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PT. Indosat Tbk.
Nine Months 2016 Results
2 PT Indosat Tbk – 9M 2016 Results
49th Anniversary
20 November 1967 – 20 November 2016
Indosat Ooredoo reborn
After 1 year
4 PT Indosat Tbk – 9M 2016 Results
Leading the market with innovations
Innovative content-enriched offerings, simple and fair
tariff schemes attract more and better customers to us
High-impact and distinctive branding
5 PT Indosat Tbk – 9M 2016 Results
Continuous M3 Ooredoo and 4Gplus campaigns with strong
visibility and recognition drive brand preference and
differentiation
Simplified and superior customer experience
6 PT Indosat Tbk – 9M 2016 Results
Create a more open, streamlined and agile products and way
of doing things; inject the “digital spirit”
Financial and
Operational Highlights
8
9M16 YoY Overview
Consolidated Revenue increased 9.9% from IDR 19,582 billion to IDR 21,525 billion
EBITDA increased 10.5% from IDR 8,568 billion to IDR 9,466 billion, EBITDA Margin reached 44.0%
Profit Attributable to Owners of The Parent increased from a loss of IDR 1,122 billion to a profit of IDR 845 billion
Free Cash Flow decreased from IDR 2,953 billion to IDR 2,647 billion
PT Indosat Tbk – 9M 2016 Results
9
3Q16 QoQ Overview
Consolidated Revenue increased 6.4% from IDR 7,129 billion to IDR 7,583 billion
EBITDA increased 11.2% from IDR 3,080 billion to IDR 3,425 billion, EBITDA Margin reached 45.2%
Profit Attributable to Owners of The Parent increased 97.9% from IDR 211 billion to IDR 417 billion
Free Cash Flow increased from IDR 877 billion to IDR 1,307 billion
PT Indosat Tbk – 9M 2016 Results
Operating Revenue
EBITDA
EBITDA Margin
Profit (Loss)Attributable to Owners of the Parent
21,525
9M-15 9M-16 YoY
9.9%
9,466 10.5%
44.0% 0.2ppt
845 175.3%
7,583
2Q-16 3Q-16 QoQ
6.4%
3,425 11.2%
45.2% 2ppt
417 97.9%
in IDR billion
19,582
8,568
43.8%
-1,122
Financial Highlights
10
• Strong growth in revenue combine with successful cost control initiative and stable currency rate contribute to strong growth in EBITDA and positive bottom line.
7,129
3,080
43.2%
211
PT Indosat Tbk – 9M 2016 Results
921 997 909 989 1044
272 286
228 226 238
in IDR billion
+6.4% QoQ +8.9% YoY
Cellular Fixed Data Fixed Voice
+5.3% / -12.8%
+5.5% / +13.3%
+6.5% / +9.2%
QoQ / YoY
3Q-15 4Q-15
5,768
Operating Revenue Breakdown
5,904
6,962
Segment Revenue Overview
1Q-16
7,187
11
5,676
6,813
2Q-16
• Quarterly cellular revenue in 3Q-16 grew due to seasonality – Ramadan and Hajj. • Initiative in fixed data segment to provide IT service that was launched back in 1Q-16
started to deliver a result to support revenue growth.
3Q-16
5,914
7,129
PT Indosat Tbk – 9M 2016 Results
6,301
7,583
Voice
SMS
Data
VAS
2.9%
9M-16 YoY
2.4%
52.2%
32.7%
2.9%
3Q-16 QoQ
8.0%
0.3%
13.2% Digital business initiatives pushed VAS revenue growth
Cellular Revenue Performance
12
- Healthy growth in all services YoY and QoQ.
- Initiative to optimize revenue generated by traditional business was able to prevent sharp decline from data cannibalization.
PT Indosat Tbk – 9M 2016 Results
69.0 69.7 69.8
80.5 81.6
3Q-15
+18.3% YoY +1.4% QoQ
Number of cellular customers in million
3Q-15
in million
0.5 0.8
0.1
10.7
1.1
4Q-15 4Q-15
Net cellular customers additions
• Momentum continued due to Ramadan and Hajj season, raised number of data users.
1Q-16 1Q-16
Cellular Customer Base
13
2Q-16 2Q-16 3Q-16 3Q-16
PT Indosat Tbk – 9M 2016 Results
ARPU and ARPM Voice Traffic and MOU
• ARPU slightly declined on QoQ basis due to aggressive campaign in ex-Java market. However, ARPU as of 9M-16 YoY maintained.
• Voice traffic increased due to our expansion in ex-Java area continues.
