DISCLOSURE OF INFORMATION TO SHAREHOLDERS OF PT INDOSAT TBK

Transcription

1 DISCLOSURE OF INFORMATION TO SHAREHOLDERS OF PT INDOSAT TBK This Disclosure of Information is made and submitted by PT Indosat Tbk in compliance with Bapepam - LK Regulation No. IX.E.1 on Affiliated Party Transactions and Conflicts of Interest on Certain Transactions, attachment to Decision of the Chairman of Bapepam - LK No. Kep-412/BL/2009 dated 25 November 2009 concerning with the Agreement dated 16 November 2015 between Ooredoo IP LLC and PT Indosat Tbk. This transaction is deemed as an Affiliated Transaction in accordance with Bapepam - LK Regulation No. IX.E.1 which is required to be published to the public. If you have difficulties in understanding the information contained in this Disclosure of Information, we suggest that you consult with your legal advisor, public accountant, financial advisor or any other relevant professional advisors. PT Indosat Tbk Residing in Central Jakarta, Indonesia ( Company ) Business Activity: Telecommunication and Informatics Services Head Office Jl. Medan Merdeka Barat No. 21, Gambir, Central Jakarta Website: THE BOARD OF DIRECTORS AND THE BOARD OF COMMISSIONERS OF THE COMPANY SHALL JOINTLY AND SEVERALLY BE RESPONSIBLE FOR THE TRUTHFULNESS AND COMPLETENESS OF THE WHOLE INFORMATION OR MATERIAL FACTS CONTAINED IN THIS DISCLOSURE OF INFORMATION AND HEREBY DECLARE, AFTER HAVING CONDUCTED A THOROUGH EXAMINATION AND TO THE BEST OF THEIR KNOWLEDGE AND BELIEF, THAT THE INFORMATION CONTAINED IN THIS DISCLOSURE OF INFORMATION IS TRUE AND THAT NO OTHER MATERIAL FACTS ARE BEING UNDISCLOSED OR OMITTED WHICH WILL CAUSE THE INFORMATION GIVEN IN THIS DISCLOSURE OF INFORMATION TO BE UNTRUE, INCOMPLETE AND/OR MISLEADING. This Disclosure of Information is issued on 18 November v1A\JKTDMS 1

2 DEFINITION Affiliate Bapepam - LK Director Ooredoo Group Disclosure of Information : Affiliate has the same meaning as defined in Article 1 paragraph 1 of the Capital Market Law. : Capital Market and Financial Institutions Supervisory Agency which was previously known as the Capital Market Supervisory Agency. : Member of the Board of Directors of the Company who is in charge when Disclosure of Information is announced. : Ooredoo and include Ooredoo Q.S.C and all entities controlled directly or indirectly by Ooredoo Q.S.C. : Disclosure of information which is published by the Company in relation to the Affiliated Transaction in compliance to Bapepam - LK Regulation No. IX.E.1. Commissioner : Member of the Board of Commissioners of the Company who is in charge when Disclosure of Information is announced. Fairness Opinion Report MOLHR OJK Ooredoo Independent Appraiser International Consultant 1 Report International Consultant 2 Report Agreement : A report prepared by the Independent Appraiser to evaluate the fairness of the Affiliated Transaction No.: APP-B/KJPP-MPR/2015/XI/16/001 dated 16 November 2015 in accordance with Bapepam - LK Regulation No. IX.E.1. : Minister of Law and Human Rights of the Republic of Indonesia. : Financial Services Authority or Otoritas Jasa Keuangan. : Ooredoo IP LLC, a company established under the laws of Qatar Financial Centre, located in P.O. Box No: 217, Ooredoo Tower 100 West Bay Center, The Corniche, Doha, Qatar. : Martokoesoemo, Prasetyo & Rekan, an independent appraiser registered in OJK who has been appointed by the Company to perform appraisal on the fairness of the Affiliated Transaction. : International Consultant Report dated 17 July 2015 from an international advertising and marketing consultant on the use of Ooredoo's trademark license for the Company's business activities. : International Consultant Report issued in March 2015 from an international brand consultant on the use of Ooredoo's trademark license for the Company's business activities. : Agreement between Ooredoo and the Company on the granting of a license to the Company to use among others the mark, sub-marks and brand assets of the Ooredoo Group dated 16 November v1A\JKTDMS 2

