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Making a turnaround in Telco and Media businessStudentsxCEOs, Institut Teknologi Bandung, Bandung – 9 Desember 2012

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Agenda

From Ratelindo to Bakrie Telecom

Reinvigorating antv and establishing VIVA

Increasing Indonesia global competitiveness

Summary

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Agenda

From Ratelindo to Bakrie Telecom

Reinvigorating antv and establishing VIVA

Increasing Indonesia global competitiveness

Summary

Bakrie Group entered into Telco business with the establishment of Ratelindo, which then transformed into Bakrie Telecom

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0 20 130 192 487

1,548

3,821

7,305

10,607

13,026

14,635

1993 1996 2003 2004 2005 2006 2007 2008 2009 2010 FY11

Commenced FWA services in the JBJB Provinces(1) based on E-

TDMA technology

Launched “Esia” (soft launch) in the JBJB Provinces(1) based on

CDMA technology

Conferred nationwide FWA license Launched new product / service -“Wifone”

Launched Rp.605 billion initial public offering on IDX

Launched new product / service -“Wimode” Awarded “Best CDMA Operator 2007”Issued Rp.650 billion domestic bonds

Raised Rp.3.0 trillion via rights issueArranged USD 150 million in vendor financingInnovation- Rp.1 per character SMS charging

Introduced‘Talk Time’ Campaign Rapid commercial ramp up

• Transformation from a niche player with 130,000 subscribers in 2003 to 14.6 million subscribers as at December 31, 2011

• Awarded full mobility license (principal license) on November 2011

Roll out of ‘Esia’ brand with series of marketing campaigns

2,805

1,672

920

404290267

3,436

Total subscribers in thousands at end of period

Gross revenue in IDR billions at end of periodFigures refer to:

(1) JBJB Provinces comprise of Greater Jakarta, Banten and West Java area. .

Launched SLI Hemat 009 serviceObtained additional frequency for JBJB region

Finalized sale and leaseback transaction for 543 towersWon third place in the "2009 Investment Award

3,447

Issued US$250 million Senior Notes, rated “B” by S&P and Fitch Launched BWA service under the “AHA” brand

Entered into an MOU with respect to RMB 2 billion (approx. US$300 million) export credit facility with ICBC

Launched new Rp.1 per second / 2KB tariff scheme

Issued US$130 million Senior Notes, rated “B” by S&P and Fitch Awarded full mobility license

Ratelindo era Bakrie Telecom era

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Bakrie Telecom has gone through major transformation to get to where it is now

How to transform this?

Ratelindo

Into this?

Bakrie Telecom

Substitute to PT Telkom, sole player in fixed line telephony business

Focus only in Jakarta area where Telkom has difficulty accessing

130K subscribers within 10 years of its inception (1993 – 2003)

#4 largest mobile operator in Indonesia in terms of subscribers, revenue, EBITDA, and EBITDA margin

Coverage area within 82 cities in Indonesia which contribute to more than 50% of Indonesia GDP

14.6Mn subscribers within 8 years of its inception (2003 – 2011)

#1 player with 39.1% brand share in West Java – Jakarta – Banten area, which contributes for ~35% of Indonesia GDP and ~27% of Indonesia total population

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Bakrie Telecom implement a “budget telecom” business model…

Keep it simple

• Primarily voice & SMS services• Focus on prepaid retail consumers• Indirect distribution• “One brand, One plan”• Simple, flat tariff plans

Value for money• Low tariffs• Affordable handsets

Reduce churn• Strong branding• Build affinity with the masses

Address a larger consumer base

• Dual usage among non-roaming GSM subscribers

• Get new wireless users

Keep it simple

• Primarily voice & SMS services• Focus on prepaid retail consumers• Indirect distribution• “One brand, One plan”• Simple, flat tariff plans

Value for money• Low tariffs• Affordable handsets

Reduce churn• Strong branding• Build affinity with the masses

Address a larger consumer base

• Dual usage among non-roaming GSM subscribers

• Get new wireless users

BTEL’s “no frills” business model, combined with its simple tariffs and ultra low costs is a key differentiator vs. competitors

