PT Indosat Tbk 9M 2015 Results - assets.indosatooredoo.com · * Restated due to implementation of PSAK 24 (revised 2013) effective 1 January 2015 • Momentum on revenue growth YoY

PT Indosat Tbk

9M 2015 Results

PT Indosat Tbk – 9M 2015 Results

Agenda


Financial and Operational Highlights

Management Focus and Key Updates

Supplemental Information

Financial and Operational Highlights


3Q15 QoQ Overview

Consolidated Revenue increased 6.7% from IDR 6,527 billion to IDR 6,962 billion

EBITDA increased 16.2% from IDR 2,758 billion to IDR 3,205 billion, EBITDA Margin reached 46.0%

Loss Attributable to Owners of The Parent increased from a loss of IDR 278 billion to a loss of IDR 389 billion

Free Cash Flow decreased from IDR 1,096 billion to IDR 1,051 billion


9M15 YoY Overview

Consolidated Revenue increased 10.5% from IDR 17,717 billion to IDR 19,582 billion

EBITDA increased 12.8% from IDR 7,593 billion to IDR 8,568 billion, EBITDA Margin reached 43.8%

Loss Attributable to Owners of The Parent decreased from a loss of IDR 1,330 billion to a loss of IDR 1,122 billion

Free Cash Flow increased from IDR 2,551 billion to IDR 2,629 billion


Financial Highlights

Operating Revenue

EBITDA

EBITDA Margin

Loss Attributable to Owners of the Parent

19,582

9M-14* 9M-15 YoY

10.5%

8,568 12.8%

43.8% 0.9ppt

-1,122 -15.6%

6,962

2Q-15 3Q-15 QoQ

6.7%

3,205 16.2%

46.0% 3.7ppt

-389 39.6%

in IDR billion

17,717

7,593

42.9%

-1,330

* Restated due to implementation of PSAK 24 (revised 2013) effective 1 January 2015

• Momentum on revenue growth YoY continued followed by EBITDA • Network Modernization completion continued to lead YoY revenue growth


6,527

2,758

42.3%

-278

845 887 916 900 935 921

281 292 262 290 271 273

in IDR billion

4Q-14

+6.7% QoQ +14.0% YoY

1Q-15

5,840

3Q-14 2Q-14

Cellular Fixed Data Fixed Voice

+0.6% / -6.7%

-1.5% / +3.9%

+8.4% / +17.1%

QoQ / YoY

4,714 4,925

6,104

2Q-15

5,190

6,368

4,903

6,093

• Cellular and Fixed Data developing well in 3Q compared to same period last year


Segment Revenue Overview

3Q-15

5,321

6,527

Operating Revenue Breakdown

5,768

6,962

Voice

SMS

Data

VAS

8.5%

3Q15 YoY

16.3%

64.6%

14.4%

6.5%

3Q15 QoQ

13.3%

13.0%

-3.6% Increased VAS usage from various gaming & content packages

- Migration to data continues to impact voice and SMS usage and revenues

- Voice and SMS usage increased during fasting month and Eid Al-Fitr celebration

Increased data usage from attractive data offerings related to fasting month and Eid Al-Fitr celebration

Cellular Revenue Performance


Cellular Customer Base

54.9 54.2

63.2 66.5 68.5 69.0

1Q-15

+27.3% YoY +0.7% QoQ

4Q-14 3Q-14 2Q-14

Number of cellular customers in million

1Q-15 4Q-14 3Q-14 2Q-14

in million

-4.8

-0.7

9.0

3.3 2.0

0.5

2Q-15 2Q-15

Net cellular customers additions

• Significant customer additions in the past 4 quarters due to aggressive acquisition campaigns following improved network quality perception


3Q-15 3Q-15


Improving ARPU

ARPU and ARPM Voice Traffic and MOU

• ARPU has improved in 3Q15 but declining since 3Q14 in line with increasing customer base • MOU and voice traffic improving due to festivity in 3Q15

