
Operational expenses development
Cost of Service
Depreciation and Amortization
Personnel
Marketing
35.3%
2Q-11
31.0%
12.6%
5.2%
As percentage of revenue
General and Administration
Total Expenses
2.3%
86.3%
35.2%
3Q-11
31.5%
7.0%
5.9%
1.4%
81.0%
38.5%
4Q-11
33.3%
6.9%
4.9%
5.7%
89.2%
37.7%
1Q-12
34.2%
6.8%
4.9%
3.7%
87.3%
39.4%
2Q-12
32.0%
6.7%
4.7%
2.1%
84.9%
41.1%
3Q-12
38.1%
5.8%
5.6%
2.4%
93.0%
• Cost of service and deprecation impacted by SMS interconnect and change in network equipment useful life
• Operational efficiency program on track
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13 Indosat Presentation 9M 2012
Strong EBITDA growth
EBITDA and EBITDA margin
2,7682,5412,3382,2952,681
2,308
+8.9% QoQ +3.3% YoY
3Q-12 2Q-12 1Q-12 4Q-11 3Q-11 2Q-11
EBITDA
in IDR billion
45.1% 47.1% 47.0% 44.0%
50.5%
44.7%
EBITDA Margin
Normalized EBITDA bridge
in IDR billion Q3
YTD
• EBITDA margin pressured by SMS interconnect and additional lease fees and loss of revenue as a result of the tower sale and lease back
2,8792,768
Normalized SMS
Interconn.
5
Tower
Transaction
106
Reported
7,7717,647
Tower
Transaction
Normalized SMS
Interconn.
18 106
Reported
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14 Indosat Presentation 9M 2012
Net profit* boosted by tower sale
Net profit
1,628
1,047
531
+55.5% YoY
+97.3% YoY
9M-12 9M-11 9M-10
in IDR billion
Normalized net profit bridge
in IDR billion Q3
YTD
• Normalized Net Profit strengthening on better financial performance and a more stable FX situation in Q3
485
1,760
Normalized Change in
Useful Life
505
Tower
Transaction
1,780
Reported
353
1,628
Normalized Change in
Useful Life
505
Tower
Transaction
1,780
Reported
* Net profit is Profit Attribution to Owners of the Company
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15 Indosat Presentation 9M 2012
Change in useful life assessment
Change in useful life of cellular network equipment from 10 years to 8 years
Reflect the shorter technology life cycle in the telecommunication industry
In line with Qtel Group policy and industry practice in Indonesia
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16 Indosat Presentation 9M 2012
Net debt to EBITDA ratio improved on receipt of tower sale proceeds
Gross debt and gross debt/EBITDA Net debt and net debt/EBITDA
22,09921,92924,421
9M-11 9M-10 9M-12
+0.8% YoY
Gross Debt
in IDR billion
2.222.24
2.56
Gross Debt/EBITDA
17,75120,12018,236
9M-12 9M-10 9M-11
-11.8% YoY
Net Debt
1.79
2.061.91
Net Debt/EBITDA
in IDR billion
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17 Indosat Presentation 9M 2012
Strong free cash flow
Free cash flow
in IDR billion
3,527
1,137
83
-970
9061,070
3Q-12 2Q-12 1Q-12 4Q-11 3Q-11 2Q-11
Capex and Capex/Revenue
1,3341,731
1,403
2,298
1,2021,349
3Q-12 2Q-12 1Q-12 4Q-11 3Q-11 2Q-11
Capex
in IDR billion
22.3%
32.1% 28.2%
44.1%
22.7% 26.1%
Capex/Revenue
• Free cash flow boosted by tower sale proceeds of IDR2.8 trillion during Q3
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18 Indosat Presentation 9M 2012
Network roll-out progress
Number of BTS
+3% QoQ +15% YoY
3Q-12
21,642
17,211
4,431
2Q-12
21,039
16,898
4,141
1Q-12
20,063
16,291
3,772
4Q-11
19,253
15,816
3,437
3Q-11
18,776
15,577
3,199
2Q-11
3,061
15,347
18,408
2G 3G
Revenue per BTS
In IDR million
538586
405446
278331
H1 2012 H1 2011
XL
Indosat
Telkomsel
• Modernization of the network key focus based on regulatory approval of technology neutral 900 MHz spectrum (3G on 900MHz)
19 Indosat IR - New Template v23 1220.pptx
Management Focus and Key updates
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20 Indosat Presentation 9M 2012
We are improving our commercial execution to accelerate the momentum
Continue prepaid portfolio re-design and pricing fine-tuning
Brand portfolio refresh
Introduce new data strategy focused on increased relevance in the market and better profitability
Sales and distribution revamp
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21 Indosat Presentation 9M 2012
Near term management focus
Continue improving execution & keep good commercial momentum
Strengthen data growth & performance
Enhance customer experience; roll-out high performance data network (3G 900) Operational efficiency program
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22 Indosat Presentation 9M 2012
2012 Guidance maintained
FY 2011 Actual FY 2012 Guidance
Consolidated Revenue Growth 3.9% In line with Industry
EBITDA Margin 46.3% 46.0% - 48.0%
Cash CAPEX IDR 6.1 trillion IDR 6.0 trillion +/- 10%
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23 Indosat Presentation 9M 2012
Thank You
Any further questions?
