indonesia industry focus telecommunication towers · telecommunication towers page 3 indonesia vs....

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ed-SGC / sa- MA

Towering confidence

Industry checks indicate stable tower rentals

Total tower sites may see 10.1% CAGR over FY15-17; TBIG and TOWR may grow even faster.

Indonesia tower-co deserve premium valuation

Upgrade TOWR to Buy and TBIG to Hold Change in our view on tower rentals. Our channel checks reveal that industry monthly rents are stable at Rp14-15mn per tower despite the recent EXCL-SUPR deal (Rp10mn per month). Even SUPR is going to apply industry rates for new incoming tenants. Hence, profitability of tower companies (tower-co) should remain solid, supported by improving tenancy ratio and stable tower rents. We forecast TBIG’s EBITDA will expand by 14.7% CAGR and TOWR’s by 12.7% over FY15-17, driven by strong profitability (EBITDA margin ~80%) and site expansion.

Appealing growth prospect amid positive industry outlook. Increasing data (3G/4G) consumption will continue to push operators to lift capex despite competitive data pricing. Operators will continue to outsource network expansion to tower-co and divest tower assets to strengthen balance sheets. Indonesia’s tower site growth will remain attractive. We project tower sites to grow by 10.1% CAGR over FY15-17. TBIG will expand its market share to 16% in FY15 with the addition of Mitratel towers while TOWR’s market share will be stable at 10.8%.

TOWR is our new top pick. Indonesia’s two largest tower-co deserve premium valuation for their strong and visible earnings growth outlook. We upgrade TOWR to Buy with a TP of Rp4,700 (13.7x FY15F EV/EBITDA), and TBIG to Hold with a TP of Rp10,400 (16.8x FY15F EV/EBITDA). We raised TP after imputing lower WACC of 9.2% (previously 9.7%), as we changed target debt:equity ratio to 70:30 from 50:50 given their high-leverage business models. We also assumed profitability would remain strong at ~80%, premised on stable rentals and their ability to pass on large costs (mainly electricity). We upgrade TOWR to Buy on undemanding valuation. TBIG is upgraded to Hold because the positive impact of the Mitratel transaction has been priced in by the market.

JCI : 5,315.28

Analyst Sachin MITTAL +65 6682 3699 [email protected] William SIMADIPUTRA +6221 30034939 [email protected]

STOCKS

Closing price as of 4 Feb 2015 Source: DBS Bank, DBS Vickers Tower Bersama Infrastructure : Bersama provides telecommunication infrastructure services to Indonesian wireless carriers.

PT Sarana Menara Nusantara : PT Sarana Menara Nusantara Tbk, through a subsidiary, build telecommunications towers. The Company constructs, operates and rents the towers to mobile telecommunications services providers

TBIG & TOWR: towers and market share

Source: DBS Vickers, Company

DBS Group Research . Equity 6 Feb 2015

Indonesia Industry Focus

Telecommunication Towers

Refer to important disclosures at the end of this report

Price Mkt Cap Target Price Performance (%)

Rp US$m Rp 3 mth 12 mth Rating

PT Sarana Menara 4,095 3,305 4,700 (1.3) 28.0 BUY Tower Bersama 9,450 3,586 10,400 9.9 56.9 HOLD

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Industry Focus


Investment thesis: Strong earnings growth outlook

We turn positive on tower-co on the back of their strong earnings growth outlook, and believe they deserve premium valuation. We forecast TBIG and TOWR will maintain strong EBITDA growth of 14.7% and 12.7% CAGR over FY15-17F driven by solid profitability and site expansion. Our assumptions only account for organic growth (build-to-suit). Both operators have a proven execution track record of solid profitability amid sizable site expansion. Their strong relationship with prominent telcos in Indonesia also provide appealing prospect for site expansion and stable rent pricing, which suggests good cash-flow visibility. Stable rents and tenancy ratios would provide operating scale as the operating cost per tower is fixed and margins would be maintained, while site expansion would be the key earnings growth driver. We assumed flat rental rates in our forecasts. We forecast TBIG’s site will grow at 12.2% CAGR and TOWR’s by 10.6% over FY15-17. The stronger growth at TBIG is attributed to its larger exposure to Telkomsel’s network expansion. The site expansion outlook remains attractive as Indonesian operators will allocate sizable capex for the next 3-5 years mainly for network expansion. Tower-co will continue to benefit from the operators’ network expansion, balance sheet deleveraging, and asset-light operational strategy, which will trigger further towers outsourcing and divestments. TBIG & TOWR EBITDA: earnings growth outlook (Rpbn)

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Sustainable solid profitability Indonesian tower-co EBITDA margins will be sustainable at ~80% over the next few years, supported by rising tenancy per tower and stable rental rates. These will provide tower companies with stronger operating leverage as operating cost per tower is fixed. Both of these operators have been able to maintain 80% EBITDA margin over the last three years despite sizable site expansion (organic and acquisitions). The stable margins despite strong expansion prove that both have exceptional execution capability and strong relationships with telcos. The high EBITDA margins are attributed to strong operating leverage as tenancy ratios rise. Like real estate, higher tenancy means more recurring income per tower. And meanwhile, operating cost, mainly maintenance and electricity, is fixed per tower. Hence, higher tenancy ratios would lead to higher EBITDA margins. The strong relationship with operators enable the top tower-co to source new tenants for every tower their build. This is why, despite expanding the number of sites, tenancy ratios remained at above 1.6x. Both companies also face minimal rental rate pressure given the win-win situation with the operators. TBIG & TOWR: quarterly EBITDA margin trend

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Source: DBS Vickers, Company Moreover, Indonesia’s tower-co generate the highest EBITDA margins of ~80% vs. 61% at US peers and 43% for peers in India (see next chart). The current robust EBITDA margins in Indonesia is a combination of a favorable rental structure (tower-co are able to pass on electricity costs to operators, lower maintenance costs for tenants, and lower initial investments), despite the tenancy ratios being lower than in the US and India.

