“We accelerate Growth”

“Indonesia “Indonesia –– Go Online”Go Online”

FEBRUARY 15, 2012

“INDONESIA TELECOM OUTLOOK”

“From Voice to Data”

The Journey… to “Everything Online”Internet development in Indonesia is quite recent – spurred by social networking

“Need to be connected”

“Social Media”

To share…

To express opinions…To be a community member…

“Mobile Commerce”

To offer goods…To find merchandise…

To advertise…To do payments…

“Need to be connected”

To contact somebody…To make appointment…

To find information….

2000-2007 2008-2011 2011-Onward

What we had in 2011…We are experiencing an era where “voice” market is maturing & mobile

internet introduction to the market

200,000

250,000

300,000

350,000

97%

106%113%

120%124%

129%

58%

63%67%

71%74%

77%

• In 2010, the wireless SIM-based

penetration rate was 97.3%

• Average Indonesian held 1.68 SIM

cards, resulting in a unique

subscriber penetration rate of only

~60%

Subscribers penetration SIM vs. Unique Subs. (%)

-

50,000

100,000

150,000

2010 2011E 2012E 2013E 2014E 2015E

Number of SIM circulation

SIM Penetration

Unique subs. Penetration

~60%

• Service providers bundling end user

devices with subscription plans with

lowering subscription fee

• Trending down internet-able device

price such as dongle, netbook,

tablets

Source: Company website, Bank reports, Frost & Sullivan analysis

Where we are now ….Critical mass is achieved with slowing-down growth rate

111.9

153.8

106%

Mobile Subscription Penetration Rate - SIM (%)

129%

Base Year (2011) Projections (2016)

12

4

Base Year (2011) Projections (2016)

Mobile Subscriber Growth Rate (%)

Source: Company website, Bank reports, Frost & Sullivan analysis

2015E

What happened on the revenue side…“Voice” revenue growth is tapering as market is maturing & operators

need to introduce new source of revenue growth

80,000

100,000

120,000

1.10

• As overall industry is maturing –

total revenue growth is projected in

range of 4% - 6% on the next 5

years

• Key factors impacting revenue &

Cellular Industry Market Revenue(IDR Bn)

0

20,000

40,000

60,000

2008A 2009A 2010A 2011E 2012E 2013E 2014E

1.05

1.06

1.051.04

investment:

• Increase in CAPEX needs in

line with increase in data

services

• Data revenue monetization that

is still in “learning curve”

• Operator anticipation for LTE

network deployment

Revenue growth

Source: Company website, Bank reports, Frost & Sullivan analysis

…Still on the revenue side…“Non-voice” revenue is taking up as operators introducing data-centric

services to the market

33% 38% 40%

Voice vs. Non-voice Revenue Composition (%)

Data Service Revenue Composition (%)

67% 62% 60%

2009 2010 2011

Voice Non-voice

80% 82% 78%

20% 18% 22%

2009 2010 2011

SMS Non-SMS

Source: Company website, Bank reports, Frost & Sullivan analysis

What happened on the network side…Majority of Operators’ BTS is 2G hence significant CAPEX will be needed

within the next 3-5 years to improve 3G coverage

BTS Composition (Three major operators)

-

20,000

40,000

60,000

80,000

100,000

3G

2G

• Recent data surging mainly lead by

15% - 20% 3G enabled handset and

expected to increase to 25% - 30%

in 2012

-

2009 2010 Q1-11 Q2-11 Q3-11

2009 2010 Q1-11 Q2-11 Q3-11

2G 85% 80% 82% 82% 81%

3G 12% 17% 18% 18% 19%

27% 23% 19% 15% 12% 9%

64%64%

63%62%

59%56%

9% 13% 18% 23%30% 36%

2009 2010 2011 2012F 2013F 2014F

3G+

2.5G

Non-GPRS

• Lack of 3G coverage has impact to

Operators’ CAPEX spending going

forward in improving its data

coverage & capacity

Handset Market Composition (%)

Source: Company website, Bank reports, Frost & Sullivan analysis

Near saturating market for penetration rate coupled with reducing ARPU is limiting the revenue growth

