PT Indosat Tbk 9M 2013 Results. Indosat IR - New Template v pptx

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1 PT Indosat Tbk 9M 2013 Results 1

2 Agenda Financial and Operational Results Management Focus Supplemental Information 2 2

3 Financial and Operational Highlights 3

4 3Q13 QoQ Overview Consolidated Revenue increased 2.9% to IDR 6,091.2 billion EBITDA decreased 1.0% to IDR 2,655.3 billion, EBITDA Margin of 43.6% Loss Attributable to Owners of The Company increased 859.4% to IDR 1.5 trillion Free Cash Flow increased 22.7% to IDR billion 4 4

5 9M13 YoY Overview Consolidated Revenue growth of 9.4% to IDR 17,799.3 billion EBITDA growth of 3.9% to IDR 7,966.3 billion, EBITDA Margin of 44.8% Profit Attributable to Owners of The Company decreased 471.3% to a loss of IDR 1,766.2 billion Free Cash Flow decreased 92.2% to IDR billion 5 5

6 Financial highlights In IDR billion 9M-12* 9M-13 YoY 2Q-13 3Q-13 QoQ Operating Revenue 16,275 17, % 5,920 6, % EBITDA 7,671 7, % 2,682 2, % EBITDA Margin 47.1% 44.8% -2.3ppt 45.3% 43.6% -1.7ppt Profit (Loss) Attributable to Owners of the Company 476-1, % , % Revenue and EBITDA margin YTD in line with guidance *Restated due to tower transaction and service concession arrangement 6 6

7 Strong performance in fixed data & fixed voice Operating Revenue Breakdown in IDR billion 5, , % YoY +2.9% QoQ 6,019 5,910 6,091 5,788 5, ,035 4,839 4,751 4,820 4,908 QoQ / YoY 25.3% / 26.1% 1.6% / 18.0% 1.8% / -2.5% 2Q-12* 3Q-12* 4Q-12 1Q-13 2Q-13 3Q13 Fixed Voice Fixed Data Cellular Fixed data driven by corporate connectivity & internet services Strong IDD incoming growth due to seasonality and higher FX *Restated due to tower transaction and service concession arrangement 7 7

8 Cellular revenue performance 3Q13 YoY 3Q13 QoQ Voice -7.7% 1.4% Revenue impacted by decreased customer base SMS -9.8% 0.1% Revenue affected by SMS interconnect, recent IM3 SMS offering and decreased customer base Data 51.0% 12.7% Data growth profile improving on incremental data users and usage VAS 54.0% 17.8% VAS growth driven by strong demand for content 8 8

9 Cellular customer base Number of cellular customers in million -3.0% YoY -4.7% QoQ in million Net customer additions Q-12 3Q-12 4Q-12 1Q-13 2Q-13 3Q-13 2Q-12 3Q-12 4Q-12 1Q-13 2Q-13 3Q-13 Net customers addition impacted by network quality issues during modernization 9 9

10 Stable ARPM & ARPU in thousand IDR (ARPU) in IDR (ARPM) ARPU and ARPM in IDR/minute Voice traffic and MOU in billion minutes in minute/subscriber % YoY +4.1% QoQ -13.5% YoY +2.8% QoQ Q-12 3Q-12 4Q-12 1Q-13 2Q-13 3Q-13 2Q-12 3Q-12 4Q-12 1Q-13 2Q-13 3Q-13 ARPU ARPM Voice Traffic MOU Total voice traffic affected by decreased customer base 10 10

11 Steady data usage growth in TByte Data usage +60.9% YoY +9.8% QoQ in billion SMS delivered -1.1% YoY +1.7% QoQ 3,423 4,031 4,500 5,257 5,904 6, Q-12 3Q-12 4Q-12 1Q-13 2Q-13 3Q-13 2Q-12 3Q-12 4Q-12 1Q-13 2Q-13 3Q-13 Data usage growth on the right trajectory from strong uptake in data users/usage 11 11

12 Operational expenses As percentage of revenue 2Q-12* 3Q-12* 4Q-12 1Q-13 2Q-13 3Q-13 Cost of Service (CoS) 39.9% 40.1% 40.3% 41.6% 41.2% 41.7% Personnel 6.8% 5.7% 6.3% 7.1% 6.6% 6.7% Marketing 3.6% 7.1% 1.3% 2.9% 3.7% 4.2% General and Administration 2.2% 2.3% 3.1% 3.0% 3.1% 3.8% Total Operating Expenses 52.4% 55.2% 51.0% 54.6% 54.7% 56.4% Depreciation and Amortization 32.0% 37.8% 42.3% 37.0% 36.5% 37.8% Total Expenses 84.5% 93.0% 93.4% 91.5% 91.2% 94.2% CoS and depreciation impacted by SMS interconnect and change in useful life Marketing spend up on seasonality; G&A increased due to professional fees *Restated due to tower transaction and service concession arrangement 12 12

13 EBITDA performance EBITDA and EBITDA margin in IDR billion 47.6% 46.9% 49.0% 45.4% 45.3% 43.6% 2, % YoY -1.0% QoQ 2,824 2,893 2,629 2,682 2,655 3Q EBITDA (YoY) impacted by softer revenue growth YTD EBITDA margin in line with guidance 2Q-12* 3Q-12* 4Q-12 1Q-13 2Q-13 3Q-13 EBITDA EBITDA Margin *Restated due to tower transaction and service concession arrangement 13 13

