pt indosat tbk 1h 2014 results – re-issued · telkomsel • network modernization completed for...
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PT Indosat Tbk1H 2014 Results – Re-issued
2Indosat Presentation 1H 2014 Results
Agenda
Financial and Operational Highlights
Management Focus and Key Updates
Supplemental Information
Financial andOperational Highlights
4Indosat Presentation 1H 2014 Results
1H14 YoY Overview
Consolidated Revenue decreased 0.8% to IDR 11,613 billion
EBITDA decreased 5.3% to IDR 5,032 billion, EBITDA Margin of 43.3%
Loss Attributable to Owners of The Company increased to IDR 1,112 billion
Free Cash Flow increased to IDR 2,195 billion
5Indosat Presentation 1H 2014 Results
2Q14 QoQ Overview
Consolidated Revenue increased 1.2% to IDR 5,840 billion
EBITDA decreased 7.3% to IDR 2,421 billion, EBITDA Margin of 41.5%
Loss Attributable to Owners of The Company increased to IDR 1,912 billion
Free Cash Flow decreased to IDR 876 billion
6Indosat Presentation 1H 2014 Results
Financial Highlights
11,708Operating Revenue
EBITDA
EBITDA Margin
Profit /Loss Attributable to Owners of the Company
11,613
1H-13 1H-14 YoY
-0.8%
5,311 5,032 -5.3%
45.4% 43.3% -2.0ppt
-231 -1,112 381.2%
5,773 5,840
1Q-14 2Q-14 QoQ
1.2%
2,611 2,421 -7.3%
45.2% 41.5% -3.7ppt
800 -1,912 -339.0%
in IDR billion
• Improved revenue growth QoQ.• EBITDA margin YTD in line with guidance.
7Indosat Presentation 1H 2014 Results
780 820 833 833 861 845257 280 350 328 261 281
Segment Revenue Overview
Operating Revenue Breakdownin IDR billion
1Q-14
+1.2% QoQ-1.4% YoY
2Q-14
5,7736,056
4Q-133Q-132Q-131Q-13Cellular
Fixed DataFixed Voice
7.9% / 0.6%-1.9% / 3.0%
1.4% / -2.2%
• Improved cellular performance after network modernization expected to be seen in 2H14• Continued strong demand for fixed data services & connectivity
QoQ / YoY5,788 5,920 6,091
4,9084,8204,751 4,6514,895 4,714
5,840
8Indosat Presentation 1H 2014 Results
Cellular revenue performance
Voice
SMS
Data
VAS
-6.4%
2Q14YoY
1.5%
11.0%
72.1%
2.4%
2Q14QoQ
1.9%
-0.9%
26.7% Improved execution and performance in VAS
Migration to data continued to impact voice usage
Higher effective SMS rate paid
Significant traffic increase in the modernized network; focus on data customer acquisition
9Indosat Presentation 1H 2014 Results
55.9 56.5 53.859.6 59.7
54.9
Cellular customer base
2Q-14
-2.7% YoY -8.1% QoQ
1Q-144Q-133Q-132Q-131Q-13
Number of cellular customersin million
2Q-141Q-13 1Q-144Q-133Q-132Q-13
Net customer additionsin million
• Rotational churn from 4Q13 and 1Q14 acquisition campaigns
-2.5
0.5
-2.7
5.8
0.1
-4.8
10Indosat Presentation 1H 2014 Results
95 92 9689
79 80127 136 133 137 140 143
16.0 15.2 15.6 14.8 13.5 13.6
ARPU stable
Voice traffic and MOU
-10.9% YoY
2Q-14
+0.4% QoQ
1Q-144Q-133Q-132Q-131Q-13
Voice Traffic
in billion minutes in minute/subscriber
MOU
• ARPU stable on improved pricing environment• Voice traffic continued to migrate to data (VoIP)
ARPU and ARPM
26.5 27.3 28.5 27.7 25.8 26.6
1Q-144Q-133Q-132Q-131Q-13
+3.1% QoQ-2.7% YoY
2Q-14
ARPU
in thousand IDR (ARPU)in IDR (ARPM)
ARPM
in IDR/minute
11Indosat Presentation 1H 2014 Results
67 69 7167 60 61
5,257 5,904 6,485
12,87115,372
19,185
High data usage growth
Data usagein TByte
+24.8% QoQ+224.9% YoY
2Q-141Q-144Q-133Q-132Q-131Q-13
SMS deliveredin billion
-11.7% YoY
2Q-141Q-14
+1.8% QoQ
4Q-133Q-132Q-131Q-13
• Modernized network enabling greater data experience and data usage growth• Increased focus on monetization in 2H14
12Indosat Presentation 1H 2014 Results
Operational expenses
Cost of Service (CoS)
Depreciation and Amortization
PersonnelMarketing
as percentage of revenue
General and Administration
Total Expenses
1Q-13 2Q-13