70 76
69 71 66
143 135 137 126 124
14.6 15.6 14.5 15.6 16.6
+13.9% YoY
3Q-15
+6.6% QoQ
Voice Traffic
in billion minutes (Voice Traffic)
in minute/subscriber (MOU)
MOU
26.9 27.9 26.4 25.5 24.2
-5.3% QoQ -10.2% YoY
3Q-15
ARPU
in thousand IDR (ARPU)
ARPM
4Q-15 4Q-15 1Q-16 1Q-16
in IDR (ARPM)
ARPU maintained
14
2Q-16 2Q-16 3Q-16 3Q-16
PT Indosat Tbk – 9M 2016 Results
Data Usage SMS Delivered
• Data traffic spiked due to aggressive campaign during Ramadan and Hajj season. • SMS traffic continued to decline as trend shifting toward messaging application.
62 59
52 55 49
55,871 57,276 63,987
93,641
146,060
in TByte
+56.0% QoQ +161.4% YoY
3Q-15
in billion
-21.2% YoY -11.6% QoQ
4Q-15 3Q-15 1Q-16 4Q-15
Strong Data Usage
1Q-16
15
2Q-16 2Q-16 3Q-16 3Q-16
PT Indosat Tbk – 9M 2016 Results
• Moderated operational expenses • Continued improvement in operational process
Cost of Service (CoS)
Depreciation and Amortization
Personnel
Marketing
as percentage of revenue
General and Administration
Total Expenses
Total Operating Expenses
3Q-15
40.5%
29.8%
6.8%
3.8%
2.9%
83.8%
54.0%
Operational expenses
4Q-15
42.1%
35.1%
7.6%
6.8%
3.0%
94.7%
59.6%
16
1Q-16
40.4%
32.6%
7.8%
4.7%
3.7%
89.1%
56.5%
2Q-16
41.4%
31.3%
7.3%
4.9%
3.2%
88.1%
56.8%
PT Indosat Tbk – 9M 2016 Results
3Q-16
40.6%
29.9%
6.8%
4.0%
3.5%
84.8%
54.9%
3,205 2,906 2,961 3,080
3,425
EBITDA and EBITDA margin
+11.2% QoQ +6.9% YoY
EBITDA
in IDR billion
EBITDA Margin
3Q-15
Quarterly EBITDA in 3Q-16 in line with guidance.
4Q-15
46.0%
EBITDA performance
1Q-16
40.4%
17
43.5%
2Q-16 3Q-16
43.2%
PT Indosat Tbk – 9M 2016 Results
45.2%
Net profit
Improvement in operational level combine with stable currency movement and low USD debt resulted positive net profit.
-1,330
-1,122
845
+175.3% YoY +15.6% YoY
9M-16 9M-15 9M-14*
in IDR billion
* Restated due to implementation of PSAK 24 (revised 2013) effective 1 January 2015
Net profit
18 PT Indosat Tbk – 9M 2016 Results
25,676 27,002 23,476
2.33 2.11
1.71
23,340 23,273 21,120
Gross debt* and gross debt/EBITDA Net debt* and net debt/EBITDA
• Gearing level continuously improved • US debt portion has come down to 12% level
* IDR 3.95tn, IDR 4.24tn and IDR 3.46tn of obligation under finance lease are included in 9M14, 9M15 and 9M16 respectively
9M-15 9M-14 9M-16
-13.1% YoY
Gross Debt
in IDR billion
Gross Debt/EBITDA
9M-16 9M-14 9M-15
Net Debt Net Debt/EBITDA
in IDR billion
Balance sheet
-9.3% YoY
19 PT Indosat Tbk – 9M 2016 Results
2.57 2.45
1.90
26.8
37.6
24.4
29.7
25.2
1,869
2,699
1,663 2,117
1,910
Free cash flow Capex and Capex/Revenue
• FCF is steadily growing, supported by improved operating CF generation and moderated capex.
• Capex disbursement is in line with guidance toward end of year.
in IDR billion
1,161
-1,392
463 877
1,307
3Q-15*
3Q-15
Capex
in IDR billion
Capex/Revenue 4Q-15*
4Q-15
1Q-16
1Q-16
Free cash flow & Capex
20
2Q-16
2Q-16
in %
3Q-16
3Q-16
* Reclassification from repayment of obligation under finance lease
PT Indosat Tbk – 9M 2016 Results
Number of BTS Data User
• 4G coverage has reached 94 cities and counting • Data users are steadily growing with 1.3Gb/month usage on average.
23,525 23,596 23,714 23,793 23,859
22,671 23,730 25,068 25,816 26,273
165 3,361 3,544 3,724 4,080
+1.6% QoQ +16.9% YoY
2Q-16
2G 3G
In million
3Q-15
52,326
4Q-15
46,361
3Q-15 4Q-15 1Q-16
32.2 34.0 31.2
35.1 39.4
+12.3% QoQ +22.4% YoY
Network & Data User
1Q-16
50,687
4G
21
2Q-16 3Q-16
53,333
3Q-16
PT Indosat Tbk – 9M 2016 Results
54,212
Management focus
& Key updates
Competition in Data today
23 PT Indosat Tbk – 9M 2016 Results
• We observe a trend of decreasing data yields in the market with Indosat data yields also significantly decreasing over the last two quarters.
• The yield reduction reflects the intensifying competition in the market with major players offering significant bonus quotas of data to secure market share.