Industry Focus


Indonesia vs. US and India EBITDA margin

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Average tenancy ratio to remain above 1.6x or rise TBIG and TOWR will continue to register robust tenancy ratios as telcos continue to upgrade their networks in anticipation of higher demand for data with the migration to 3G/4G networks. And the expanding network capacity would require additional BTS installations and co-location potential for existing well-located towers. TOWR's current robust tenancy ratio (9M14: 1.9x) will be sustainable, given its increasing exposure to the big 3 operators and stable Hutch BTS installations going forward. TBIG would also be able to maintain a stable average tenancy ratio of 1.6x over FY15-17 despite the recent consolidation of Mitratel towers which have a lower average tenancy ratio of 1.1x, premised on TBIG ability to add tenants post-acquisition like it after the transaction with Indosat involving 2,500 towers in FY12. The low tenancy at Mitratel’s is a result of TLKM’s no-sharing policy, which effectively forced Mitratel to serve only TLKM/Telkomsel and their related clients. TBIG and TOWR had successfully maintained an average tenancy ratio of 1.6x-1.7x over the last three years despite their sizable site expansion. This is attributed to the management’s deep understanding of the Indonesian operators’ network expansion blue prints, marketing strategies, and project execution ability, stemming from the tower-co's strong reputation and relationships with big operators. TBIG can source tenants/ BTS installation orders from operators without sacrificing rental rates and profitability.

TBIG & TOWR: tenancy ratio trend (x)

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Source: DBS Vickers, Company Indonesian tower-co profitability will also expand along with tenancy ratios because of stronger operating leverage. This suggests that even in the worst case scenario - such as further rental rate pressure and escalating operating costs -, tower-co would still be able to at least maintain profitability at current levels. As mentioned before, Indonesia’s tower-co register robust EBITDA margins with lower tenancy ratios relative to both the US and India. The ratio in the US is 2.0x and it is 2.5x in India vs. Indonesia's 1.6x. A macro size tower capable can handle up to 3.0x tenancy ratio. Indonesia: tower-co tenancy ratio vs region

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Industry Focus


Stable rental pricing outlook Rental rates should be stable at Rp14-15mn per month, and we have conservatively assumed flat rental rates in our forecasts. The current rental rates are sufficient to provide a win-win situation for both tower-co and operators. Operators would save significant time and money to acquire land, construct towers and other technical aspects mainly in remote areas. Hence, there will not be significant rental rate pressure from operators ahead. Also, the recent SUPR and EXCL tower transaction (3,500 towers) will not squeeze industry rental rates, as feared by the street. On the term sheet, EXCL has agreed to sell the towers to SUPR with Rp10mn per month fixed rental rate (leaseback scheme), which is 40% below the industry average rate. We believe the low rental rate is only applicable to SUPR, to compensate for the lower price per tower that SUPR would pay to EXCL. Our channel checks indicate SUPR will apply industry rates for new incoming tenants, which suggests industry rental rates will remain undisturbed. The key contract renegotiation this year is only from Telkomsel. Under the new terms, Telkomsel will pay its own electricity bill instead of the tower-co. There are only mild changes to our forecasts, as despite the Telkomsel contract carrying lower rental rates, tower-co EBITDA margin will be higher because they will exclude electricity expenses under the new contract. Hence, the renegotiation of this contract would not hurt tower-co profitability and earnings. TBIG & TOWR: monthly rental rate outlook (Rpm/tenant)

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Source: DBS Vickers, Company The stable rental rates ahead is also supported by a stable competition among tower-co. The telco tower industry is a fragmented market with no single dominant player. Both TBIG and TOWR currently only account for 16% of the total market share according to tower ownership.

On the other hand, the newcomers, mainly smaller tower-co, will not change the industry landscape. Despite the entry of new smaller players such as Rajawali-backed Nusantara Infrastructure (META) and Northstar-backed Centrin (CENT) , the competition landscape, rental pricing will be stable as the operators prefer an established tower-co that could become their long term expansion partner. The tower-co ability to serve expansion orders punctually means telcos will not be easily lured by smaller operators that offer steep rental rate discounts. Independent tower-co size by tower ownership

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Source: DBS Vickers, Company Appealing site expansion potential

Indonesia’s tower site growth will remain attractive. We project tower sites to grow by 10.1% CAGR over FY15-17. TBIG’s and TOWR’s tower portfolios will grow by 11.5% and 10.4% CAGR over FY15-17, respectively. TBIG will expand its market share to 16% in FY15 and stable afterward with the Mitratel towers, while TOWR’s market share will be stable at 10.8% as we only assumed organic growth in our forecasts. We conservatively assumed steady site expansion ahead. Particularly for FY15, we think despite the appealing network expansion potential, each operator, except Telkomsel, will have its own internal restructuring agenda for this year, such as EXCL-Axis network integration and ISAT balance sheet restructuring. Hence, we conservatively assumed the telcos’ network expansion will not be as robust as in FY14. Going forward, we believe the operators’ network expansion will shift to higher gear after the internal restructuring.