3 Company Shareholders of the Company Bapepam - LK Regulation No. IX.E.1 Bapepam - LK Regulation No. IX.E.2 Affiliated Transaction Capital Market Law : PT Indosat Tbk, a public limited liability company duly established and existing under the law of Republic of Indonesia, having its address at Jl. Medan Merdeka Barat No. 21, Gambir, Central Jakarta : The shareholders of the Company whose names are registered in the Shareholders Register of the Company which is issued by the shares administration bureau. : Bapepam - LK Regulation No. IX.E.1, attachment to the Decision of the Chairman of Bapepam - LK No. Kep-412/BL/2009 dated 25 November 2009, on Affiliated Party Transactions and Conflicts of Interest in Certain Transactions. : Bapepam - LK Regulation No. IX.E.2, attachment to the Decision of the Chairman of Bapepam - LK No. Kep-614/BL/2011 dated 28 November 2011, on Material Transaction and Change of Main Business Activities. : Transaction conducted by the Company or a Controlled Company with an Affiliate of the Company or an Affiliate of the members of the Board of Directors, Board of Commissioners or major shareholder of the Company as stipulated in point 1 letter d of Bapepam - LK Regulation No. IX.E.1, in this case the signing of the Agreement between the Company and Ooredoo, the affiliated party of the Company. : Law No. 8 of 1995 on Capital Markets. A. A. PREFACE This Disclosure of Information is made to comply with Bapepam - LK Regulation No. IX.E.1 point 2 letter a, which obliges the Company to make a Disclosure of Information regarding the Affiliated Transaction conducted by the Company, where the Company is obliged to announce the Affiliated Transaction to the public by no later than two business days after the occurrence of the transaction. Through this Disclosure of Information the Company will provide explanation, consideration and background of conducting the transaction to the public. In this Disclosure of Information the object of the Affiliated Transaction will be elaborated including the value of the Affiliated Transaction, the parties of the Affiliated Transaction and the nature of the affiliation with respect to the Affiliated Transaction. Other than that, this Disclosure of Information will also present the summary of the report from the Independent Appraiser which will be explained further in section C. Further explanation regarding the Affiliate relationship between the Company and Ooredoo will be explained in section B of this Disclosure of Information v1A\JKTDMS 3

4 B. INFORMATION ON THE AFFILIATED TRANSACTION 1. Reasons and Background The Company is one of the largest telecommunication operators in Indonesia. It has served Indonesia since 1967 and since 2008 has been part of Ooredoo, one of the fastest growing telecommunication companies in the world. * From its establishment until today, the Company has been a pioneer of telecommunication development in Indonesia. It has been a front-runner in many of the breakthrough developments in improving the telecommunication service offered to the people of Indonesia. Indonesia s telecommunication market remains highly competitive. To compete in this rapidly evolving market and retain its front-running pioneering image, the Company needs to reposition how it is perceived by people in this changing world. Through its partnership with Ooredoo, the Company leverages global expertise and cutting-edge technology to bring a world-class network experience and innovative products and services to the people of Indonesia. The strong strategic and financial linkages between these two companies have supported the Company in recent years as it builds on the many breakthrough achievements it has celebrated. These ties will continue to strengthen as the Company positions itself as part of the international group. As a member of Ooredoo Group, the Company has access to use the mark, sub-marks and brand assets of the Ooredoo Group in Indonesia including but not limited to use of names, images, partnership, sponsorships, intellectual property, goods and marketing collateral. This Affiliated Transaction offers the Company exclusive rights to these global assets. The benefit of utilizing these marks, sub-marks and brand assets in Indonesia has been previously assessed by international consultants i.e., through International Consultant 1 Report and International Consultant 2 Report. The Company has considered those 2 (two) reports before the Agreement was signed. In addition to the above, the entering of the Company as a party in this Agreement will not limit the right of the Company over its existing brands. Based on the considerations above, the Company expects that the access to Ooredoo marks, submarks and brand assets will refresh the Company's business, increase future income and help the Company to remain competitive. 2. The Purpose and Benefit for the Company * By Revenue from v1A\JKTDMS 4