If we see Indonesia in the Region…Double digit growth a thing of the past

Bangladesh

Cambodia

India

10.0%

12.0%

14.0%

16.0%

Bangladesh

Cambodia

India

10.0%

12.0%

14.0%

16.0%Mobile Revenue & Penetration Rate APAC, 2010

Mobile

Revenue C

AG

R (

2009-2

015)

9

Australia

Cambodia

China

Hong Kong

Indonesia

Japan

Malaysia

New Zealand

PakistanPhilippines

SingaporeSouth Korea

Sri Lanka

Taiwan

Thailand

Vietnam

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 140.0% 160.0% 180.0%

2010 Mobile Penetration Rate (%)

Australia

Cambodia

China

Hong Kong

Indonesia

Japan

Malaysia

New Zealand

PakistanPhilippines

SingaporeSouth Korea

Sri Lanka

Taiwan

Thailand

Vietnam

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 140.0% 160.0% 180.0%

2010 Mobile Penetration Rate (%)

Mobile

Revenue C

AG

R (

2009

Source: Company website, Bank reports, Frost & Sullivan analysis

37.9%

13.3%

2010

Indonesia amongst others in the RegionWhile lags behind other countries, coverage expansion & speed

improvement in major cities are increasing

4,990

7,792 7,139

Avg Kbps Peak Kbps

Broadband Penetration (fixed & wireless dongles as % of pop)

Mobile Data Average & Peak Broadband Speed (Kbps)

1.9%

Singapore Malaysia Indonesia

Source: Frost & Sullivan, ITU, Internetstats, AMDA

1,086 1,071 518

Singapore Malaysia Indonesia

While fixed and mobile internet penetration is still relatively low, we are now can find many hotspots in metropolitan areas – most of them are free for use

“Everything” is online… are we ready?As of 2010, broadband penetration is approx. 2% but is expected to reach around ~60% by 2016 driven mainly by “small-screen” mobile

Internet Penetration (Mn)

39.6

145.2

21.840

60

80

100

120

140

160

Millions

2010 2015

29.7%

3.6%6.3%

CAGR: 2.8%

Data connections (Mn)

21.9%CAGR

Source: Company website, Bank reports, Frost & Sullivan analysis

2011 2016

167

62

3.7

16.9 18.3

4.2

22.921.8

0

20

40

Singapore Malaysia Indonesia Thailand

CAGR: 2.8%

How big is the market…Indonesia has a very small online market revenue but potential for growth

is there…

$8, 39%

$11, 54% 0.1

1.03

67%

CAGR

Online Commerce Market Size, 2010 (USD Mn) Mobile Commerce Revenue Projection(USD Bn)

Ads

Gaming

Video/music$2, 7%

2010 2011 2012 2013 2014 2015

Video/music

• Indonesia potentially reach 10 times its current m-commerce industryvalue by 2015 with a proper ecosystem and infrastructure,technology, & regulatory framework

Source: Company website, Bank reports, Frost & Sullivan analysis

6501,400

1,600

1,800

2,000

1,808

How big is the market…E-enablement of Indonesia starting now

� Rakuten’s entry into Indonesia through JV

� Other international players scouting for JVs –

Korean and US based

� Indonesia online shopping % half of

Thailand

E-commerce (transaction revenues)

Market Size (US$ mn) Market Drivers

172

780

57

378

120

0

200

400

600

800

1,000

1,200

2010 2015

E-Commerce

Ecosystem enablers

Digital Content

349

Source: Company website, Bank reports, Frost & Sullivan analysis

� Many app developers looking at Indonesia as

a base for global development

� Huge interest from local entrepreneurs

� Difficulty in monetization

Digital Content

� Payment mechanisms still a concern in

Indonesia

� Mobile payments – issues in regulation

Ecosystem enablers

Some key takeaway…

Demand is there..are we ready?

As the market has shown, the demand for “everything online” is

there – from a simple browsing to mobile payment & transaction.

The next question: Are we ready? In terms of basic infrastructure,

market education, human competency, and market readiness

Who drives the

“CAPEX”?

“CAPEX” is key function in delivering good-experience on data

centric services i.e. cross platform, cross devices, cross

geographical areas

The next question: Who drives the budget? As almost all of

Indonesian operators are in majority owned by foreign investment

and budget allocation is certainly governed by interest of the major

shareholders

See you somewhere…online