• CoS increased due to higher network operational costs.• Increased go to market expenses following completion of modernization in Java• D & A declining in line with expectation and guidance
Total Operating Expenses
4Q-13
41.2%
36.5%
7.0%3.7%2.8%
91.2%
54.7%
3Q-13
41.6%
37.0%
7.2%2.9%2.8%
91.5%
54.6%
41.7%
37.8%
6.8%4.2%3.7%
94.2%
56.4%
42.4%
38.9%
8.7%4.0%5.1%
99.1%
60.2%
1Q-14
41.4%
34.4%
7.2%2.8%3.4%
89.2%
54.8%
2Q-14
43.4%
33.6%
7.3%3.6%4.1%
116.7%
58.5%
Provision for IMM Legal Contigency 23.3%
13Indosat Presentation 1H 2014 Results
2,629 2,682 2,655 2,410 2,611 2,421
Overall stable EBITDA
EBITDA and EBITDA margin
-7.3% QoQ-9.7% YoY
2Q-141Q-144Q-133Q-132Q-131Q-13
EBITDA
in IDR billion45.3%45.4%
EBITDA Margin
• YTD EBITDA margin in line with guidance
43.6%39.8%
45.2%41.5%
14Indosat Presentation 1H 2014 Results
Normalized net profit bridge
-180 -231
-1,112-1,112
153
Normalized net profit*
Net profit
+381.2% YoY+28.1% YoY
1H-141H-131H-12
in IDR billion in IDR billion 1H-14
• Net loss up on provision for IM2 Legal Contigency
NormalizedNet–FX Loss
Reported
* Net profit is Profit Attribution to Owners of the Company
Change in Useful Life
Sale TBIG Shares
ProvisionIM2 Legal
Contigency
286
34
414
1,359
15Indosat Presentation 1H 2014 Results
2.72
2.17
2.54
27,09923,931 25,598
2.232.01
2.32
22,224 22,133 23,379
Balance sheet
Gross debt* and gross debt/EBITDA Net debt* and net debt/EBITDA
1H-131H-12 1H-14
+7.0% YoY
Gross Debt
in IDR billion
Gross Debt/EBITDA
1H-141H-12 1H-13
+5.6% YoY
Net Debt Net Debt/EBITDA
in IDR billion
• Debt level stable, weakening IDR YoY increased debt level.* IDR 3.8tn and IDR 3.4tn of obligation under finance lease are included in 1H13 and 1H14 respectively
16Indosat Presentation 1H 2014 Results
45.1 46.541.3
24.027.5 28.6
2,612 2,750 2,516
1,452 1,590 1,669
Free Cash Flow & Capex
Free cash flowin IDR billion
-499
390 479
-1,045
1,319 876
2Q-141Q-144Q-133Q-132Q-131Q-13
Capex and Capex/Revenue
2Q-141Q-144Q-133Q-132Q-131Q-13
Capex
in IDR billion
Capex/Revenue
• Free cash flow positive in 2Q14 due to higher generated operating cash.
17Indosat Presentation 1H 2014 Results
452389426
276233 226
Network Development
Number of BTS
17,452 17,668 18,214 18,871 19,892 20,585
4,645 4,781 4,993 5,409 6,36313,328
+29.2% QoQ+51.1% YoY
2Q-14
22,097
1Q-144Q-133Q-132Q-131Q-13
2G3G
Cellular Revenue per BTSIn IDR million
1H 20141H 2013XL
IndosatTelkomsel
• Network modernization completed for key cities in Java + Bali. • Modernization outside of Java to be finalized soon.
22,449 23,207 24,280 26,25533,913
18Indosat Presentation 1H 2014 Results
Q2 in summary
Management Focus and Key Updates
20Indosat Presentation 1H 2014 Results
Developing adjacent and new businesses
People and culture
Improving cost efficiencies to enable investments for growth
Driving strong uptake, usage, monetization of our data services and developing our data ecosystem
Executing well on network modernization to improve network quality and customer experience
Our Focus
21Indosat Presentation 1H 2014 Results
Digital Business Snapshot
Commercial Partnerships
Dedicated Digital Unit
Incubation and Investments
Incubator Venture Fund
• Invest in innovative apps and startups to capture value beyond arpus
• Secure growth from adjacent businesses
• Stimulate data ecosystem through enabling platforms
• Grow data revenue through commercial partnerships
1
2
3
DriverPillar Execution
Influential global partners (Telco Operators and OTT players)
22Indosat Presentation 1H 2014 Results
2014 Guidance
FY 2013 Actual FY 2014 Guidance
Consolidated Revenue Growth 6.4% Low single digit
EBITDA Margin 43.5% Low-Mid 40’s
Cash CAPEX IDR 9.33 trillion IDR 8-9 trillion
23Indosat Presentation 1H 2014 Results
Thank You
Any further questions?