80 78 78

67 67 70

143 148 142 140 145 143

13.6 13.1 13.6 13.2 13.5 14.6

+11.6% YoY

1Q-15

+8.4% QoQ

4Q-14 3Q-14 2Q-14

Voice Traffic

in billion minutes (Voice Traffic)

in minute/subscriber (MOU)

MOU

26.6 28.3 28.0 24.0 25.3 26.9

4Q-14 3Q-14 2Q-14

+6.5% QoQ -4.9% YoY

1Q-15

ARPU

in thousand IDR (ARPU)

ARPM

2Q-15 12-15 3Q-15 3Q-15

in IDR (ARPM)

Data Usage SMS Delivered

Strong Data Usage

• Growing number of data users in line with Company’s strategy to acquire customers through data offering stimulated by an improved network

61 57 59 56 60 62

19,185 20,911

29,891

39,880 46,027

55,871

in TByte

+21.4% QoQ +167.2% YoY

1Q-15 4Q-14 3Q-14 2Q-14

in billion

+8.1% YoY

1Q-15 4Q-14

+3.3% QoQ

3Q-14 2Q-14 2Q-15 2Q-15


3Q-15 3Q-15

Operational expenses


• Moderated operational expenses • Impact from accelerated Depreciation has been reflected in 2014

Cost of Service (CoS)

Depreciation and Amortization

Personnel

Marketing

as percentage of revenue

General and Administration

Total Expenses

Total Operating Expenses

2Q-14*

43.4%

33.6%

7.4%

3.6%

4.1%

115.5%

58.6%

3Q-14*

42.7%

33.4%

7.4%

4.9%

3.0%

91.4%

58.0%

Provision for Legal Case 23.3%

4Q-14*

45.2%

35.1%

6.9%

5.9%

3.8%

96.8%

61.7%

1Q-15

42.9%

33.9%

7.4%

3.0%

3.8%

91.2%

57.3%

2Q-15

42.1%

32.2%

6.9%

4.6%

4.2%

89.9%

57.7%


3Q-15

40.5%

29.8%

6.8%

3.8%

2.9%

83.8%

54.0%

EBITDA performance

EBITDA and EBITDA margin

2,420 2,567 2,440 2,604 2,758 3,205

+16.2% QoQ +29.4% YoY

1Q-15 4Q-14* 3Q-14* 2Q-14*

EBITDA

in IDR billion

EBITDA Margin

41.4% 42.0% 38.3%

42.7%

2Q-15

• 3Q15 EBITDA margin improved • Revenue development improving with

continued good cost management


3Q-15

42.3%


46.0%

-1,122

Net profit Normalized net loss bridge

Normalized net profit

• 9M15 net loss still impacted mainly by IDR depreciation

-1,766

-1,330

-1,122

-15.6% YoY -24.7% YoY

9M-15 9M-14* 9M-13

in IDR billion in IDR billion 9M-15

Normalized Net –

FX Loss

Reported


-1,457

334


2.42 2.57

2.45

Balance sheet

Gross debt* and gross debt/EBITDA Net debt* and net debt/EBITDA


• Total debt increased due to Rupiah depreciation • Reducing US debt portion is progressing

* IDR 3.79tn, IDR 3.95tn and IDR 4.24tn of obligation under finance lease are included in 9M13, 9M14 and 9M15 respectively