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… while driving growth through “disruptive innovation” strategy

2005 / 2006: Flat plan, rock bottom on-net pricing

2008: SMS pricing innovation

On-net tariff of Rp.50 per minute One simple plan valid for any day any

time Strong customer education

campaign to communicate the concept of Talktime Minutes as against market practice of Prepaid Voucher amount

The Rp.1 / character SMS is a global first innovation

Per character charging is like per second voice call charging - pay per use

2007: Breaking the price barrier of $25 for CDMA handsets

Introduced affordable and high-quality new handset package priced at Rp.199,000

2010: Rp.1 tariff scheme

Offers subscribers to enjoy on net at Rp.1 per second (with a minimum of one minute), SMS at Rp.1 per character and data at Rp.1 per 2kb

Simple, transparent and fair method of calculation for subscribers

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Result: in 2009 become the #1 player in JBJB1, the most important region in Indonesia

Source: Single Source, Roy Morgan.

BTEL is the No.1 player and has a brand share of over 39.1% in the JBJB area, which accounts for ~35% of Indonesia’s GDP and ~27% of total population in the country

“Esia” brand is the most recognized brand among users, is the most recommended brand by existing subscribers to their friends / family, and has the lowest tariff. Its brand share has long overtaken the “Big 3” players by significant margin

Subscriber brand share trends: JBJB

Spontaneous brand awareness among potential users

BTEL offers the cheapest tariffs in JBJB

Most recommended brand for friends and relatives

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10

0%

10%

20%

30%

40%

50%

2Q08 2Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q110 3Q10 4Q10 1Q11 2Q11

0102030405060708090

100

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

0102030405060708090

100

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

0%

10%

20%

30%

40%

50%

2Q08 2Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q110 3Q10 4Q10 1Q11 2Q11

Source: Brand Health Tracking, TNS.

Notes:1. Jakarta, Banten, Jawa Barat

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The strong results encourage BTEL to expand its footprint during 2007 – 2011

• Network supported by 4k BTS.

• In line with the implementation of the asset light strategy, 94% of the BTS are collocated

BTS deployment trend

• Esia city coverage: 82 cities• We heavily invested in BWA business with EVDO technology 2010-2011.

Current EVDO services city coverage: 22 cities• We also expand our organization since 2007, from 743 employees in 2006 to

1900 in 2011.

FY05 FY06 FY07 FY08 FY09 FY10 FY11No. of Cities 17 17 34 64 79 82 82 BTS

JBJB 235 408 832 1,577 2,431 2,669 2,751Non JBJB 368 1,195 1,246 1,278 1,265TOTAL 235 408 1,200 2,772 3,677 3,947 4,016

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BTEL expanded high quality Network able to accommodate the 30% CAGR subscribers growth

Aggressive Network expansion but still maintain superior Network quality

BTEL subscribers has grown at 30% CAGR since 2006

2006 9M12

1.547

12.04

Subscribers

CAGR: 30%

* In million

* In IDR bn 9M12

Revenue 2,213

EBITDA 767

2012 Financial highlight

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BTEL launched esia max-d for BWA EVDO service in June 2012

• In 2011, Marketing cost spent for Aha is Rp47bn.

• We integrated our brand, in order to make the Marketing cost more efficient.

• After the relaunch, subscribers and revenues have grown steadily.