Industry Focus


TBIG & TOWR: towers and market share

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Source: DBS Vickers, Company We assumed TOWR would add up to 1,472 sites in FY15 and FY16, while TBIG would add 5,855 sites (3,928 from Mitratel plus 1,927 build-to-suit) and 2,266 sites, respectively (FY14 : 2,409 sites). Looking forward, we forecast both TBIG and TOWR would add 2,000-2,500 sites annually, in line with guidance. TBIG & TOWR: annual net adds (towers)

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Beneficiaries of improving telecommunication sector

dynamics in Indonesia The telcos’ continuous network expansion and balance sheet deleveraging activity will trigger more tower outsourcing and divestment, which would help tower-co to achieve organic and inorganic growth. Indonesia’s rising data consumption will continue to trigger telco network expansion to serve their customers, and sustain growth momentum and market shares. The strong growth momentum is reflected in the sizable capex allocation for the next three years. Telcos will continue to expand 3G networks while anticipating the need to grow 4G networks, despite their debt-heavy balance sheets and tight profitability. The big three telcos - TLKM, ISAT and EXCL - are still in a growth cycle, which is reflected in their proposed capex spending for the

next three years (see next chart). Newspapers also recently reported that TLKM is planning to issue bonds to finance capex to expand its fiber optic network. The external funding plans by net cash operators like TLKM suggest that Indonesia’s telcos are still in the expansion stage. Indonesia: big operators capex trend

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Source: DBS Vickers, Company Hence, Indonesian telcos’ capex/revenue will remain the highest among ASEAN peers. The current capex to sales ratio average 31%, the highest among ASEAN countries. Indonesia: capex per revenue vs. ASEAN countries

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Source: DBS Vickers, Company The high capex cycle will continue, additionally supported by Indonesia’s appealing telecommunication industry. Telcos have announced 30,000-33,000 new BTS location in 2013-2015. Moreover, 3G/4G penetration rate is only 10% with 30mn subscribers in 2013. Businessmonitor forecasts Indonesia’s 3G/4G penetration rate will reach 17% with 67mn subscribers in FY17, implying 23% subscriber growth (CAGR) over FY13-17.

Industry Focus


Indonesia: 3G/4G subscribers (mn) and penetration rate

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The stabilizing data pricing competition is also positive for tower-co, and would reduce risks of rental rate pricing pressure from telcos. TLKM is currently testing the waters by raising prices gradually for some areas, while EXCL has said they would raise prices if the market allowed it. Consolidation among operators will also not severely impact tower-co growth outlook. It would be a case of 'short term pain’ for ‘long term gain' for tower-co, because despite potentially slower network expansion as telcos focus on integrating networks, like that seen at EXCL-Axis, telcos must continue to expand their networks. Another long term benefit of the telco consolidation is lower risk of receivable defaults as bigger operators have stronger balance sheets and cash flows.

Tower acquisition will boost tower-co growth Leveraged operators like EXCL and ISAT will continue to deleverage their balance sheets and focus on their core operations. However, operating cash flows is not sufficient to replace the debt financing amid data pricing pressure, tight profitability, and rising capex. Unlocking the non-core assets and switching to asset-light operating models via outsourcing are the best options to deleverage balance sheets and improve operational efficiency.

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Source: DBS Vickers, Company The latest transactions between telcos and tower-co have been a win-win solution for both parties. Operators are able to unlock tower assets at great valuations and use the proceeds to repay debt, while tower-co get ready-to-use tower assets to potentially accelerate EBITDA growth through more tenants and operational synergies. Furthermore, with telcos given the opportunity to own stakes in tower-co, as seen in the ISAT-TBIG and TLKM-TBIG (Mitratel) transactions, means they would benefit from their investments if the tower-co share prices go up following successfully integration and higher tower tenancy. The chart below shows the transaction value for the latest three transactions. Each transaction set a new valuation benchmark, which will also benefit telcos and encourage future tower divestments, in our view. Note that the lower EXCL-SUPR per tower valuation is part of the transaction contract to offset lower rental rates to EXCL. Tower transaction valuation (US$/tower)

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Series1


Industry Focus


Currently, independent tower-co collectively own only 32% of the total tower population in Indonesia. But that will increase as the outsourcing trend accelerates. We estimate the regional countries independent tower-co account for half of the total tower population. Telcos also showed interest to divest their towers asset, including Telkomsel (14,000 towers), EXCL (another 4,500 towers) and ISAT (8,000 towers). Indonesia tower ownership composition

Independent towers32.0%

Operators' towers68.0%


Exposure to first tier operators support cash-flow visibility

TBIG’s and TOWR’s site and earnings growth will continue to outperform the smaller tower-co because of their exposure to the big 3 telcos. Both these tower-co have a proven execution track record, access to competitive financing, and exposure to quality operators. On the other hand, the smaller tower-co will not become prominent players in Indonesia given their limited bargaining power with operators.

Indonesia listed tower-co are well-exposed to the big 3 operators. If we include Hutch in our calculation, all the companies have average 80% exposure to the big 4 operators in Indonesia. Faster network expansion by the big three telcos will benefit the tower-co. That means the large tower-co should experience stronger site growth and increasing tenancy. Moreover, big operators have stronger balance sheets and cash flows, which means minimal risk of receivables default for the tower-co.

Tower-co clients composition

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Source: DBS Vickers, Company TOWR (upgrade to Buy) and TBIG (upgrade to Hold)

deserve premium valuations

We upgrade TOWR to Buy from Hold with a new DCF-based TP of Rp4,700 (WACC: 9.2% & terminal growth: 4%), and raise TBIG to Hold (previously Sell) with a new DCF-based TP of Rp10,400 (similar assumptions). Both tower-co stocks deserve a premium valuation for their solid positioning in Indonesia’s tower industry given their solid execution capability and exposure to network expansion and tower divestment by the big telcos.

The higher TPs is the result of a reduction in WACC to 9.2% (previously 9.7%) after changing our target debt:equity ratio to 70:30 from 50:50 given their high-leverage business models. We also assumed the strong profitability is sustainable at ~80%, premised on the tower-co ability to maintain competitive long term rental contracts at stable rental rates, and pass on large costs (mainly electricity) to clients.

We like TOWR for its attractive valuation. TOWR is trading at 20% discount to TBIG’s valuation despite having a similar business model and performance. Moreover, TOWR has greater financial flexibility to pursue tower acquisition, in our view. And finally, the large exposure to the big three telcos would also improve TOWR’s cash flow quality and accelerate site expansion.