5 The purpose and benefit that could be obtained by the Company from the implementation of the Affiliated Transaction, among others, are as follows: (a) (b) (c) (d) (e) Through this Affiliated Transaction, the Company will have exclusive access rights in Indonesia to Ooredoo brand marks and assets including sponsorship assets, marketing media, creative assets in the form of intellectual property rights, and to other creative data owned by Ooredoo in the Ooredoo library. In addition, the Company will also obtain access to research assets owned by Ooredoo. The Ooredoo mark, sub-mark and brand assets are well-known and respected internationally and in the telecommunications industry. The equity of these assets continues to increase. The Affiliated Transaction formalises the use of such assets in Indonesia. This supports ongoing efforts to refresh external perceptions of the Company s business, in accordance with its strategy. Closer relationship between the Company and Ooredoo has already led to new partnerships with global industry leaders and helped expand the Company's business. Through this Affiliated Transaction and associated benefits, the Company is expected to be able to better compete both locally and internationally. Taking the factors listed above, which is expected to be gained by the Company as explained above, and further review to International Consultant 1 Report, International Consultant 2 Report and Independent Appraiser report to asses the fairness of this Affiliated Transaction (provided in section C of this Disclosure of Information), the Company moves to proceed with the Affiliated Transaction. 3. Object and Value The object of the Affiliated Transaction between the Company and Ooredoo is the signing of the Agreement. According to the Agreement, the Company will pay the license fee based on the following criteria: (a) (b) (c) Payment of the license fee will be conducted annually based on the Company's income in the audited annual financial statement of the Company. The Company will only pay this license fee if the Company has positive net profit after the calculation of license fee, net profit means the net profit according to the published audited annual financial statements of the Company. The licensee fee will be paid based on certain percentage calculation from the Company's Operating Revenue. This fee will not exceed 1.3% times the Company's Operating Revenue v1A\JKTDMS 5

6 4. Parties The Company's Operating Revenue means all income recorded by the Company in its audited annual financial statements with respect to its business in Indonesia, which include (i) Cellular revenue from consumer, B2B and digital business units (ii) Fixed - wholesale and the Company Phone, (iii) MIDI business from the Company standalone, (iv) fiber business. Intercompany revenue between Ooredoo Group, revenues from PT Aplikanusa Lintasarta and the tower revenues are excluded from the definition of the Company's Operating Revenue. A. The Company (i) General Information The Company, domiciled in Central Jakarta, is established pursuant to Deed of Establishment No. 55 dated 10 November 1967 made before Mohamad Said Tadjoedin, SH, Notary in Jakarta, announced in State Gazette No. 26 dated 29 March 1968, Supplement No. 24. The Articles of Association of the Company have been amended several times lastly pursuant to Deed No. 30 dated 10 June 2015 made before Aryanti Artisari, SH, Notary in Jakarta, which has been notified to the MOLHR based on the confirmation receipt from MOLHR No. AHU-AH dated 29 June The Company is domiciled in Central Jakarta with an address at Jl. Medan Merdeka Barat No. 21, Gambir, Central Jakarta The Company's shares are listed in Indonesia Stock Exchange with ISAT as the ticker symbol. Pursuant to the Articles of Association of the Company, the purposes and objectives of the Company are to engage in activities on the provision of telecommunication networks, telecommunication services and informatics and/or convergence technology services. (ii) Capital Structure and Shareholding Composition of the Company As of the date of this Disclosure of Information, the capital structure, shareholder composition and share ownership of the Company based on the Shareholders Register of the Company as of 31 October 2015 issued by PT EDI Indonesia, as the Shares Administration Bureau of the Company, are as follows: Information Number of Shares % Nominal Value (IDR) Authorized Capital - A Series Shares - B Series Shares Total of the Authorized Capital Issued and Paid-up Capital: ,999,999, ,999,999,900 20,000,000, ,000,000,000, v1A\JKTDMS 6

7 A Series Shares: Republic of Indonesia B Series Shares: Ooredoo Asia Pte 3,532,056, ,205,660,000 Ltd Republic of 776,624, ,662,499,900 Indonesia Skagen Funds 292,528, ,252,895,000 (Skagen AS) Public 832,722, ,272,295,000 Total amount of Issued 5,433,933, ,393,350,000 and Paid-up Capital Shares in Portfolio 14,566,066,500 1,456,606,650,000 (iii) Management and Supervision of the Company B. Ooredoo As of the date of this Disclosure of Information, members of the Board of Commissioners and the Board of Directors of the Company are as follows: Board of Commissioners President Commissioner : Dr. Nasser Mohammed Marafih Commissioner : Ahmed Yousef Ebrahim Al-Derbesti Commissioner : Drs Beny Roelyawan Commissioner : Cynthia Alison Gordon Commissioner : Khalid Ibrahim A. Al-Mahmoud Commissioner : Astera Primanto Bhakti Commissioner : Chris Kanter Independent Commissioner : Richard Farnsworth Seney Independent Commissioner : Wijayanto Samirin Independent Commissioner : Elisa Lumbantoruan Board of Directors President Director : Alexander Rusli Director : Caba Pinter Director : Herfini Haryono Independent Director : Joy Wahjudi Director : John Martin Thompson (i) General Information Ooredoo IP LLC, a company established under the laws of Qatar Financial Centre, having its address at P.O. Box No: 217, Ooredoo Tower 100 West Bay Center, The Corniche, Doha, Qatar with QFC Registration No: v1A\JKTDMS 7