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Agenda

From Ratelindo to Bakrie Telecom

Reinvigorating antv and establishing VIVA

Increasing Indonesia global competitiveness

Summary

1999 2003 2005 2007 2008 2009

tvOne, previously known as Lativi and owned by the Latief family, obtained free-to-air (FTA) TV broadcasting license

Lativi focused on general entertainment for CDE segments mainly with acquired programs

Star TV bought a 20% stake in ANTV

ANTV shifted focus to general entertainment for a wider audience target (male, female and children), relying on acquired programs

Anindya Bakrie was appointed as President Director and CEO of VIVA

Rebranded and launched tvOne as a news and sports channel for ABC1 15+ segment

Repositioned ANTV as a family lifestyle channel with in-house programs and sports programs for ABCD segment

ANTV, which had been in operations since 1993 and initially focused on youth programs, re-launched a new logo and focused on women’s and children’s programs

Bakrie family bought Lativi, which had poor network management and debt problems

Lativi was subsequently renamed to tvOne

Restructured so that Star TV owns 7.5% of VIVA and VIVA owns 100% of tvOne and ANTV

Source: Company information

ANTV General entertainment with no distinctive positioning Relied on expensive acquired programs

Lativi General entertainment for CDE segment Mainly acquired programs

Before 2008

ANTV Family lifestyle and sports for ABCD 5+ segment Low cost in-house production

tvOne Focused news and sports channel for ABC1 15+ segment

with independent news content Successfully displaced Metro TV, which had been the #1

news channel for 9 years, within a year

Since 2008

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Bakrie Group focus to grow media business since the company repositioned ANTV and acquired Lativi back in 2007 – 2008

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VIVA group with its subsidiary has undergone major business turnaround to achieve where it is now

Condition Before 2008 Condition After 2008

Non-integrated two FTA terrestrial TV stations: ANTV and Lativi, with no clear differentiation between the two

Highly leveraged company with lower ratings

General entertainment, no focus on segmental targeting content

High operational cost

Two FTA terrestrial TV stations with clear differentiation: distinct segment as target market; plus an on-line news portal

ANTV by focusing on in-house production of local content (e.g. quiz shows, variety shows, and reality shows) which has proved to be more popular amongst Indonesian viewers has gained audience share from 4.9% in 2008 to 8.5% in 2010

TVOne emerged as the leader of news-focused channels by audience share (4.6% in 2008, 6.6% in 2009 and 5.9% in 2010)

Viva.co.id based on ALEXA is the #1 ranked Indonesian news portal based on page-views in September 2011; while based on Effective is the #1 ranked Indonesian news portal and #2 ranked South East Asia news portal

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VIVA’s management team has successfully demonstrated its ability to turn the Company around and achieve improved results

2008 2009 2010

4.3%

5.0% 5.0%

1.9% 2.0%2.5%

tvOne Metro TV

Source: Media Partners Asia.

5.8%5.0%

6.5%

2008 2009 2010

Successfully repositioned ANTV as a family lifestyle channel, resulting in higher audience share

tvOne displaced the long-standing news channel as the number one news-focused channel based on audience share

VIVAnews has successfully established itself as a leader among domestic Internet news portals, despite being present for only 2,5 years

Since the entry of VIVA’s new management team, the Company has achieved successin each of its three main businesses

Audience share of ANTV

Source: Media Partners Asia.

Audience share of tvOne vs Metro

1 2 3

1 VIVAnews 1 Detik

2 Detik 2 VIVAnews

3 Kompas 3 Kompas

4 Kapanlagi 4 Okezone

5 Okezone 5 Kapanlagi

Internet news portals by page views

Internet news portals by popularity

Source: Alexa

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Well thought initiative and robust execution are key success factors of Bakrie Group in managing its media businesses

Content: Segmented program

• Our success is driven by segment-focused program composition• Tailored programming for the special characterized viewer based on its demographic

condition• Segmental targeting for viewership to maximize audience share and program ratings• Content predominantly in-house programs

• Utilize strategic property assets available as production facilities

• Utilize infrastructure of affiliates as an alternative delivery platform for video content as well as data content

Capitalizing on Bakrie Group’s existing resources

Synergies across business units

• Centralized sales and marketing team• Program content sharing: Coordinated programming between ANTV and tvOne

minimizes viewership competition for any given time slot• Broadcast and IT Infrastructure sharing:

• Coordinated procurement activities between ANTV, tvOne and Vivanews provides knowledge sharing on available products and new technology

• Sharing of studio and broadcast equipment reduces rental costs• Sharing of transmission tower enables lower rental and labor costs

Key initiatives Business execution

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ANTV is featuring lifestyle and sports contents...