We are positive on TBIG’s earnings growth potential, mainly because the Mitratel acquisition is earnings-accretive, and TBIG may be further leveraged to Telkomsel’s network expansion and tower divestment. However, there is limited upside to the stock price as the market has priced in the positive impact of the transactions post-announcement. TBIG’s stock price rallied 14% after the deal was announced.

Industry Focus


Our TPs for TBIG and TOWR implies FY15 EV/EBITDA multiples of 16.8x and 13.7x, respectively. These are at +1SD of their respective 5-year historical multiple. This is reasonable, given sustained strong profitability, a steady tenancy outlook, and appealing site expansion plans.

TBIG EV/EBITDA band

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Source: DBS Vickers, Bloomberg Finance L.P. TOWR EV/EBITDA band

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We believe the current high valuation (EV/EBITDA) relative to the telcos’ is sustainable going forward. The high multiples are attributed to the tower-co stable and steady earnings growth business models.

Both the companies' EV/EBITDA multiples are still at a discount to US peers’ valuations. We think the valuation gap provides a benchmark for further re-rating potential, given Indonesia’s tower-co more lucrative industry and profitability outlook.

On the other hand, the premium valuations relative to Indian peers are justified since India’s tower-co (mainly Bharti Infratel) is affiliated to the parent (not an independent tower-co). This means the parent company could squeeze rental rates and profitability, which would reflect on EBITDA margins, which are among the lowest in Indonesia and the US.

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Indonesia’s average tower-co EV/tower of US$400k is high relative to the three latest tower transactions which averaged US$200k per tower. The fair replacement cost is US$110k per tower. However, the higher price tag is justified by the tower-co ability to boost tenancy and increase per tower return on investment.

EV/tower comparison (US$ per tower)

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www.dbsvickers.com ed: SGC / sa: MA

BUY Rp4,095 JCI : 5,291.72 (Upgrade from HOLD) Price Target : 12-Month Rp 4,700 (Prev Rp 3,900) Potential Catalyst: Tower acquisition, better than expected earnings result DBSV vs Consensus: In-line (EBITDA) Analyst Sachin MITTAL +65 6682 3699 [email protected] William SIMADIPUTRA +6221 30034939 [email protected]

Price Relative

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R e l a t i v e I n d e xR p

P T S a r a n a M e n a r a N u s a n t a r a ( L H S ) R e la t iv e J C I IN D E X ( R H S ) Forecasts and Valuation FY Dec (Rp bn) 2013A 2014F 2015F 2016F

Turnover 3,197 4,239 4,726 5,329 EBITDA 2,651 3,517 3,921 4,421 Pre-tax Profit 228 1,797 2,111 2,544 Net Profit 169 1,348 1,583 1,908 Net Pft (Pre Ex.) 1,117 1,348 1,583 1,908 EPS (Rp) 17 132 155 187 EPS Pre Ex. (Rp) 109 132 155 187 EPS Gth (%) (51) 700 17 21 EPS Gth Pre Ex (%) 67 21 17 21 Diluted EPS (Rp) 17 132 155 187 Net DPS (Rp) 0 0 0 0 BV Per Share (Rp) 358 490 645 832 PE (X) 247.9 31.0 26.4 21.9 PE Pre Ex. (X) 37.4 31.0 26.4 21.9 P/Cash Flow (X) 17.2 13.9 14.0 11.9 EV/EBITDA (X) 18.7 13.9 12.3 10.6 Net Div Yield (%) 0.0 0.0 0.0 0.0 P/Book Value (X) 11.4 8.4 6.3 4.9 Net Debt/Equity (X) 2.1 1.4 1.0 0.6 ROAE (%) 5.9 31.2 27.4 25.3 Earnings Rev (%): - (2) New Consensus EPS (Rp): 118 151 190 Other Broker Recs: B: 10 S: 2 H: 2 ICB Industry : Telecommunications ICB Sector: Mobile Telecommunications Principal Business: PT Sarana Menara Nusantara Tbk, through a subsidiary, build telecommunications towers. The Company constructs, operates and rents the towers to mobile telecommunications services providers Source of all data: Company, DBS Vickers, Bloomberg Finance L.P.

At A Glance Issued Capital (m shrs) 10,203 Mkt. Cap (Rpbn/US$m) 41,781 / 3,320 Major Shareholders Tricipta Mandhala Gumilang (%) 25.6 Caturguwirantna Sumapala (%) 24.6 T Rowe Price International (%) 8.6 Free Float (%) 41.3 Avg. Daily Vol.(‘000) 361

Company Focus

Sarana Menara Nusantara Bloomberg: TOWR IJ EQUITY | Reuters: TOWR.JK Refer to important disclosures at the end of this repor


Our new top pick Project 12.7% EBITDA CAGR over FY15-17F on

the back of 10.4% tower sites CAGR

First-tier operators to boost tenant growth

Undemanding valuation, upgrade to BUY

Strong earnings growth. We forecast TOWR's EBITDA will grow by 12.7% CAGR over FY15-17F, on the back of solid site additions, and stable rental rates and tenancy ratios. For the same reasons, we expect EBITDA margins to remain strong ahead at ~80%. We believe TOWR tenancy ratio will be stable at 1.9x despite steady site expansion (organic growth). We forecast TOWR’s sites will grow by 10.6% CAGR over FY15-17F. Rising exposure to first-tier operators. TOWR’s proven execution track record will continue to attract first tier tenants. The big three operators’ revenue contribution expanded to 33% of TOWR 9M14 revenue vs. 19% in FY10. TOWR has successfully transformed from a concentrated client base (Hutch) tower-co into an independent tower-co with the big three operators as key revenue contributors. This is boost TOWR's earnings growth and cash-flow visibility ahead, since the big operators can expand faster and have stronger credit profiles. Upgrade to BUY, raised TP to Rp4,700. The revised TP implies 13.7x FY15 EV/EBITDA. Currently, TOWR is trading at 24% discount to TBIG's FY15F EV/EBITDA. TOWR’s lower gearing than TBIG implies bigger room for inorganic growth at TOWR.