8 Pursuant to business license granted by authority of Qatar Financial Centre dated 18 November 2013, the business activities of Ooredoo are management offices and other related functions in respect of holding and managing Ooredoo Q.S.C. intellectual property rights within Ooredoo group companies. (ii) Capital Structure and Shareholding Composition of Ooredoo On the date of this Disclosure of Information, 100% of Ooredoo's shares are owned by Ooredoo Q.S.C. Ooredoo QSC is an indirect shareholder of Ooredoo Asia Pte. Ltd. (iii) Management and Supervision of Ooredoo On the date of this Disclosure of Information, the composition of the Board of Directors of Ooredoo is as follows: Directors 5. Nature of Affiliation of the Parties Director 1 : H. E. Sh. Sauod Nasser F.N. Al Thani Director 2 : Dr. Nasser Mohammed Marafih The implementation of the Affiliated Transaction as disclosed in this Disclosure of Information involves parties that have an affiliated relationship, which is as follow: (a) Affiliation Based On Shares Ownership Ooredoo is a subsidiary of Ooredoo Q.S.C, the Company is an indirect subsidiary of Ooredoo Q.S.C. (b) Affiliation Based On Management President Commissioner of the Company served as a director in Ooredoo i.e., Dr. Nasser Mohammed Marafih. This Affiliated Transaction is not a conflict of interest transaction mentioned in the Bapepam - LK regulation No. IX.E.1 as there is no difference between the economic interest of the Company and the personal economic interest of the members of the Board of Directors, the members of the Board of Commissioners or the major shareholder which may cause loss to the Company. This is also supported by the Fairness Opinion Report issued by the Independent Appraiser. C. OPINION OF INDEPENDENT APPRAISER As stipulated in the Bapepam - LK Regulation No. IX.E.1, to ensure fairness of the Affiliated Transaction conducted by the Company, the Company has requested the Independent Appraiser to provide a Fairness Opinion Report on the Affiliated Transaction as presented in Fairness v1A\JKTDMS 8

9 Opinion Report No: APP-B/KJPP-MPR/2015/XI/16/001 dated 16 November 2015 regarding the Fairness Opinion of the proposed signing Agreement between the Company and Ooredoo ("Proposed Transaction"). Summary of the results of assessments conducted by the Independent Appraiser is as follows: a) Identity of the Parties - Company. - Ooredoo. b) The Object of the Proposed Transaction The Object of the Proposed Transaction is the signing of the Agreement between the Company and Ooredoo, on the granting of a license to the Company to use among others the mark, sub-marks and brand assets of the Ooredoo Group. Therefore the base object of the Proposed Transaction is the Agreement. c) Nature of the Proposed Transaction Based on the regulation by OJK regarding the Proposed Transaction that will be performed by the Company, the nature of the transaction is divided as Affiliated Transaction & Conflict of Interest Transaction as regulated in Bapepam - LK Regulation No. IX.E.1 and as Material Transaction & Change of Main Business Activities as regulated in Bapepam - LK Regulation No. IX.E.2. Affiliated Transaction and Conflict of Interest In accordance with the intention and purpose and also background of the Proposed Transaction, the Company's management stated that the Proposed Transaction is categorized as affiliated transaction and not contain elements of conflict of interest. The affiliated nature of the Proposed Transaction is based on the relationship between the Company and Ooredoo which are in one group with Ooredoo Group which owns 65% shares of the Company in accordance with management letter of the Company No. 063/ A00/MKT/15 dated 11 November Material Transaction and Change of Main Business Activities Based on the consolidated financial statements of the Company as of 30 June 2015 audited by Tanudireja, Wibisana, Rintis & Rekan Public Accountant dated 27 August 2015, the equity value of the Company is IDR13,594 billion (thirteen trillion five hundred ninety four billion Rupiah). Based on the management's confirmation on the Proposed Transaction value resulting from the financial projection period as of July , the royalty expense is IDR1,554 billion (one trillion five hundred fifty four billion Rupiah). Comparing this to the value of the Company's equity as of 30 June 2015, the value of this Proposed Transaction is estimated will not exceed 20% of the v1A\JKTDMS 9