26,225 25,676 27,002

2.21 2.33

2.11

23,916 23,339 23,273

9M-14 9M-13 9M-15

+5.2% YoY

Gross Debt

in IDR billion

Gross Debt/EBITDA

9M-15 9M-13 9M-14

-0.3% YoY

Net Debt Net Debt/EBITDA

in IDR billion

Free cash flow & Capex

Free cash flow Capex and Capex/Revenue


• FCF YTD strengthening with improved operating CF generation • Capex stays within guidance

in IDR billion

876

356

-206

481

1,096 1,051

1Q-15 4Q-14 3Q-14 2Q-14

1Q-15 4Q-14 3Q-14 2Q-14

Capex

in IDR billion

Capex/Revenue 2Q-15

2Q-15

28.6 25.7 25.4

23.2 21.1

26.8

3Q-15

3Q-15

1,669 1,566 1,618 1,414 1,372

1,869

Network & Data User

Number of BTS Data User


• Strong network performance in already modernized areas • 4G LTE roll out is in progress

20,585 21,420 22,166 22,212 22,902 23,525

13,328 15,962 18,063 18,544 20,067 22,671

+7.5 QoQ +23.6% YoY

1Q-15 4Q-14 3Q-14 2Q-14

2G 3G

In million

33,913 37,382

2Q-15

40,229 40,756

3Q-15

42,969 46,196

1Q-15 4Q-14 3Q-14 2Q-14 2Q-15 3Q-15

26.3 25.5 29.1 29.5 30.1

32.2

+7.1 QoQ +26.3% YoY

3Q in summary


Management Focus and Key Updates


Our Focus

Develop adjacent and new businesses

Increase cost efficiencies enabling continued investments

Improve monetization on the strong growth of data users and increasing traffic

Leverage modernized network and improved customer experience driving revenue growth

LTE roll out to further enhance data experience


2015 Guidance


FY 2014 Actual FY 2015 Guidance

Consolidated Revenue Growth 1.0% In line with market

EBITDA Margin* 41.7% Low to Mid 40’s

Cash CAPEX IDR 6.4 trillion IDR 6.5 - 7.5 trillion


Thank you


Investor Relations & Corporate Secretary Jl. Medan Merdeka Barat No. 21 Jakarta - 10110 Tel: +62 21 30442615 [email protected]

• PT Indosat Tbk ( “Indosat” or “Company” ) cautions investors that certain statements contained in this document state its management's intentions, hopes, beliefs, expectations, or predictions of the future are forward-looking statements

• The Company 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:

• The Company’s ability to manage domestic and international growth and maintain a high level of customer service

• Future sales growth

• Market acceptance of the Company’s product and service offerings

• The Company’s ability to secure adequate financing or equity capital to fund our operations

• Network expansion

• Performance of the Company’s network and equipment

• The Company’s 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

• Please be also advised that the information provided herein are merely issued to coincide with the release of Ooredoo QSC (formerly known as Qatar Telecom QSC) results for the year ended 31 December 2013, as the Company’s indirect majority shareholder that consolidates Indosat’s results in its financial statements. Subject to the completion of, including but not limited to the audit by the Public Accountant Firm on the Company’s consolidated financial statements which are prepared in accordance with the Indonesian Financial Accounting Standards (IFAS), Indosat expects to file and release its consolidated financial statements for the year ended 31 December 2013 on 30 April 2014 at the latest (“Indosat’s Official Release”). Accordingly, the information provided herein may differ from what is contained in Indosat's Official Release.

Disclaimer


Supplemental Information


IM2 case development


On September 16, 2014, the South Jakarta Attorney Office (“Kejaksaan Negeri

Jakarta Selatan”), without preliminary notification, executed the Supreme

Court’s Decision on Mr. Indar Atmanto. The execution was done based on a

quotation of the Supreme Court’s Decision, which states, among others, that (i)

Mr. Indar Atmanto is found guilty and sentenced to eight years imprisonment

and charged with penalty of Rp300,000,000,- (if the penalty is not paid, Mr.

Indar Atmanto would serve an additional six months imprisonment), and (ii)

IM2 pay the losses sustained by the State amounting to

Rp1,358,343,346,674,-.

Subsequently, on January 16, 2015, Mr.Indar Atmanto and/or his lawyer or IM2

received the document on the Supreme Court’s decision regarding the litigation

case. As of the issuance date of the consolidated financial statements, Mr.