Company Focus

Sarana Menara Nusantara

INVESTMENT THESIS

Profile Rationale

PT Sarana Menara Nusantara Tbk, through a subsidiary, builds telecommunications towers. The Company constructs, operates, and rents the towers to mobile telecommunications services providers.

Strong earnings growth outlook Double digit EBITDA growth outlook on stable rental rate

and solid tenancy ratio outlook.

Higher exposure to first tier operators TOWR’s proven execution track record will continue to

attract first tier tenants, which will improve earnings growth and quality.

Valuation Risks

We raise our FY14F/FY15F EBITDA forecast by 10.6%/5.1% due to better than expected revenue performance. Hence we revise our target price upwards to Rp 3,900 based on discounted cash flow (DCF) valuation (weighted average cost of capital 10.0%, termin

Tenancy risk Tower-co fail to find additional tenant on the newly

acquired/built tower causing tenancy and profitability drop

Rental rate pressure Potential decline in tower leasing rates cannot be ruled

out.

Weak rupiah vs USD High USD denominated debt may hit earnings if

Indonesian currency depreciates.

Operators network expansion slowdown Slower network expansion means slower BTS rollout,

which would hurt tower-co site expansion outlook.

Source: DBS Vickers

Company Focus

Sarana Menara Nusantara

Income Statement (Rp bn) Balance Sheet (Rp bn) FY Dec 2013A 2014F 2015F 2016F FY Dec 2013A 2014F 2015F 2016F

Turnover 3,197 4,239 4,726 5,329 Net Fixed Assets 11,152 12,479 13,583 14,588 Cost of Goods Sold (1,135) (1,353) (1,413) (1,591) Invts in Associates & JVs 0 0 0 0 Gross Profit 2,062 2,886 3,313 3,738 Other LT Assets 2,167 2,115 2,063 2,011 Other Opng (Exp)/Inc (339) (448) (499) (563) Cash & ST Invts 1,506 3,108 4,874 7,123 Operating Profit 1,724 2,439 2,814 3,176 Inventory 1 1 1 1 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 674 893 996 1,123 Associates & JV Inc 0 0 0 0 Other Current Assets 35 35 35 35 Net Interest (Exp)/Inc (547) (641) (703) (632) Total Assets 15,534 18,631 21,552 24,882 Exceptional Gain/(Loss) (948) 0 0 0 Pre-tax Profit 228 1,797 2,111 2,544 ST Debt 1,086 1,086 1,086 1,086 Tax (63) (449) (528) (636) Creditor 485 571 592 667 Minority Interest 4 0 0 0 Other Current Liab 849 1,272 1,350 1,458 Preference Dividend 0 0 0 0 LT Debt 8,221 9,221 10,221 11,221 Net Profit 169 1,348 1,583 1,908 Other LT Liabilities 1,250 1,489 1,728 1,967 Net Profit before Except. 1,117 1,348 1,583 1,908 Shareholder’s Equity 3,648 4,996 6,579 8,487 EBITDA 2,651 3,517 3,921 4,421 Minority Interests (5) (5) (5) (5) Total Cap. & Liab. 15,534 18,630 21,552 24,881 Sales Gth (%) 41.1 32.6 11.5 12.8 EBITDA Gth (%) 39.9 32.6 11.5 12.8 Non-Cash Wkg. Capital (625) (914) (911) (966) Opg Profit Gth (%) 31.9 41.5 15.4 12.8 Net Cash/(Debt) (7,802) (7,199) (6,433) (5,184) Net Profit Gth (%) (51.3) 700.0 17.4 20.5 Effective Tax Rate (%) 27.8 25.0 25.0 25.0 Cash Flow Statement (Rp bn) Rates & Ratio FY Dec 2013A 2014F 2015F 2016F FY Dec 2013A 2014F 2015F 2016F

Pre-Tax Profit 228 1,797 2,111 2,544 Gross Margins (%) 64.5 68.1 70.1 70.1 Dep. & Amort. 928 1,078 1,107 1,246 Opg Profit Margin (%) 53.9 57.5 59.5 59.6 Tax Paid (194) (26) (449) (528) Net Profit Margin (%) 5.3 31.8 33.5 35.8 Assoc. & JV Inc/(loss) 0 0 0 0 ROAE (%) 5.9 31.2 27.4 25.3 Chg in Wkg.Cap. (314) (133) (82) (53) ROA (%) 1.3 7.9 7.9 8.2 Other Operating CF 1,782 291 291 291 ROCE (%) 10.1 11.8 11.6 11.2 Net Operating CF 2,430 3,007 2,977 3,500 Div Payout Ratio (%) 0.0 0.0 0.0 0.0 Capital Exp.(net) (1,434) (2,404) (2,211) (2,251) Net Interest Cover (x) 3.1 3.8 4.0 5.0 Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.2 0.2 0.2 0.2 Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 47.3 67.5 73.0 72.6 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 585.0 701.8 693.5 665.4 Other Investing CF (343) 0 0 0 Inventory Turn (avg days) 2.2 0.8 0.8 0.8 Net Investing CF (1,776) (2,404) (2,211) (2,251) Current Ratio (x) 0.9 1.4 1.9 2.6 Div Paid 0 0 0 0 Quick Ratio (x) 0.9 1.4 1.9 2.6 Chg in Gross Debt (143) 1,000 1,000 1,000 Net Debt/Equity (X) 2.1 1.4 1.0 0.6 Capital Issues 0 0 0 0 Net Debt/Equity ex MI (X) 2.1 1.4 1.0 0.6 Other Financing CF (495) 0 0 0 Capex to Debt (%) 15.4 23.3 19.6 18.3 Net Financing CF (638) 1,000 1,000 1,000 Z-Score (X) 2.8 2.8 2.7 0.0 Currency Adjustments 360 0 0 0 N. Cash/(Debt)PS (Rp) (765) (706) (631) (508) Chg in Cash 376 1,603 1,766 2,249 Opg CFPS (Rp) 269 308 300 348 Free CFPS (Rp) 98 59 75 122 Quarterly / Interim Income Statement (Rp bn) Key Assumptions FY Dec 4Q2013 1Q2014 2Q2014 3Q2014 FY Dec 2013A 2014F 2015F 2016F

