PT Indosat Tbk 1Q 2013 Results 1
Agenda Financial and Operational Results Management Focus Supplemental Information 2 2
Financial and Operational Highlights 3
YoY Overview Consolidated Revenue growth of 17.6% to IDR 5,788.2 billion EBITDA growth of 13.8% to IDR 2.629,2 billion, EBITDA Margin fall of 1.5 ppt to 45.4% Profit Attributable to Owners of The Company decreased to a loss of IDR 71.1 billion Free Cash Flow decreased 703.7% to - IDR 499.0 billion 4 4
QoQ Overview Consolidated Revenue decreased 2.1% to IDR 5,788.2 billion EBITDA decreased 9.1% to IDR 2,629.2 billion, EBITDA Margin fall 3.6 ppt to 45.4% Profit Attributable to Owners of The Company increased 94.3% to a loss of IDR 71.1 billion Free Cash Flow decreased 11.6% to - IDR 499.0 billion 5 5
Financial highlights In IDR billion 1Q-12* 1Q-13 YoY 4Q-12 1Q-13 QoQ Operating Revenue 4,922 5,788 17.6% 5,910 5,788-2.1% EBITDA 2,310 2,629 13.8% 2,893 2,629-9.1% EBITDA Margin 46.9% 45.4% -1.5ppt 49.0% 45.4% -3.6ppt Profit Attribution to Owners of the Company -23-71 -214.4% -1,253-71 94.3% EBITDA growth driven by improvement in the top line and good cost control *Restated due to tower transaction and service concession arrangement 6 6
Strong growth in cellular and fixed data Operating Revenue Breakdown in IDR billion 5,180 4,922 314 225 855 682 4,012 4,015 +17.6% YoY -2.1% QoQ 6,132 5,910 5,788 278 264 257 5,455 730 254 807 780 689 5,124 4,839 4,751 4,512 QoQ / YoY -2.9% / 14.1% -3.3% / 14.3% -1.8% / 18.4% 4Q-11 1Q-12* 2Q-12 3Q-12 4Q-12 1Q13 Fixed Voice Fixed Data Cellular Competitive commercial programs driving good cellular revenue momentum Government & enterprise connectivity projects contributed solid growth in fixed data *Restated due to tower transaction and service concession arrangement 7 7
Solid cellular revenue growth YoY YoY QoQ Voice 8.0% -9.3% Revenue growth YoY up on increased customer base and usage SMS 10.8% -6.7% Successful SMS campaigns and SMS interconnect driving growth Data 23.3% 13.1% Data growth accelerating and gaining momentum driven by increased data user uptake VAS 5.2% 14.6% VAS growth driven by strong demand for content 8 8
Steady growth in customer base YoY Number of cellular customers in million +7.4% YoY -4.3% QoQ in million Net customer additions 51.7 52.1 50.9 55.5 58.5 55.9 4.5 3.0 0.2 0.4-1.2-2.5 4Q-11 1Q-12 2Q-12 3Q-12 4Q-12 1Q-13 4Q-11 1Q-12 2Q-12 3Q-12 4Q-12 1Q-13 Rotational churn in first quarter due to strong gross adds in previous two quarters 9 9
Positive ARPU trend on higher usage in thousand IDR (ARPU) in IDR (ARPM) ARPU and ARPM in IDR/minute in billion minute Voice traffic and MOU in minute/subscriber 152 137 130 125 119 127 90 91 98 115 111 95 +5.9% YoY -1.1% QoQ +15.6% YoY -19.0% QoQ 25.2 25.1 26.9 30.8 26.8 26.5 14.1 13.8 15.0 18.1 19.7 16.0 4Q-11 1Q-12 2Q-12 3Q-12 4Q-12 1Q-13 4Q-11 1Q-12 2Q-12 3Q-12 4Q-12 1Q-13 ARPU ARPM Voice Traffic MOU 1Q13 commercial programs resulted in positive voice traffic & revenue growth trend Seasonal impact in first quarter 10 10
Healthy data and SMS usage growth in TByte Data usage +31.4 YoY -5.4% QoQ in billion SMS delivered +15.5% YoY -8.2% QoQ 2,842 3,240 3,423 4,032 4,500 4,257 63 58 67 71 73 67 4Q-11 1Q-12 2Q-12 3Q-12 4Q-12 1Q-13 4Q-11 1Q-12 2Q-12 3Q-12 4Q-12 1Q-13 Data usage growth strengthening Seasonal impact in first quarter 11 11
Operational expenses As percentage of revenue 4Q-11 1Q-12* 2Q-12 3Q-12 4Q-12 1Q-13 Cost of Service 40.7% 38.3% 38.8% 41.1% 40.3% 41.6% Personnel 7.3% 6.8% 6.6% 5.8% 6.3% 7.1% Marketing 1.7% 4.2% 5.4% 5.6% 1.3% 2.9% General and Administration 3.5% 3.7% 2.1% 2.4% 3.1% 3.0% Total Operating Expenses 55.3% 53.1% 52.9% 54.9% 51.0% 54.6% Depreciation and Amortization 33.5% 34.5% 31.8% 38.1% 42.3% 37.0% Total Expenses 86.8% 87.6% 84.7% 93.0% 93.4% 91.5% Cost of service and depreciation impacted by SMS interconnect and change in network equipment useful life *Restated due to tower transaction and service concession arrangement 12 12
Solid EBITDA growth YoY EBITDA and EBITDA margin in IDR billion 49.0% 46.7% 46.9% 47.1% 45.1% 45.4% +13.8% YoY -9.1% QoQ 2,768 2,893 2,629 2,418 2,310 2,569 Revenue growth and cost control resulting in healthy EBITDA growth EBITDA Margin inline with the guidance 4Q-11 1Q-12* 2Q-12 3Q-12 4Q-12 1Q-13 EBITDA EBITDA Margin *Restated due to tower transaction and service concession arrangement 13 13
