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1 Indosat IR - New Template v23 1220.pptx
1
PT Indosat Tbk Full Year 2012 Highlights
2 Indosat IR - New Template v23 1220.pptx 2 Indosat IR - New Template v23 1220.pptx
2 Indosat Presentation FY 2012
2
Agenda
Financial and Operational Results
Management Focus and Key Updates
Supplemental Information
3 Indosat IR - New Template v23 1220.pptx
3
Financial and Operational Highlights
4 Indosat IR - New Template v23 1220.pptx 4 Indosat IR - New Template v23 1220.pptx
4 Indosat Presentation FY 2012
4
YoY Overview
Consolidated Revenue growth of 10.4% to IDR 22.72 trillion
EBITDA growth of 10.2% to IDR 10.57 trillion, EBITDA Margin fall of 0.1 ppt to 46.5%
Profit Attributable to Owners of The Company decreased to IDR 417.4 billion
Free Cash Flow increased 237.1% to IDR 4.3 trillion
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5 Indosat Presentation FY 2012
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QoQ Overview
Consolidated Revenue growth of 1.3% to IDR 6.21 trillion
EBITDA growth of 5.7% to IDR 2.93 trillion, EBITDA Margin growth 2.0 ppt to 47.1%
Profit Attributable to Owners of The Company decreased to a loss of IDR 1.21 trillion
Free Cash Flow decreased 112.1% to negative IDR 425.3 billion
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Financial highlights
20,577 Operating Revenue
EBITDA
EBITDA Margin
Profit Attribution to Owners of the Company
22,719
FY-11 FY-12 YoY
10.4%
9,591 10,574 10.2%
46.6% 46.5% -0.1ppt
880 417 -52.5%
6,132 6,209
3Q-12 4Q-12 QoQ
1.3%
2,768 2,927 5.7%
45.1% 47.1% 2.0ppt
1,760 -1,211 -168.8%
In IDR billion
• Improvement in the top line and cost efficiency continue to drive positive EBITDA growth
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7 Indosat Presentation FY 2012
636 739
672
699
730 833
7
Strong annual growth in cellular and fixed data businesses
Operating Revenue Breakdown
in IDR billion
3Q-12
+1.3% QoQ +18.8% YoY
4Q12
6,209 6,132
2Q-12 1Q-12 4Q-11 3Q-11
Cellular
Fixed Data
Fixed Voice
-4.9% / -15.7%
14.1% / 12.8%
-0.2% / 22.4%
• Improvement in commercial execution driving strong growth in cellular business in FY12 • E-KTP project and transponder contributed solid growth in fixed data
QoQ / YoY
315
5,307
314
5,228 4,977
5,400
278
254
225
264
4,447
4,080 4,357 4,175
5,112 5,124
8 Indosat IR - New Template v23 1220.pptx 8 Indosat IR - New Template v23 1220.pptx
8 Indosat Presentation FY 2012
8
Cellular revenue driven by strong SMS and data revenue development
Voice
SMS
Data
VAS
-2.2%
YoY
66.1%
10.8%
-65.6%
-1.3%
QoQ
0.9%
2.6%
2.4%
YoY negative revenue growth is in line with the market
Successful SMS campaigns, especially on IM3, driving positive growth
Data growth accelerating driven by increased smartphone penetration
VAS revenue impacted by uncertain market conditions after SMS Premium regulated in October 2011
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Strong growth in customer base
4Q-12
+13.1% YoY +5.4% QoQ
3Q-12 2Q-12 1Q-12 4Q-11 3Q-11
Number of cellular customers
in million
3.0
4.5
-1.2
0.40.2
4.3
4Q-12 3Q-11 3Q-12 2Q-12 1Q-12 4Q-11
Net customer additions
in million
• Successful campaigns and distribution improvements key to increased net adds • Improving churn trend
51.5 51.7 52.1 50.9 55.5 58.5
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ARPU trend improving on higher voice and SMS traffic
Voice traffic and MOU
+40.3% YoY
Q4-12
+9.1% QoQ
3Q-12 2Q-12 1Q-12 4Q-11 3Q-11
Voice Traffic
in billion minute in minute/subscriber
111115
989190
98
MOU
• 2012 commercial programs resulted in positive voice traffic & revenue elasticity
ARPU and ARPM
28.430.826.925.125.229.7
3Q-12 2Q-12 1Q-12 4Q-11 3Q-11
-7.6% QoQ +12.8% YoY
4Q-12
ARPU
in thousand IDR (ARPU) in IDR (ARPM)
119125130137152
166
ARPM
in IDR/minute
14.2 14.1 13.8 15.0 18.1 19.7
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11 Indosat Presentation FY 2012
11
Improving SMS traffic trend; data usage picking up
Data usage
in TByte +11.6% QoQ +58.4 YoY
4Q-12 3Q-12 2Q-12 1Q-12 4Q-11 3Q-11
SMS delivered
in billion +14.6% YoY
