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PT EXCELCOMINDO PRATAMA Tbk. (XL)
Views on Industry
August 2008
1
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Views on Industry
Indonesian MarketIndonesian Market Mobile penetration overstated
Multiple SIM Cards
Calling card users high rotationalchurn
Lower MoU compared to other regional
countries, mainly due to higher average
Large incrementalLarge incremental
capacitycapacity
requirement forrequirement for
2
Intensifying competition
Competitive LandscapeCompetitive Landscape
Previous:
Focus on coverage
Today:
Shift to capacity
ImpactImpact
an ng ncreasean ng ncrease
in MoUin MoU
Passive InfrastructurePassive Infrastructure
sharing amongstsharing amongst
operatorsoperators
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249 million 3rd largest
104.0 million 3rd largest
41.8 %1 Third quartile
Indonesian Wireless Market:
Large and Poised for Growth
2007 Statistics Regional Ranking
Population
Wireless Subscribers
Year-End Wireless Penetration (%)
3
16.5% Top quartile
US$7.52 Bottom quartile
60.02 Third quartile
US$0.083 Second quartile
Monthly Average Revenue Per User (ARPU)
Monthly Minutes of Usage(MOU)
Revenue Per Minute
2007-2012 Wireless Subscriber CAGR (%)
1. Wireless penetration based on number of SIM card subscriptions as a percentage of total population. Penetration rate based on real subscribers wasapproximately 24% as of December 2007.
2. Outgoing minutes and ARPU, respectively.
3. Based on monthly voice ARPUs of US$5.0.Source: Company Estimates, Goldman Sachs Research, Pyramid Research
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Rapid Wireless Subscriber Growth
279
104135
162186 207
223 258248237 266 273
42%
53%
63%
72%79%
84%89% 92% 94% 96% 99%97%
100
200
300
Subscribers(mm)
20%
40%
60%
80%
100%
Penetra
tion(%)
Projected Wireless Subscribers
Indonesias wireless market will double in size over the next five years
4
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
0%
Subscribers (mm) Penetration (%)
Key Trends
Source: Goldman Sachs Research
Indonesia's wireless market is the third largest in the region, behind China and India
Several factors will drive rapid projected subscriber growth
Heightened competition contributing to lower tariffs and increasing wireless service affordability
Falling handset prices and large handset re-sale market reducing barriers to entry for new subscribers
Positive macroeconomic environment combining strong GDP growth with rising income levels
Network expansion and rural rollouts catering to previously unmet demand
Low fixed line capital investment levels further contributing to the need for wireless telephony services
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From most expensive to the cheapest
Competition in theIndonesian mobile business
has driven down pricesconsiderably in past 24
months
This has resulted in tariffsmoving from being one ofthe most expensive in the
region to one of thecheapest
ImpactImpact
5
RPM Comparison in 2005 RPM Comparison today
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Volume is the key
The capacity will be the focus of the operatorsThe capacity will be the focus of the operators With RPM already at the lowest level, operators now aim for MoU
enhancement
At current total MoU of approximately 200mins/subs/month, this is less
than half of Indias MoU/subs/month
There is still ample room for MoUs to rise to 400mins, as over time,
disposable income should improve due to declining inflation
6
o su s mon compar son n m nu es
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Margins are to remain high
Despite of price competition, the margins are likely to remain
stable, due to cost per minute reduction. However, such cost
reductions would vary from one operator to another.
Revenue and cost per minute (Rp.) Operating profit per minute (Rp.) vs margin %
7
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Capex is expected to remain high
Capex spend in Indonesian telecommunication industry for the past 3years show increasing trend. Capex is expected to remain high.
Subscriber net adds will remain high and MoU per user will grow astariffs cut continue to spur penetration and usage.
16000
18000
Rp (bn)
8
0
2000
4000
6000
8000
10000
12000
14000
2005 2006 2007 2008E
TSEL ISAT XL
`
Source: Companys estimateSource: Companys estimate
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Kebijakan & Peraturan Telekomunikasi
Perkembangan teknologi lebih cepat dariregulasi. Regulasinya masih berdasarkan pada teknologi circuit
switch, sementara jaringan yang terbangun sebagian besar
beralih ke teknologi packet switch Mem erce at enetrasi internet men unakan teknolo i
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wireless broadband
Niat baik pemerintah memberi insentif bagi
operator yang aktif menggelar jaringan danmenyediakan layanan kepada masyarakat &sebaliknya perlu dituangkan secepatnya.
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Kebijakan & Peraturan Telekomunikasi
Perlu didukung upaya pemerintah menemukanmekanisme pengalokasian frekuensi yang lebih baik,
agar penggunaan frekuensi dapat lebih efisien dan
lebih bermanfaat untuk masyarakat luas
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Masih terdapat perlakuan yang tidak sama (Unequallevel of playing field) antara operator, misalnya dalam
hal:
Biaya interkoneksi Biaya BHP Frekuensi
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Inkonsistensi, Peraturan yang berubah-ubah dan Multiinterpretasi dari UU dan Peraturan Pemerintah dapat
menimbulkan kebingungan pada investor
Terdapat dualisme dalam memandang peran investor
Pengaturan Investasi
12
agar tidak mengurangi minat calon investor baru karena
Industri Telekomunikasi merupakan bagian yang yang
tidak terpisahkan dari industri lainnya di Indonesia
hingga perlu kebijakan terpadu.
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Dampak Dari Otonomi Daerah Terhadap Operator
Beberapa Pemerintah Daerah Kabupaten/Kotamemandang pembangungan jaringan telekomunikasi& penyediaan layanan telekomunikasi sebagai sumberpendapatan daripada sebagai infrastruktur yang dapat
meningkatkan pertumbuhan ekonomi
13
Beberapa Peraturan Daerah yang berakibatkelambatan pembangunan & Pungutan yangmenimbulkan high cost economy. Perlu dipikirkan
realokasi sebagian BHP frekuensi ke daerah untukmenutupi biaya tambahan yang muncul.