Turnover 902 913 997 1,165 Key Assumptions Cost of Goods Sold (309) (320) (334) (348) Towers 9,746 11,346 12,818 14,290 Gross Profit 593 594 663 817 Total tenants 18,322 21,822 24,797 27,772 Other Oper. (Exp)/Inc (96) (96) (114) (121) Tenancy ratio 2 2 2 2 Operating Profit 497 498 549 696 Capex (Rp tn) 2 2 2 2 Other Non Opg (Exp)/Inc 0 0 0 0 Associates & JV Inc 0 0 0 0 Net Interest (Exp)/Inc (175) (160) (160) (159) Exceptional Gain/(Loss) (236) 263 (209) (130) Pre-tax Profit 86 601 180 407 Tax (28) (152) (48) (99) Minority Interest (2) 1 0 1 Net Profit 57 450 133 309 Net profit bef Except. 293 187 341 439 EBITDA 743 754 814 972 Sales Gth (%) 10.9 1.3 9.1 16.9 EBITDA Gth (%) 10.4 1.6 7.9 19.4 Opg Profit Gth (%) 14.2 0.2 10.3 26.7 Net Profit Gth (%) N/A 692.5 (70.5) 132.5 Gross Margins (%) 65.7 65.0 66.5 70.1 Opg Profit Margins (%) 55.1 54.5 55.1 59.7 Net Profit Margins (%) 6.3 49.3 13.3 26.5 Source: Company, DBS Vickers

www.dbsvickers.com ed: SGC / sa: MA

HOLD Rp9,450 JCI : 5,315.28 (Upgrade from FULLY VALUED) Price Target : 12-Month Rp 10,400 (Prev Rp 7,600) Potential Catalyst: Sector update, rating upgrade DBSV vs Consensus: Higher (EBITDA) Analyst Sachin MITTAL +65 6682 3699 [email protected] William SIMADIPUTRA +6221 30034939 [email protected]

Price Relative

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R e l a t i v e I n d e xR p

To w e r B e r s a m a In f r a s t r u c t u r e ( L H S ) R e la t iv e J C I IN D E X ( R H S ) Forecasts and Valuation FY Dec (Rp bn) 2013A 2014F 2015F 2016F

Turnover 2,691 3,241 5,384 6,111 EBITDA 2,205 2,741 4,307 4,953 Pre-tax Profit 1,178 1,626 2,822 3,174 Net Profit 1,248 1,261 1,900 2,139 Net Pft (Pre Ex.) 1,265 1,261 1,900 2,139 EPS (Rp) 260 248 373 421 EPS Pre Ex. (Rp) 264 248 373 421 EPS Gth (%) 35 (5) 51 13 EPS Gth Pre Ex (%) 90 (6) 51 13 Diluted EPS (Rp) 260 248 373 421 Net DPS (Rp) 52 50 75 84 BV Per Share (Rp) 831 982 1,733 2,070 PE (X) 36.3 38.1 25.3 22.5 PE Pre Ex. (X) 35.8 38.1 25.3 22.5 P/Cash Flow (X) 28.6 30.8 21.1 16.1 EV/EBITDA (X) 26.1 22.5 15.7 13.7 Net Div Yield (%) 0.6 0.5 0.8 0.9 P/Book Value (X) 11.4 9.6 5.5 4.6 Net Debt/Equity (X) 2.9 2.5 1.4 1.1 ROAE (%) 30.7 28.1 27.5 22.1 Earnings Rev (%): 0 (12) (16) Consensus EPS (Rp): 294 389 458 Other Broker Recs: B: 8 S: 4 H: 5 ICB Industry : Technology ICB Sector: Technology Hardware & Equipment Principal Business: Bersama provides telecommunication infrastructure services to Indonesian wireless carriers.

Source of all data: Company, DBS Bank, DBS Vickers, Bloomberg Finance L.P.

At A Glance Issued Capital (m shrs) 4,797 Mkt. Cap (Rpbn/US$m) 45,327 / 3,586 Major Shareholders Provident Capital (%) 23.8 Wahana Anugerah (%) 23.8 Saratoga Infrastruktur (%) 17.0 Free Float (%) 35.4 Avg. Daily Vol.(‘000) 1,834

Indonesia Company Focus

Tower Bersama Infrastructure Bloomberg: TBIG IJ EQUITY | Reuters: TBIG.JK Refer to important disclosures at the end of this report


Limited upside despite positive outlook

Project 14.7% EBITDA CAGR over FY15-17F on the back of 11.5% tower sites CAGR

Mitratel deal is value-accretive

Leveraged to Telkomsel network expansion

Upgrade to HOLD, raised TP to Rp10,400

Mitratel deal is value-accretive. The share-swap transaction with TLKM's tower subsidiary Mitratel is value-accretive. We conservatively assumed TBIG’s tenancy ratio would be 1.56x (FY14: 1.67x) assuming 1,927 sites and 3,741 tenants (excluding Mitratel's 3,928 existing towers), in line with guidance. There may be further EBITDA growth if TBIG can boost Mitratel’s tower tenancy ratio to match its current ratio of 1.67x. Leveraged to Telkomsel network expansion. Post the Mitratel transaction, TBIG will be further leveraged to the Telkomsel network expansion and tower divestment plan. TBIG might secure more orders with the network expansion, since TLKM will own 5.7% of TBIG with an exercisable option to increase its stake to 13.7% within two years. TLKM also has vested interest to maximize TBIG's value. Furthermore, TBIG is exposed to Telkomsel's plan to divest 14,000 towers.