14 Normalized net profit* Net profit Normalized net profit bridge in IDR billion in IDR billion 9M % YoY % YoY 1, , , ,766 9M-11** 9M-12** 9M-13 Reported Change in Useful Life Net FX Loss Normalized Net profit affected by substantial FX loss and change in network equipment useful life * Net profit is Profit Attribution to Owners of the Company ** Restated due to tower transaction and service concession arrangement 14 14

15 Balance sheet Gross debt* and gross debt/ebitda in IDR billion % YoY 25,468 26,225 22,765 Net debt* and net debt/ebitda in IDR billion % YoY 20,956 21,120 23,916 9M-11 9M-12 9M-13 Gross Debt Gross Debt/EBITDA 9M-11 9M-12 Net Debt 9M-13 Net Debt/EBITDA Increased net debt due to lower cash and higher debt * IDR 3.3tn and IDR 3.8tn of obligation under finance lease are included in 9M12 and 9M13 respectively 15 15

16 Free Cash Flow in IDR billion 3,528 Free cash flow Capex and Capex/Revenue in IDR billion ,137 1, ,334 1,332 2,612 2,750 2, Q-12* 3Q-12* Q-12 1Q-13 2Q-13 3Q-13 2Q-12 Capex 3Q-12 4Q-12 1Q-12 2Q-13 3Q-13 Capex/Revenue Network modernization driving higher cash capex *Restated due to tower transaction and service concession arrangement 16 16

17 Network roll-out Number of BTS +7.2% YoY +3.4% QoQ 21,039 21,642 21,930 22,097 22,449 23,207 4,141 4,431 4,596 4,645 4,781 4, Cellular Revenue per BTS In IDR million ,898 17,211 17,334 17,452 17,668 18,214 2Q-12 3G 3Q-12 2G 4Q-12 1Q-13 2Q-13 3Q-13 9M 2012 Telkomsel Indosat XL 9M 2013 Network modernization program mainly focusing on existing footprint in key market areas Successfully launched 3G 900/2100 HSDPA+ in South Bali 17 17

18 Q3 in summary 18 18

19 Management Focus and Key updates 19

20 Near term management focus Execute well on network modernization and improve network quality Drive strong uptake and usage of our data services Improve cost efficiencies to enable investments in growth Transform culture with focus on quick wins 20 20

21 2013 Guidance maintained FY 2012* Actual FY 2013 Guidance Consolidated Revenue Growth 9.2% In line with Industry or better EBITDA Margin 47.0% Mid 40 s Cash CAPEX IDR 5.8 trillion IDR 8 trillion +10% *Restated due to tower transaction and service concession arrangement 21 21

22 Thank You Any further questions? Indosat Investor Relations Jl. Medan Merdeka Barat No. 21 Jakarta Tel: Investor@indosat.com Upcoming events FY 2013 Results 22 22

23 Disclaimer PT Indosat Tbk cautions investors that certain statements contained in this document state management's intentions, hopes, beliefs, expectations, or predictions of the future are forward-looking statements Management 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: Our ability to manage domestic and international growth and maintain a high level of customer service Future sales growth Market acceptance of our product and service offerings Our ability to secure adequate financing or equity capital to fund our operations Network expansion Performance of our network and equipment Our 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 23 23

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25 Supplemental Information 25

26 Credit ratings maintained In August 2013, Moody s released its credit opinion on Indosat, affirmed Indosat Ba1 ratings and Stable outlook. The stable outlook reflects Moody s expectation that Indosat will retain its market position amid increasing competition for data services, and leverage, in terms of adjusted debt/ebitda will remain in line with the rating level, at x over the near term. In June 2013, 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-based company's National Long-Term Rating at 'AAA(idn)'. The Outlook is Stable on the IDR and the National Long-Term Rating. Fitch has also assigned a foreign-currency senior unsecured rating of 'BBB'. On 10 July 2013, Standard and Poor s ( S&P ) said today that its long-term corporate credit rating and outlook on PT Indosat Tbk. (BB+/Stable/--; axbbb+/--) are not affected by an adverse court ruling. They do not expect the ruling to disrupt Indosat's operations. They expect Indosat to maintain its good operating performance of the past three quarters. They believe the penalty will not materially affect Indosat's cash flow adequacy, and that the company has strong liquidity to meet the penalty. On 14 March 2013, PEFINDO affirmed its ratings of idaa+ for PT Indosat Tbk. (ISAT or the Company) and its Bonds V/2007, Bonds VI/2008, Bonds VII/2009, and Bonds VIII/2012, and idaa+(sy) for its Sukuk Ijarah II/2007, Sukuk Ijarah III/2008, Sukuk Ijarah IV/2009, and Sukuk Ijarah V/2012. The outlook of the rating is Stable. The ratings reflect the strong support from the major shareholder, the Company s stable market position, and its stable operating performance. However, the ratings are offset by the Company s aggressive capital structure and intense competition within the telecommunication industry

27 Debt maturity profile In IDR trillion Debt maturity profile* IDR USD in IDR * Excluding obligation under capital lease 27 27

28 Spectrum overview for top 5 cellular operators in Mhz 850 Mhz 900 Mhz 1800 Mhz 2100 Mhz Indosat Telkomsel * XL Axiata Axis Hutchison * Telkom and Bakrie Telecom have the same spectrum, differentiated by its operational areas 28 28