Normalized net profit* up on improved operational performance in IDR billion Net profit Normalized net profit bridge in IDR billion 1Q13 484-104.7% YoY -214.4% YoY 296 81 314-23 -71-71 1Q-11 1Q-12** 1Q-13 Reported Change in Useful Life Nett FX Loss Normalized Net profit impacted by tower sale & leaseback and change in useful life of network equipment * Net profit is Profit Attribution to Owners of the Company ** Restated due to tower transaction and service concession arrangement 14 14
Balance sheet improving Gross debt* and gross debt/ebitda in IDR billion 2.51 2.50 2.31 3.0% YoY 24,283 24,313 25,042 Net debt* and net debt/ebitda in IDR billion 2.24 2.31 2.05-1.0% YoY 21,626 22,453 22,226 1Q-11 1Q-12 1Q-13 Gross Debt Gross Debt/EBITDA 1Q-11 1Q-12 Net Debt 1Q-13 Net Debt/EBITDA Better operational cash flow together with tower proceeds strengthening balance sheet * IDR 951.1bn and IDR 3.4tn of obligation under finance lease are included in 1Q12 and 1Q13 respectively 15 15
Free Cash Flow decreased on higher cash CAPEX in IDR billion 83 Free cash flow 1,137 3,528 Capex and Capex/Revenue in IDR billion 40.6% 32.1% 28.2% 21.8% 22.6% 2,103 1,731 1,402 1,334 1,332 45.1% 2,612-447 -499 4Q-11 1Q-12 2Q-12 3Q-12 4Q-12 1Q-13-970 4Q-11 1Q-12* 2Q-12 3Q-12 4Q-12 1Q-13 Capex Capex/Revenue Modernization driving higher cash capex in first quarter *Restated due to tower transaction and service concession arrangement 16 16
Network roll-out Number of BTS +10.1% YoY +0.8% QoQ Cellular Revenue per BTS In IDR million 19,253 3,437 15,816 20,063 3,772 16,291 21,039 4,141 16,898 21,642 4,431 17,211 21,930 4,596 17,334 22,097 4,645 17,452 274 203 147 220 215 118 4Q-11 3G 1Q-12 2G 2Q-12 3Q-12 4Q-12 1Q-13 1Q 2012 Telkomsel Indosat XL 1Q 2013 Network modernization program mainly focusing on existing footprint in key market areas Network quality improvement expected during 2H13 17 17
Indosat FC Barcelona: Exclusive Official Telecom Partner for Indonesia Indosat as Exclusive Official Telecom Partner for Indonesia To grab and develop VAS content business through community Messi is the brand ambassador 18 18
Management Focus and Key updates 19
Near Term Management Focus Enhance data services and VAS offerings Device bundling with prominent partners Execute modernization program in key areas to improve customer experience on data Improve operational efficiencies further Corporate values and culture transformation 20 20
2013 Guidance FY 2012 Actual FY 2013 Guidance Consolidated Revenue Growth 10.4% In line with Industry or better EBITDA Margin 46.5% Mid 40 s Cash CAPEX IDR 6.3 trillion IDR 8 trillion +10% 21 21
Thank You Any further questions? Indosat Investor Relations Jl. Medan Merdeka Barat No. 21 Jakarta - 10110 Tel: +62 21 30442615 Investor@indosat.com Upcoming events Indosat AGMS in June 2013 22 22
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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Supplemental Information 25
Credit ratings maintained On 8 February 2012, Moody s affirmed Indosat Ba1 ratings and Stable outlook, follows announcement that Indosat has agreed to sell 2,500 of its communications towers to PT Tower Bersama Infrastructure Tbk. On 30 April 2012, FitchRatings upgraded Indonesia-based Indosat Long-Term Foreign and Local-Currency Issuer Default Ratings (IDR) and Foreign Currency senior unsecured rating to BBB from BBB-. The Outlook is Stable. On 3 July 2012, Standard and Poor s ( S&P ) has upgraded Long-Term Credit Rating and the Indosat s Guaranteed Notes Rating to BB+ from BB. S&P also removed all the ratings from their CreditWatch. The Outlook is Stable to reflect S&P expectation that Indosat's operating performance will be stable. The agency also raised their long-term ASEAN regional rating scale on Indosat to axbbb+ from axbbb-. On 12 June 2012, Pefindo assigned Indosat, all its IDR Bond and Sukuk Ijarah rating idaa+ and idaa+(sy) respectively. The Outlook is stable. The ratings reflect the strong parent support, Indosat s stable market position, and its stable operating performance. However, the ratings are offset by Indosat aggressive capital structure and intense competition within the telecommunication industry. 26 26
Debt maturity profile Debt maturity profile* In IDR trillion 6.32 3.81 3.63 1.33 6.32 2.48 2.96 1.39 1.76 1.70 1.38 1.50 0.72 0.77 1.37 0.20 1.50 1.50 0.67 0.67 0.60 0.59 0.39 0.20 0 0.20 2013 2014 2015 2016 2017 2018 2019 2020 2022 IDR USD in IDR * Excluding obligation under capital lease 27 27
Spectrum overview for top 3 cellular operators in Mhz 900 Mhz 1800 Mhz 2100 Mhz 2300 Mhz Indosat 10.0 20.0 10.0 15.0 Telkomsel 7.5 22.5 15.0 15.0 XL Axiata 7.5 7.5 15.0 0.0 Telkomsel and XL each acquire 5Mhz on the last auction 28 28