10 Company s equity or around 11.4% of the Company s equity. Therefore, the Proposed Transaction is not a Material Transaction and Change of Main Business Activities as regulated under Bapepam - LK Regulation No. IX.E.2. d) Objective of the Valuation The purpose of this fairness opinion is to ensure and express the fairness of the Proposed Transaction that indicated as Affiliated Transaction as regulated in the Bapepam - LK Regulation No. IX.E.1. Therefore the use of Fairness Opinion Report is for the benefit of the internal management of the Company and OJK. e) Limitation and Assumptions Independent Appraiser does not carry out the following activities: 1. Complete review of the Company s and its subsidiaries financial statement, but only a limited review related to the purpose of assignment, including clarification on the validity of documents, ownership of assets and the possibility of claims or off-balance sheet on financial statements of the Company and its subsidiaries. 2. Quantitative analysis of the long-term business plan is for five years, but the Agreement has a period of ten years. 3. The analysis for an extended period of time (over ten years), which in the Agreement may be extended automatically for the next ten years and it can be categorized as a series of transactions which quantitatively might be material in accordance with the applicable OJK regulations. 4. Business Valuation (equity) on the Company and the Company's subsidiaries including the brand valuation. 5. Property valuation (fixed assets) owned by the Company and the Company's subsidiaries. 6. Analysis on the tax implication for the parties in the Agreement. 7. Business and financial feasibility study. Based on the analysis of the Proposed Transaction, the Independent Appraiser has made the following assumptions: 1. The Company has provided all the informations related to the Proposed Transaction and none of the information is not provided to the Appraiser. 2. The long-term business plan for the first five years has considered the prudence principles, therefore the steady growth may be a reflection of the business plan for the next five years v1A\JKTDMS 10

11 3. The Agreement is for the first ten-years period. 4. The management has convinced and followed the applicable OJK regulations related to the Proposed Transaction. 5. There is no significant change in the general conditions and macro economic Indonesia that can affect changes in the general assumptions used in particular in quantitative analysis. 6. No regulatory changes in the industry that can significantly affect the assumptions in the Company's long-term plan. 7. That all information and data provided by the management of the Company is true. f) Assesment of the Proposed Transaction Methodology The fairness analysis on the Proposed Transaction covers several aspects as the methodology of preparation of a fairness opinion, which includes the following: a. Analysis of the Proposed Transaction, which consists of identification and relationship between the transacting parties, the agreement and the terms agreed in the transaction, and the assessment of the risks and benefits of the proposed transaction. b. Qualitative and quantitative analysis which includes company history and nature of business, industry and environmental analysis, operational analysis and prospects of the company, reasons for the transaction, gains and losses that are qualitatively on the proposed transaction. It also includes the quantitative analysis of historical performances, cashflow valuation, assessment of financial projections, financial ratio analysis and analysis of financial statements before the transaction and financial statements proforma after the transaction. In the quantitative analysis, we also conducted an incremental analysis such as valueadded contribution to the company as a result of the proposed transaction, including the impact on the company's financial projections, and sensitivity analysis to measure the advantages and disadvantages of the transaction to be performed. c. Analysis of the transaction value including comparison between the value of the proposed transaction and the value of the conducted transaction, as well as analysis to ensure that the proposed transaction provides incremental value. d. Analysis of relevant factors, such as analysis of relevant costs and revenues and non-financial information, procedures of decision making by the company while determining the transaction plan and value of transaction v1A\JKTDMS 11

12 g) Fairness Opinion Conclusion on the Proposed Transaction Based on a qualitative and quantitative analysis of the Proposed Transaction and the factors that are relevant in providing fairness opinion on the Proposed Transaction of the Company, the Proposed Transaction is FAIR v1A\JKTDMS 12

13 D. ADDITIONAL INFORMATION For the Company's shareholders who need further information regardingg the Transaction which have been stated in this Disclosure, please contact: PT Indosat Tbk Head Office Jl. Medan Merdeka Barat No.. 21, Gambir Central Jakarta, Jakarta, 18 November 2015 Up. Investor Relations/Corporate Secretary v1A\ \JKTDMS 13