Solid fundamentals, but demanding valuation.We upgrade TBIG to HOLD (from Fully-valued) and raised target price to Rp10,400, implying16.8x FY15 EV/EBITDA. However, the market has priced in the positive impact of the Mitratel transaction. The key upside risk is better- than-expected results after the TBIG-Mitratel integration.

Company Focus

Tower Bersama Infrastructure

INVESTMENT THESIS

Profile Rationale

PT Tower Bersama Infrastructure Tbk provides telecommunication infrastructure services to Indonesian wireless carriers. The Company develops and operates telecommunication supporting infrastructure including tower and in-building systems across Indonesia.

Demanding valuation TBIG is trading at 15.1x FY15F EV/EBITDA, at 23%

premium to TOWR's 12.3x.

Positive impact on Mitaratel transaction TBIG will be further leveraged toTelkomsel’s network

expansion and tower divestment plans after the transaction

Bigger size means better operating leverage, supported by cost synergies and stable margins

Valuation Risks

Target price is Rp10,400 based on DCF valuation (WACC 9.2%, terminal growth 4%). It implies 16.8x FY15 EV/EBITDA, or 19% premium to TOWR.

Tenancy risk Tower-co fail to find additional tenant on the newly

acquired/built tower causing tenancy and profitability drop

Rental rate pressure Change in industry competitive landscape and bargaining

power with telcos potentially cause the rental rate pressure

Operators network expansion slowdown High USD denominated debt might hit earnings if

Indonesian currency depreciates.

Operators network expansion slowdown Slower network expansion means slower BTS rollout, which would hurt tower-co site expansion outlook.

Source: DBS Bank, DBS Vickers

Company Focus

Tower Bersama Infrastructure

Income Statement (Rp bn) Balance Sheet (Rp bn) FY Dec 2013A 2014F 2015F 2016F FY Dec 2013A 2014F 2015F 2016F

Turnover 2,691 3,241 5,384 6,111 Net Fixed Assets 220 2,387 11,669 13,717 Cost of Goods Sold (396) (477) (803) (984) Invts in Associates & JVs 0 0 0 0 Gross Profit 2,295 2,765 4,580 5,127 Other LT Assets 15,901 15,901 15,901 15,901 Other Opng (Exp)/Inc (242) (280) (565) (642) Cash & ST Invts 855 337 457 505 Operating Profit 2,052 2,484 4,015 4,485 Inventory 328 395 656 745 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 603 727 1,207 1,371 Associates & JV Inc 0 0 0 0 Other Current Assets 812 812 812 812 Net Interest (Exp)/Inc (858) (858) (1,194) (1,312) Total Assets 18,719 20,560 30,703 33,050 Exceptional Gain/(Loss) (17) 0 0 0 Pre-tax Profit 1,178 1,626 2,822 3,174 ST Debt 2,331 2,331 2,331 2,331 Tax 174 (248) (402) (449) Creditor 126 114 264 267 Minority Interest (104) (117) (520) (586) Other Current Liab 1,475 1,601 1,754 1,801 Preference Dividend 0 0 0 0 LT Debt 10,650 11,250 14,350 14,350 Net Profit 1,248 1,261 1,900 2,139 Other LT Liabilities 24 24 24 24 Net Profit before Except. 1,265 1,261 1,900 2,139 Shareholder’s Equity 3,988 4,997 8,816 10,528 EBITDA 2,205 2,741 4,307 4,953 Minority Interests 126 243 3,163 3,749 Total Cap. & Liab. 18,719 20,560 30,703 33,050 Sales Gth (%) 57.2 20.5 66.1 13.5 EBITDA Gth (%) 57.7 24.3 57.2 15.0 Non-Cash Wkg. Capital 144 220 658 860 Opg Profit Gth (%) 60.9 21.0 61.6 11.7 Net Cash/(Debt) (12,126) (13,244) (16,224) (16,176) Net Profit Gth (%) 34.6 1.0 50.7 12.6 Effective Tax Rate (%) N/A 15.3 14.2 14.1 Cash Flow Statement (Rp bn) Rates & Ratio FY Dec 2013A 2014F 2015F 2016F FY Dec 2013A 2014F 2015F 2016F