Upcoming events FY-2012 Results in 1Q 2013
Indosat Investor Relations Jl. Medan Merdeka Barat No. 21 Jakarta - 10110 Tel: +62 21 30442615 Investor@indosat.com
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24 Indosat Presentation 9M 2012
Disclaimer
• PT Indosat Tbk cautions investors that certain statements contained in this document state management's intentions, hopes, beliefs, expectations, or predictions of the future are forward-looking statements
• Management wishes to caution the reader that forward-looking statements are not historical facts and are only estimates or predictions. Actual results may differ materially from those projected as a result of risks and uncertainties including, but not limited to:
• Our ability to manage domestic and international growth and maintain a high level of customer service
• Future sales growth
• Market acceptance of our product and service offerings
• Our ability to secure adequate financing or equity capital to fund our operations
• Network expansion
• Performance of our network and equipment
• Our ability to enter into strategic alliances or transactions
• Cooperation of incumbent local exchange carriers in provisioning lines and interconnecting our equipment
• Regulatory approval processes
• Changes in technology
• Price competition
• Other market conditions and associated risks
• The company undertakes no obligation to update publicly any forward-looking statements, whether as a result of future events, new information, or otherwise
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26 Indosat IR - New Template v23 1220.pptx
Supplemental Information
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27 Indosat Presentation 9M 2012
Credit ratings maintained
On 30 April 2012, FitchRatings upgraded Indonesia-based Indosat Long-Term Foreign and Local-Currency Issuer Default Ratings (IDR) and Foreign Currency senior unsecured rating to ‘BBB’ from ‘BBB-‘. The Outlook is Stable.
On 3 July 2012, Standard and Poor’s (“S&P”) has upgraded Long-Term Credit Rating and the Indosat’s Guaranteed Notes Rating to ‘BB+’ from ‘BB‘. S&P also removed all the ratings from their CreditWatch. The Outlook is Stable to reflect S&P expectation that Indosat's operating performance will be stable. The agency also raised their long-term ASEAN regional rating scale on Indosat to ‘axBBB+’ from ‘axBBB-’.
On 12 June 2012, Pefindo assigned Indosat, all its IDR Bond and Sukuk Ijarah rating ‘idAA+’, ‘idAA+’, and ‘idAA+(sy)‘ respectively. The Outlook is stable. The ratings reflect the strong parent support, Indosat’s stable market position, and its stable operating performance. However, the ratings are offset by Indosat aggressive capital structure and intense competition within the telecommunication industry.
On 8 February 2012, Moody’s affirmed Indosat Ba1 ratings and Stable outlook, follows
announcement that Indosat has agreed to sell 2,500 of its communications towers to PT Tower
Bersama Infrastructure Tbk.
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28 Indosat Presentation 9M 2012
Impact on Q3 financials of tower sale and lease back transaction
Operating expense
Gain on sale of towers
Tax and others
Income Statement
Balance Sheet
Assets
Liabilities
Equity
Net profit
-73
2,610
2,083
-195
1,780
1,780
830
Net impact as of Sep 2012 in IDR billion
Revenue -35
• Accounting treatment for tower sale and lease back transaction is predominantly classified as operating lease
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29 Indosat Presentation 9M 2012
We are within our covenants
Net debt to equity
Gross debt to equity
Net debt to EBITDA
Gross debt to EBITDA
0.87
9M-12
1.08
1.79
2.22
Interest coverage 5.86
< 2.5x
> 3.0x
< 3.5x
0.85
1.14
1.91
2.56
4.59
9M-10
1.05
1.15
2.06
2.24
5.48
9M-11
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Debt maturity profile
Debt maturity profile
In IDR trillion
1.33
3.06
0.77 1.37 1.50 1.500.47 0.320.21
3.98
2.65
2012
0.68
6.32
6.32
2019
1.69
0.19
2018
0.19
0.19
2017
1.75
0.38
2013 2020 2022
1.50
2016
1.36
0.59
2015
0.98
0.66
2014
3.72
0.66
IDR
USD in IDR
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31 Indosat Presentation 9M 2012
Spectrum overview for top 3 cellular operators
10.0
900 Mhz
7.5
7.5
Indosat
Telkomsel
XL Axiata
20.0
1800 Mhz
22.5
7.5
10.0
2100 Mhz
10.0
10.0
15.0
2300 Mhz
15.0
0.0
in Mhz
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