4Q-12 3Q-12
+1.9% QoQ
2Q-12 1Q-12 4Q-11 3Q-11
• Data usage showing good improvement • Still solid growth in SMS traffic
2,520 2,842
3,240 3,423
4,032 4,500
66 63
58
67 71 73
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12
Operational expenses
Cost of Service
Depreciation and Amortization
Personnel
Marketing
3Q-11 As percentage of revenue
General and Administration
Total Expenses
34.7%
4Q-11
31.6%
7.0%
5.8%
1.4%
80.5%
40.1%
1Q-12
33.3%
7.3%
4.9%
3.5%
89.0%
37.6%
2Q-12
34.2%
6.8%
4.9%
3.7%
87.3%
39.4%
3Q-12
32.0%
6.7%
4.7%
2.1%
84.9%
41.1%
4Q-12
38.1%
5.8%
5.6%
2.4%
93.0%
• Cost of service and deprecation impacted by SMS interconnect and change in network equipment useful life
38.5%
40.5%
6.0%
5.4%
2.9%
93.4%
Total Operating Expenses 48.9% 55.8% 53.0% 52.9% 54.9% 52.9%
13 Indosat IR - New Template v23 1220.pptx 13 Indosat IR - New Template v23 1220.pptx
13 Indosat Presentation FY 2012
10,574 144 9 10,727
2,681 2,346 2,338 2,541
2,768 2,927
13
Strong EBITDA growth
EBITDA and EBITDA margin
+5.7% QoQ +24.8% YoY
4Q-12 3Q-12 2Q-12 1Q-12 4Q-11 3Q-11
EBITDA
in IDR billion
45.1% 47.1% 47.0%
44.9%
50.5%
EBITDA Margin
Normalized EBITDA bridge
in IDR billion FY12
• Improvement in top line growth driving solid EBITDA growth
Tower
Transaction
Normalized SMS
Interconn.
Reported
47.1%
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14 Indosat Presentation FY 2012
417
1,646
14
Normalized net profit* up on improved operational performance
Net profit
417
880
709
-52.6% YoY +24.1% YoY
FY-12 FY-11 FY-10
in IDR billion
Normalized net profit bridge
in IDR billion FY12
• Net profit impacted by tower sale & leaseback transaction, and change in useful life of network equipment
Normalized Change in
Useful Life
Tower
Transaction
Reported
* Net profit is Profit Attribution to Owners of the Company
Nett – FX
Loss
1,780
1,257
695
-723
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15 Indosat Presentation FY 2012
2.422.552.57
24,845 24,498 25,554
2.05
2.322.35
22,770 22,274 21,637
15
Balance sheet strengthening
Gross debt* and gross debt/EBITDA Net debt* and net debt/EBITDA
FY-11 FY-10 FY-12
4.31% YoY
Gross Debt
in IDR billion
Gross Debt/EBITDA
FY-12 FY-10 FY-11
-2.86% YoY
Net Debt Net Debt/EBITDA
in IDR billion
• Better operational cash flow together with the tower proceeds enables decreased gearing
* IDR 446bn, IDR 826bn and IDR 3.3tn of obligation under capital lease are included in FY10, FY11 and FY12 respectively
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Free Cash Flow trend improving
Free cash flow
in IDR billion
-425
3,527
1,137
83
-970
906
4Q-12 3Q-12 2Q-12 1Q-12 4Q-11 3Q-11
Capex and Capex/Revenue
1,832
1,3341,731
1,403
2,103
1,202
4Q-12 3Q-12 2Q-12 1Q-12 4Q-11 3Q-11
Capex
in IDR billion
29.4% 22.3%
32.1%
40.2%
22.7%
28.2%
Capex/Revenue
• FCF improving YoY, even when net tower proceed of IDR 2.8tn is excluded • FCF down in 4Q due to CAPEX and working capital seasonality
FY-12 FY-11 FY-10 FY-09 FY-08 FY-07
984
-3,773
-6,620
878 1,282
4,322
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17 Indosat Presentation FY 2012
17
Network roll-out
Number of BTS
+1.3% QoQ +13.9% YoY
4Q-12
21,642
17,211
4,431
3Q-12
21,039
16,898
4,141
2Q-12
20,063
16,291
3,772
1Q-12
19,253
15,816
3,437
4Q-11
18,776
15,577
3,199
3Q-11
2G 3G
Revenue per BTS
In IDR million
FY 2012 FY 2011
XL
Indosat
Telkomsel
• Network modernization program (incl. 3G on 900MHz) started in Q412
17,344
4,596
21,930 1,143
781 798
1,036
468
753
*9M12 Figures
*
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Management Focus and Key updates
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19 Indosat Presentation FY 2012
19
Wrapping-up 2012
We improved commercial execution & created good revenue momentum
We strengthened data traffic & revenue growth
We secured 3G on 900MHZ and commenced modernization program We improved operational efficiencies further
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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%
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Thank You
Any further questions?