Upcoming events 9M – 2014 Results
Indosat Investor RelationsJl. Medan Merdeka Barat No. 21Jakarta - 10110Tel: +62 21 [email protected]
24Indosat Presentation 1H 2014 Results
Disclaimer
• 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 financialstatements. Subject to the completion of, including but not limited to the audit by the Public Accountant Firm on the Company’s consolidated financialstatements which are prepared in accordance with the Indonesian Financial Accounting Standards (IFAS), Indosat expects to file and release its consolidatedfinancial statements for the year ended 31 December 2013 on 30 April 2014 at the latest (“Indosat’s Official Release”). Accordingly, the information providedherein may differ from what is contained in Indosat's Official Release.
Supplemental Information
27Indosat Presentation 1H 2014 Results
IM2 case development based on disclosure to OJK dated 21 October 2014
The Supreme Court decided that, among other things, Mr. Indar Atmanto,former President Director of IM2, found guilty and sentenced him with 8years of imprisonment and a penalty of Rp 300.000.000,-, and to alsopunish PT Indosat Mega Media (“IM2”), the Company’s subsidiary, to paycompensation on the state loss in the amount of Rp 1.358.343.346.674,-.Nevertheless, please kindly be informed that neither Mr. Indar Atmanto norhis legal counsel have received the complete copy of such Supreme Courtdecision.
In light of the development as stated above, pursuant to the prevailingaccounting principles (PSAK No. 57; IAS 37 : “Provisions, ContingentLiabilities and Contingent Assets”, and PSAK 8; IAS 10 : “Events after theReporting Period”), IM2 recognizes in its financial statements for periodended 30 June 2014, a provision for legal contingencies amounting to Rp1.358.643.346.674,- (“Recognition of Accounting Provision”).
Please be advised that this Recognition of Accounting Provision is merelyconducted to comply with the prevailing accounting principles and inconsideration of the legal interest of minority shareholders. The Companystill and will always support either Mr. Indar Atmanto or IM2 to continue toundertake any remedy available based on the prevailing laws.
28Indosat Presentation 1H 2014 Results
Credit ratings maintained
On 2 April 2014: Fitch Ratings has affirmed PT Indosat Tbk's (Indosat) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) at 'BBB'. The agency has also affirmed the Indonesia-basedcompany's National Long-Term Rating at 'AAA(idn)'. The Outlook is Stable on the IDR and the NationalLong-Term Rating. Fitch has also affirmed the foreign-currency senior unsecured rating of 'BBB'.
On 14 July 2014, Standard and Poor’s (“S&P”) has affirmed its rating and outlook on PT Indosat Tbk.(BB+/Stable/NR; axBBB+/--). The stable outlook reflects the outlook on the sovereign credit rating onIndonesia (BB+/Stable/B; axBBB+/axA-2). S&P says that Indosat has adequate cushion in itscovenants to absorb a more than 15% decline in EBITDA and Indosat has good financial flexibility dueto its strategic relationship with parent Ooredoo, good banking relationships, and access to local andglobal financial markets.
On 12 March 2014, PEFINDO has affirmed its “idAA+” ratings for PT Indosat Tbk (ISAT) and its BondsV/2007 Serie B, Bonds VI/2008 Serie B, Bonds VII/2009, and Bonds VIII/2012. PEFINDO has alsoaffirmed the “idAA+(sy)” ratings for ISAT’s Sukuk Ijarah IV/2009 and Sukuk Ijarah V/2012. PEFINDOlikewise affirmed its ratings of “idAA+” and “idAA+(sy)” for the Company’s IDR1.23 trillion BondsV/2007 Serie A and IDR0.4 trillion Sukuk Ijarah II/2007, respectively, which will be internally financedupon their maturity on 29 May 2014. The outlook for the rating is “stable”.
On 4 March 2014, Moody's Investors Service says that PT Indosat Tbk's operating performance forFY2013 was weaker than expected, but can be accommodated within its Ba1 rating with a stableoutlook.
29Indosat Presentation 1H 2014 Results
Debt maturity profile
Debt maturity profile*In IDR trillion
0.41 0.83 0.74 0.48 0.24 0.24
7.78
0.833.27
1.92 1.52 0.50 1.501.50
2020201920182014 2022201720162015
IDRUSD in IDR
* Excluding obligation under capital lease
30Indosat Presentation 1H 2014 Results
Spectrum overview for top 4 cellular operators
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
3.6
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