Family lifestyle channel targeting ABCD 5+ in Indonesia

Distinguishes itself in the Indonesian TV industry by providing a family-focused lifestyle programs, including but not limited to game shows, children’s shows, sports, movies, reality shows and documentaries

ABCD account for 84.5% of Indonesia’s viewing audience

Strong line up of programs that have contributed to increase in audience share from 5.5% in 2008 to 7.1% in 2010 based on ABCD 5+ SES

Strong Line-up of Programs

Audience Share

The “Super Family” game show ranked # 5 for the time slot between 6.30 PM to 7.30 PM, with TV rating of 3.1

Best Quiz & Game Show - Panasonic Gobel award 2011

“Super Deal 2 Milyar” ranked #2 amongst quiz shows for the Jan – Nov 2010 period with TVR and TVS of 2.7 and 10.0, respectively

Source: Company.

10 year contract until 2017 Accounted for 15 of 20 most

popular football matches among male aged 10 to 44

Exclusive rights to Liga Indonesia Best Sport Program – Panasonic

Gobel Award 2010

Source: AGB Nielsen.

In percentage (%)

2008 2009 2010

4.95.5

8.5

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...thus far the repositioning strategy has proven to be successful

Prime time programming has enjoyed improving audience ratings

ANTV ratings and audience share

Focus on in-house production of local content (e.g. quiz shows, variety shows, and reality shows) which has proved to be more popular amongst Indonesian viewers

A stable base of popular content with consistent ratings is the most effective wayto increase our share of advertising revenues

Slot RatingAudience share (%) Rating

Audience share (%) Rating

Audience share (%)

Early morning (5.30am to 8.00am) 0.6 7.2 0.7 8.6 0.7 7.9Morning (8.00am to 12.00pm) 0.6 5.2 0.5 4.2 0.5 4.6Afternoon (12.00pm to 5.30pm) 0.7 6.2 0.8 6.2 1.0 8.3Prime time (5.30pm to 9.30pm) 1.3 4.9 1.4 5.5 2.2 8.5Late night(9.30pm to 1.30am) 0.7 5.3 0.7 5.2 0.7 5.5

2008 2009 2010

Source: Nielsen.

57.4% of TV Population

Source: AGB Nielsen Media Research, 10 cities, TV share 15+ ABC1.

Note: (1) Metro TV has been known as the leading news station in Indonesia since 1999.

Amrozi execution

(Bali bombing terrorist)

Election and

Marriot bombing 2

Gaza Strip and

presidential campaign

Terrorist raid at

Temanggung

KPK vs POLRI

Bloody clashes in Tanjung Priok

Mentawal, Waslor, Merapi Disaster

Death of Dulmatin, Representative Plenary Trial, Tax Broker Case

24-hour channel focused on providing news and sports programs

Known as Lativi until February 2008 Emerged as the leader of news-focused channels by

audience share (4.6% in 2008, 6.6% in 2009 and 5.9% in 2010)

Received stable ratings from the middle to high disposable income segments in Indonesia, targeted primarily to young professionals

Hires and retains the most recognized news anchors in Indonesia

Leading Programs

Audience Share

Japan Tsunami

Royal wedding

Within one year after launching, tvOne has become the leading news channel with profitable operation

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Top Programs in 2011

Program Title Type TV rating Number of episodes Audience share

World Boxing Sports 2 10 13.5Jakarta Lawyers Club News (Talk show) 1.4 19 5.1Atas Nama Rakyat News (Talk show) 1.1 3 4.2Kabar Petang News (hard news) 1.1 149 5.1Damai Indonesiaku Religious programming 1 32 7.2Suara Keadilan News (news feature) 0.9 17 3.2Telusur News (news feature) 0.9 13 4.8Tokoh Information (Documenter) 0.9 21 3.6Voli Sports 0.8 13 5.4Apa Kabar Indonesia Malam News (Talk show) 0.8 149 5.4