Upcoming events Indosat Capital Market Day 2013
Indosat Investor Relations Jl. Medan Merdeka Barat No. 21 Jakarta - 10110 Tel: +62 21 30442615 [email protected]
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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
• Please be advised that the information provided herein are merely issued to coincide with the release of Ooredoo (formerly known as Qtel Group - with the legal name: Qatar Telecom Q.S.C.) results for the year ended December 31, 2012, as our indirect majority shareholder that consolidates Indosat’s results in its financial statements. Subject to the completion of, including but not limited to the audit by the Public Accountant on the Company’s consolidated financial statements which are prepared in accordance with the Indonesian Financial Accounting Standards as well as the Company's consolidated financial statements which are prepared in accordance with the IFRS to comply with the requirements under the US law (since we are a Foreign Private Issuer) which to the certain extent might affect the determination of accounting treatment presented hereto, Indosat expects the filing and release of its official results for the year ended December 31, 2012 shall be done on April 30, 2013 at the latest (“Indosat’s Official Release”). Accordingly, the information provided herein may differ from what is contained in Indosat's Official Release.
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24 Indosat IR - New Template v23 1220.pptx
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Supplemental Information
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Credit ratings maintained
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.
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.
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Accounting Treatment on Sale and Lease Back Transaction
Before January 1, 2012, there was no requirement to separately evaluate lease agreement that contained land and building elements. As such, the assessment was performed on a combined basis.
Starting January 1, 2012, based on PSAK 30 (Revised 2011), when a lease includes both land and building elements, an entity should assess the classification of each element separately whether as a finance or an operating lease.
Determining whether a lease transaction is a finance lease or an operating lease is a complex issue and requires substantial judgment as to whether the lease agreement transfer substantially all the risks and rewards of ownership to or from the Group.
In sale and leaseback transactions, the classification of the lease back arrangements as described above determines how the gain or loss on the sale transaction is recognized.
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Impact of tower sale and lease back transaction on Financial Statement
Fair value adjustment of TBIG shares
Gain deferred (finance lease)
Net gain recognized
9M 2012
-69
2,187
in IDR billion
Gross gain recognized 2,256
• Accounting treatment for tower sale and lease back transaction is classified as finance lease
Differences
-1,342
-1,062
FY 2012
280
-1,411
1,125
2,256
2,083 -1,029 1,054
Initial cost and others -105 -71
Net gain recognized after initial cost and others
280
34
0
0
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Impact of tower sale and lease back transaction on Financial Statement
YTD Dec 12
4,742
723
4,019
Net impact FY 2012 in IDR billion
• Accounting treatment for tower sale and lease back transaction is classified as finance lease
Assets
Liabilities
Equity
Differences
2,132
-1,057
3,183
YTD Sept 12
2,610
1,780
830
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Impact of tower sale and lease back transaction on Financial Statement
Income/Expense Related to Tower Transaction
Net Gain recognized
Income Statement
Balance Sheet
Assets
Liabilities
Equity
Net profit
-314
4,742
1,125
723
723
4,019
Net impact FY 2012 in IDR billion
Potential Revenue Loss -88
• Accounting treatment for tower sale and lease back transaction is classified as finance lease
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30
We are within our covenants
Net debt to equity*
Gross debt to equity*
Net debt to EBITDA*
Gross debt to EBITDA*
1.12
FY-12
1.32
2.05
2.42
Interest coverage 6.18
< 2.5x
> 3.0x
< 3.5x
1.24
1.36
2.35
2.57
4.65
FY-10
1.18
1.29
2.32
2.55
5.64
FY-11
* Including obligation under capital lease
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31
Debt maturity profile
Debt maturity profile*
In IDR trillion
2.68
0.67 0.67 0.60
6.30 1.33
3.26
0.42 0.77 1.37
0
1.50 1.50
3.93 4.01
6.30
2019
1.70
0.20
2018
0.20
0.20
2017
0.38
2013 2020 2022
1.50
2016
1.76
0.59
2015
1.37
2014
1.09
IDR
USD in IDR
* Excluding obligation under capital lease
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Spectrum overview for top 3 cellular operators
10.0
900 Mhz
7.5
7.5
Indosat
Telkomsel
XL Axiata
20.0
1800 Mhz
22.5
7.5
10.0
2100 Mhz
15.0
15.0
15.0
2300 Mhz
15.0
0.0
in Mhz
• Telkomsel and XL each acquire 5Mhz on the last auction