pt. indosat tbk. indosat tbk – 9m 2016 results 4 leading the market with innovations innovative...

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


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


Continuous M3 Ooredoo and 4Gplus campaigns with strong

visibility and recognition drive brand preference and

differentiation

Simplified and superior customer experience


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


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


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


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.


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


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


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


• 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%


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%


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


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


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


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


54,212

Management focus

& Key updates

Competition in Data today


• 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.


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


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

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


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


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*


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 ( “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


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