Pre-Tax Profit 1,178 1,626 2,822 3,174 Gross Margins (%) 85.3 85.3 85.1 83.9 Dep. & Amort. 153 256 293 469 Opg Profit Margin (%) 76.3 76.6 74.6 73.4 Tax Paid (102) (122) (248) (402) Net Profit Margin (%) 46.4 38.9 35.3 35.0 Assoc. & JV Inc/(loss) 0 0 0 0 ROAE (%) 30.7 28.1 27.5 22.1 Chg in Wkg.Cap. (676) (202) (591) (249) ROA (%) 7.7 6.4 7.4 6.7 Other Operating CF 1,033 0 0 0 ROCE (%) 13.5 11.7 14.5 12.9 Net Operating CF 1,586 1,558 2,275 2,992 Div Payout Ratio (%) 20.0 20.0 20.0 20.0 Capital Exp.(net) (434) (2,424) (4,474) (2,515) Net Interest Cover (x) 2.4 2.9 3.4 3.4 Other Invts.(net) (2,529) 0 0 0 Asset Turnover (x) 0.2 0.2 0.2 0.2 Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 64.8 74.9 65.6 77.0 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 106.5 198.3 135.0 187.7 Other Investing CF 371 0 0 0 Inventory Turn (avg days) 249.1 598.9 375.3 494.9 Net Investing CF (2,591) (2,424) (4,474) (2,515) Current Ratio (x) 0.7 0.6 0.7 0.8 Div Paid (288) (252) (380) (428) Quick Ratio (x) 0.4 0.3 0.4 0.4 Chg in Gross Debt 2,125 600 400 0 Net Debt/Equity (X) 2.9 2.5 1.4 1.1 Capital Issues 0 0 2,300 0 Net Debt/Equity ex MI (X) 3.0 2.7 1.8 1.5 Other Financing CF (956) 0 0 0 Capex to Debt (%) 3.3 17.8 26.8 15.1 Net Financing CF 881 348 2,320 (428) Z-Score (X) 2.5 2.6 2.4 2.5 Currency Adjustments 273 0 0 0 N. Cash/(Debt)PS (Rp) (2,528) (2,604) (3,190) (3,180) Chg in Cash 149 (518) 121 49 Opg CFPS (Rp) 472 346 563 637 Free CFPS (Rp) 240 (170) (432) 94 Quarterly / Interim Income Statement (Rp bn) Segmental Breakdown / Assumptions FY Dec 4Q2013 1Q2014 2Q2014 3Q2014 FY Dec 2013A 2014F 2015F 2016F

Turnover 735 781 800 850 Revenues (Rp bn) Cost of Goods Sold (114) (121) (122) (133) Tower revenue 2,471 3,014 4,460 5,168 Gross Profit 621 661 678 717 Shelter-only & DAS 219 228 923 943 Other Oper. (Exp)/Inc (60) (67) (70) (73) Operating Profit 561 594 608 645 Other Non Opg (Exp)/Inc 156 55 36 367 Associates & JV Inc 0 0 0 0 Total 2,691 3,241 5,384 6,111 Net Interest (Exp)/Inc (237) (273) (293) (372) Exceptional Gain/(Loss) (21) 265 (245) (121) Pre-tax Profit 459 640 106 518 Key Assumptions Tax (24) (85) 36 8 Tower sites 8,866 11,275 17,130 19,396 Minority Interest (12) (29) (5) (51) DAS & shelter only sites 1,467 1,557 1,617 1,681 Net Profit 423 527 137 475 Tower tenants 15,309 18,716 26,778 31,033 Net profit bef Except. 444 262 383 596 Tower tenancy ratio 2 2 2 2 EBITDA 605 641 658 699 Capex (Rp tn) 3 2 4 3 Sales Gth (%) 7.5 6.2 2.4 6.3 EBITDA Gth (%) 8.1 6.0 2.7 6.2 Opg Profit Gth (%) 7.9 5.8 2.5 6.0 Net Profit Gth (%) N/A 24.5 (74.0) 246.2 Gross Margins (%) 84.5 84.6 84.8 84.4 Opg Profit Margins (%) 76.3 76.0 76.0 75.8 Net Profit Margins (%) 57.5 67.4 17.1 55.8 Source: Company, DBS Vickers

Industry Focus


DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows:

STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)

BUY (>15% total return over the next 12 months for small caps, >10% for large caps)

HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)

FULLY VALUED (negative total return i.e. > -10% over the next 12 months)

SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd and DBS Vickers Securities (Singapore) Pte Ltd, its respective connected and associated corporations and affiliates (collectively, the “DBS Vickers Group”) only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS Bank Ltd. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd., its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”)) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies. Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk

assessments stated therein. Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report. DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months. ANALYST CERTIFICATION The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date of the report is published, the analyst and his/her spouse and/or relatives who are financially dependent on the analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities). COMPANY-SPECIFIC / REGULATORY DISCLOSURES

1. DBS Bank Ltd., DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”), their subsidiaries and/or other affiliates do not have a proprietary position in the securities recommended in this report as of 31 Dec 2014.

2. DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates may beneficially own a total of 1% of any class of common equity securities of the company mentioned as of 31 Dec 2014.

3.

Compensation for investment banking services: DBS Bank Ltd., DBSVS, DBSVUSA, their subsidiaries and/or other affiliates have received compensation, within the past 12 months, and within the next 3 months may receive or intends to seek compensation for investment banking services from Sarana Menara Nusantara.

Industry Focus


DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.

RESTRICTIONS ON DISTRIBUTION General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or

located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

Australia This report is being distributed in Australia by DBS Bank Ltd. (“DBS”) or DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”), both of which are exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS and DBSVS are regulated by the Monetary Authority of Singapore under the laws of Singapore, which differ from Australian laws. Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by the Hong Kong Securities and Futures Commission.

Indonesia This report is being distributed in Indonesia by PT DBS Vickers Securities Indonesia.

Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR") (formerly known as HwangDBS Vickers Research Sdn Bhd). Recipients of this report, received from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from, or in connection with the report.

Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are only intended for institutional clients only and no other person may act upon it.

United Kingdom

This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the meaning of the Financial Services and Markets Act and is regulated by The Financial Conduct Authority. Research distributed in the UK is intended only for institutional clients.

Dubai This research report is being distributed in The Dubai International Financial Centre (“DIFC”) by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3rd Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may act upon it.

United States Neither this report nor any copy hereof may be taken or distributed into the United States or to any U.S. person except in compliance with any applicable U.S. laws and regulations. It is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate.

Other jurisdictions

In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

DBS Bank Ltd. 12 Marina Boulevard, Marina Bay Financial Centre Tower 3

Singapore 018982 Tel. 65-6878 8888

Company Regn. No. 196800306E

indonesia industry focus telecommunication towers · telecommunication towers page 3 indonesia vs....

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