Source: Company

Differentiated by delivering news and information in a lively and interactive manner

Tailored programming to appeal to ABC1 15+ demographic

Programs include news and current affairs, talk shows, documentaries and sports

— Pre-dominantly in-house programs

— Includes selectively licensed foreign news content from major international news providers

VIVA’s success is driven by segment-focused program composition

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Focused on providing national and international news, complemented by sports and lifestyle

Integrated with television business− Leverages off tvOne news content− Features live streaming news videos from tvOne

and certain popular programs from ANTV. Content

− Prepared through in-house writers and reporters, as well as third-party sources

− Monthly subscription to news feeds from international providers like Associated Press

− Written in Bahasa and English Targets Indonesian population who are switching from

reading print media− More interested in coverage of local events− 80-90% of content reserved for local news

(Sept 2011)

#1 Ranked Indonesian news portal

#2 ranked South East Asia news portal

(Sept 2011)

#1 Ranked Indonesian news portal based

on pageviews

Our domination in the news segment has been secured in the online segment as well through VIVAnews and transformed to viva.co.id

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Agenda

From Ratelindo to Bakrie Telecom

Reinvigorating antv and establishing VIVA

Increasing Indonesia global competitiveness

Summary

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Challenges of Indonesia: education and healthcare

Some facts on healthcare in Indonesia

• Indonesia only have 3 medical doctors out of every 10K population, compared to Malaysia at 9:10K, Vietnam (12:10K), and Singapore (18:10K)

• Every year, rich Indonesians spend far more than USD 1Bn for their medical expenses overseas (Singapore, Australia, Malaysia, and the US being the main destinations) big potential loss for the domestic healthcare business

Some facts on education in Indonesia

• Government has proposed a spending on education of IDR 332Tn (~USD 35Bn) for 2013, equal to 1.5x of Indonesia FDI

• However, between 2006 – 2010 Indonesia only spends 2.8% of its GDP for education, compared to India at 3.1%, Singapore (3.3%), and Malaysia (4.1%)

• Currently only 17% of Indonesia students that are going into tertiary education

• Indonesia graduates 80K engineers/year, compared to India at 120K and China (350K)

• Indonesia sends 7K students per year to the US, compared to India and China which are more than 100K each

• Indonesia still has a very low PhD compared to China and India, and 80% of Indonesia PhD is in the non-technological field (e.g. religion, philosophy, economy)

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The real issue: culture

• Indonesia has a culture that doesn’t accept failure (i.e. fear to fail culture)

• As long as the view toward failure doesn’t change, Indonesia will not be able to compete globally

• Example: fear to fail culture will make it difficult for Indonesia to drive up its number of entrepreneurs• Out of the 240Mn population, ideally Indonesia should have 4.8Mn entrepreneurs

(2% of population)• Currently Indonesia only have 0.2% entrepreneurs (~480K out of the total

population), very low compared to Singapore at 7%, USA (10%), and Japan (11%)

• Without the required entrepreneurs, it will be difficult for Indonesia to compete globally and contribute more to the world development

• To do this, academia, business community, and government should work together to develop “soft” infrastructure such as having culture change through coaching and mentorship

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The few who dare to take the challenge

KENDRO HENDRA(SETTING WIZARD & DATA MOVERS NOKIA)

SEHAT SUTARDJACEO MARVELL TECHNOLOGY

GROUP LTD

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Are you next?

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Agenda

From Ratelindo to Bakrie Telecom

Reinvigorating antv and establishing VIVA

Increasing Indonesia global competitiveness

Summary

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Summary

• Bakrie Group has long since engaged in the Telco and Media business

• The current achievement of Bakrie Group Telco and Media business is a result of carefully planned and executed turnaround

• To increase its global competitiveness, Indonesia must change its perception toward failure

• “Dare to fail” is a fundamental entrepreneurial mindset there is a lesson in every “failure”, do not forget to apply it in every future business endeavors

• Indonesia will need more entrepreneurs in the future to be able to compete globally and contribute more to the world development