• Starting in 4Q-16 Indosat Ooredoo is reducing the bonus quotas of data from the currently high levels to more moderate levels to effectively bring the data yields. We hope that the other market players will also realign behind this positive trend and contribute to a healthier and more rational market.
in IDR / MB
RPMB*
* RPMB: Revenue Per Megabyte
33.1 30.9
34.2 32.8
27.6
17.7
2Q-15 3Q-15 4Q-15 1Q-16 2Q-16 3Q-16
Management Focus
24
● Continue to transform Indosat Ooredoo to
become the leading digital telco in
Indonesia, both from a product offering
perspective as well as the way it interacts
with its stake holders
● Continue to build operational excellence
and efficiency as part of the company
culture
● To explore industry synergies to become
more efficient and effective
● To further strengthen the corporate (b2b)
offering to build a stable base through
connectivity and services.
PT Indosat Tbk – 9M 2016 Results
9M-16 Actual
FY 2016 Guidance
Consolidated Revenue Growth 9.9% In line with market
EBITDA Margin 44.0% Low to Mid 40’s
CAPEX IDR 5.7 trillion IDR 6.5 – 7.5 trillion
2016 Guidance
25 PT Indosat Tbk – 9M 2016 Results
Thank You Investor Relations & Corporate Secretary Jl. Medan Merdeka Barat No. 21 Jakarta - 10110 Tel: +62 21 30442615 Investor@indosatooredoo.com
Supplemental
Information
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.
IM2 case development
28 PT Indosat Tbk – 9M 2016 Results
On 25 January 2016, Standard & Poor's Ratings Services (“S&P”) affirmed its 'BB+‘ long-
term corporate credit rating on PT Indosat Tbk. The outlook is positive. S&P also affirmed
their 'axBBB+' long-term ASEAN regional scale rating on the Indonesia-based
telecommunications company. S&P affirmed the rating because they expect Indosat to
maintain its solid No.2 position in Indonesia's growing cellular market. The positive outlook
reflects their view that the company's financial risk profile will improve over the next 12-18
months.
On 12 August 2016, PEFINDO has affirmed its “idAAA” ratings for PT Indosat Tbk (ISAT)
and its Shelf Registration Bond I/2014-2016 including its proposed fourth phase issuance
of up to IDR3.2 trillion; 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 Shelf Registration
Sukuk Ijarah I/2014-2016, including its proposed fourth phase issuance of up to IDR288
billion; Sukuk Ijarah IV/2009 Serie B; and Sukuk Ijarah V/2012. The outlook for the
corporate rating is “stable”.
On 1 June 2016, Moody's Investors Service has affirmed Indosat Tbk. (P.T.)'s Ba1
corporate family rating. At the same time, Moody's has changed the rating outlook to
positive from stable. The change in outlook to positive reflects the substantial
improvement evident in Indosat's operational and financial profiles, with the company --
over the last four quarters -- reporting YoY revenue growth of 11%-13%, above the sector
average in Indonesia of about 9%.
On 15 March 2016, Fitch Ratings has upgraded the Long-Term Local-Currency Issuer
Default Rating (LC IDR) of Indonesia’s second-largest telecommunications operator, PT
Indosat Tbk (Indosat Ooredoo), to ‘BBB+’ from ‘BBB’. The agency has simultaneously
affirmed Indosat Ooredoo’s Long-Term Foreign-Currency IDR (FC IDR) and its foreign-
currency senior unsecured rating at ‘BBB’. Fitch has also affirmed the National Long-Term
Rating at ‘AAA(idn)’. The Outlook on the ratings is Stable.
Credit ratings
29 PT Indosat Tbk – 9M 2016 Results
0.08
1.82
0.26 0.26
0.92
5.32
2.06
3.62
0.95 1.10
2.08
0.12 0.36
0.81 0.26
In IDR trillion
2020 2019 2022 2018 2017 2016
IDR
USD in IDR
2021 2024
* Excluding obligation under capital lease
2023
Debt maturity profile*
30 PT Indosat Tbk – 9M 2016 Results
2025 2026
Number of BTS
2 x 10.0
900 Mhz
2 x 7.5
2 x 7.5
Indosat
Telkomsel
XL Axiata
2 x 20.0
1800 Mhz
2 x 22.5
2 x 22.5
2 x 10.0
2100 Mhz
2 x 15.0
2 x 15.0
in Mhz
Hutchison - 2 x 10.0 2 x 10.0
2 x 2.5
850 Mhz
2 x 4.5
-
-
15.0*
2300 Mhz
15.0*
-
-
* Indosat/IM2: West Java exclude Bogor, Depok & Bekasi ; Telkom/Telkomsel: Maluku & North Maluku
Spectrum overview
31
2020 2020 2020 2019 & 2026 2019 Valid until
PT Indosat Tbk – 9M 2016 Results
• 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
Disclaimer
32 PT Indosat Tbk – 9M 2016 Results
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