Indar Atmanto and IM2 plan to conduct further legal act by submitting a

reconsideration request peninjauan kembali (”PK”).

On March 16, 2015, Mr. Indar Atmanto’s submission of Judicial Review

[Peninjauan Kembali (”PK”)] was officially registered at the Corruption Court

under No. 08/AKTA.PID.SUS/PK/TPK/2015/PN.Jkt.Pst.

On November 4, 2015, the Supreme Court’s official website announced that

the Judicial Review filed by Mr. Indar Atmanto was rejected based on Supreme

Court’s decision dated October 20, 2015. However, no detailed information

regarding the exact content of such Supreme Court’s decision was available.

As of the issuance date of the interim consolidated financial statements, the

official copy of such Supreme Court’s decision hasn’t been received.

Credit ratings


On 25 May 2015, Standard and Poor’s (“S&P”) revised its outlook on eight Indonesian companies and two Indonesian financial institutions to positive from stable. They revised the outlook on Indosat to reflect the prospect for exceptional support from Ooredoo Q.S.C. following the outlook revision on the sovereign credit rating on Indonesia. They consider Indosat to be a strategically important subsidiary of its parent but they do not consider parental support as a basis for a rating above the sovereign foreign currency rating for strategically important subsidiaries.

On 28 September 2015, PEFINDO has affirmed its “idAAA” ratings for PT Indosat Tbk

(ISAT) and its Shelf-Registered Bond I/2014-2016, Bonds V/2007 Serie B, Bonds VII/2009

Serie B, and Bonds VIII/2012. PEFINDO has also affirmed its “idAAA(sy)” ratings for

ISAT’s Sukuk Ijarah I/2014-2016, Sukuk Ijarah IV/2009 Serie B, and Sukuk Ijarah V/2012.

The outlook for the corporate rating is “stable”. The ratings reflect ISAT’s strong support

from its majority shareholder, strong market position, and stable operating performance.

On 1 April 2015, Moody's Investors Service says that PT Indosat Tbk's (Ba1 stable)

overall FY2014 financial performance is in line with expectations, with an improved

operating performance in the second half of the year offsetting a weaker first half.

On 5 May 2015: Fitch Ratings Indonesia has assigned National Long-Term Ratings of

'AAA(idn)' to PT Indosat Tbk's (Indosat; BBB/AAA(idn)/Stable) IDR1.75trn senior

unsecured bonds and IDR250bn sukuk ijarah issues. The issues are from Indosat’s

IDR9trn bond programme and IDR1trn sukuk ijarah programme - affirmed at 'AAA(idn)' on

27 March 2015 - and are consequently rated at the same level as the programmes.

Debt maturity profile*


In IDR trillion

2019 2018 2022 2017 2016 2015

IDR

USD in IDR

2021 2025

Number of BTS

* Excluding obligation under capital lease

0.20 1.64

4.25

1.03 0.30

1.00

3.98

2.88

1.36 2.27

0.65 0.36

1.88 0.36 0.60

2020 2024

Spectrum overview


Number of BTS

10.0

900 Mhz

7.5

7.5

Indosat

Telkomsel

XL Axiata

20.0

1800 Mhz

22.5

22.5

10.0

2100 Mhz

15.0

15.0

in Mhz

Hutchison - 10.0 10.0

2.5

850 Mhz

3.5 – 5.0*

-

-

* Telkom and Bakrie Telekom have the same spectrum, differentiated by its operational areas

15.0**

2300 Mhz

15.0**

-

-

** Indosat/IM2: West Java exclude Bogor, Depok & Bekasi ; Telkom/Telkomsel: Maluku & North Maluku

PT Indosat Tbk 9M 2015 Results - assets.indosatooredoo.com · * Restated due to implementation of PSAK 24 (revised 2013) effective 1 January 2015 • Momentum on revenue growth YoY

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