PT. Indosat Tbk. First Quarter 2016 Results

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1 PT. Indosat Tbk. First Quarter 2016 Results

2 Reborn Update

3 New Stream to focus on Why Change? Increase Attractive to help the business Quality perception and retention challenges Faster growth, renewed sense of purpose Market and consumers are evolving DIGITALIZATION is a new opportunity for us to win the market We can leverage the Ooredoo brand to capture this opportunity Innovative & global brand association Technical & funding support Data and digital leadership The New Indosat Ooredoo Positioning & Streams We are building Indonesia's leading digital telco, enabling access and greater Liberating products 1 & services A data strong 2 network 3 We treat our customer like a friend Affordability & Accessibility 4G LTE for Everybody New Behavior & Customercentric Experience What does this mean? New look & feel! New logo & designs, reskinned Galeri/ outlets/ office/ materials Digital customer experience! Revamped digital touchpoints, Apps Corner New culture & behavior! Can-do attitude, Reform mindset: positive & curious 3

4 1 Liberating products & services From High Variety package offer..becoming Clear and Simple package 4

5 2 A Data Strong Network Indosat Ooredoo won Speedtest Award for Fastest Mobile Network and Fastest 4G Network in Indonesia based on the results of tests performed on Speedtest.net and Speedtest mobile applications. Network performance test results show Mbps download speed and 9.43 Mbps upload speed Speedtest rank cellular network based on average download performance with the fastest technology available in Indonesia. 5

6 3 We treat our customer like a friend 0815XXXXXXX Enrich customers touch point for easiness and ability to customize their own needs 6

7 Mobile Financial Services

8 Serving all customer segments Mobile Banking Telco Wallet Micro Savings, loans Pay with QR OTT Wallet Cash Management Remittance Mobile POS Micro insurance 8

9 MFS trend Transaction Volume (in Million) (Dec-14) 900% (Dec-15) Number of Agent Locations 154K 222K (Dec-14) 63% (Dec-15) Dec-15 IDR 2,500 Bn Jan-15 IDR 64Bn Number of Subscribers (in Million) Transaction Value (in trillion IDR) Active Agents Jan-14 IDR 27Bn 1,3 2,5 (Dec-14) (Dec-15) 84% 0,19 (Dec-14) 1000% 2,5 (Dec-15) 12k 115k (Dec-14) (Dec-15) 614% 9

10 Building biggest ever eco-payment system Cash in Cash out Chain Stores ATM Switching Service Payment Airtime Billers Insurance FIs Online Merchant In Store Payment Transfer & Remittance Pay with QR Codes MTO MNO Classic Pizza Cone Coffee Kulture E-Claire Coffee Rasa Sabananyo Heidy s Kitchen Soho Conv. Store Uncle Yaya s Steak 10

11 Financial and Operational Highlights

7% from IDR 2,604 billion to IDR 2,961 billion, EBITDA Margin reached 43.

12 1Q16 YoY Overview Consolidated Revenue increased 11.8% from IDR 6,093 billion to IDR 6,813 billion EBITDA increased 13.7% from IDR 2,604 billion to IDR 2,961 billion, EBITDA Margin reached 43.5% Profit Attributable to Owners of The Parent increased from a loss of IDR 456 billion to a profit of IDR 217 billion Free Cash Flow decreased from IDR 587 billion to IDR 463 billion 12

1Q16 QoQ Overview Consolidated Revenue decreased 5.2% from IDR 7,187 billion to IDR 6,813 billion EBITDA increased 1.9% from IDR 2,906 billion to IDR 2,961 billion, EBITDA Margin reached 43.

13 1Q16 QoQ Overview Consolidated Revenue decreased 5.2% from IDR 7,187 billion to IDR 6,813 billion EBITDA increased 1.9% from IDR 2,906 billion to IDR 2,961 billion, EBITDA Margin reached 43.5% Profit Attributable to Owners of The Parent increased from a loss of IDR 188 billion to a profit of IDR 217 billion Free Cash Flow increased from IDR -1,509 billion to IDR 463 billion 13

14 Financial Highlights in IDR billion 1Q-15 1Q-16 YoY 4Q-15 1Q-16 QoQ Operating Revenue 6,093 6, % 7,187 6, % EBITDA 2,604 2, % 2,906 2, % EBITDA Margin 42.7% 43.5% 0.8ppt 40.4% 43.5% 3.1ppt Profit (Loss)Attributable to Owners of the Parent % % Revenue and EBITDA continued to grow, supported by strong growth in cellular revenue and cost management initiative that starts to deliver the result. Bottom line has entered into positive territory due to stabilized currency. 14

15 Segment Revenue Overview in IDR billion 6, Operating Revenue Breakdown +11.8% YoY -5.2% QoQ 6,527 6,962 7,187 6, QoQ / YoY -20.1% / -21.4% -8.9% / +1.0% 4,903 5,321 5,768 5,904 5, % / +15.8% 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 Fixed Voice Fixed Data Cellular Strong data cellular revenue growth has driven up overall cellular business performance IDR appreciation drove IDD revenue down and eventually brought down Fixed voice revenue QoQ and YoY. Project related to government was stop caused a lower Fixed data revenue QoQ. However, revenue growth YoY is still maintained. 15

16 Cellular Revenue Performance YoY QoQ Voice 8.2% -6.2% SMS 13.3% -8.3% - Healthy growth in all services YoY - Seasonality impacted voice and sms revenue, but data, supported by 4G network and offering, continued to grow Data 45.5% 7.4% VAS 21.8% 5.8% Increased VAS usage from various gaming & content packages 16

17 Cellular Customer Base in million Number of cellular customers +4.9% YoY +0.1% QoQ in million Net cellular customers additions Q-15 2Q-15 3Q-15 4Q-15 1Q-16 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 Number of customer continued to grow, shifting from acquisition mode to monetization mode. 17

18 Improving ARPU in thousand IDR (ARPU) ARPU and ARPM in IDR (ARPM) in billion minutes (Voice Traffic) Voice Traffic and MOU in minute/subscriber (MOU) % YoY % QoQ % YoY % QoQ Q-15 2Q-15 3Q-15 4Q-15 1Q-16 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 ARPU ARPM Voice Traffic MOU ARPU grew inline with customer addition YoY Voice traffic was growing due to our expansion in outside of Java area 18

19 Strong Data Usage Data Usage SMS Delivered in TByte in billion +60.5% YoY +11.7% QoQ -6.8% YoY -11.6% QoQ 39,880 46,027 55,871 57,276 63, Q-15 2Q-15 3Q-15 4Q-15 1Q-16 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 Increase in data traffic continued driven by 4G data plan focused SMS declined due to seasonality 19

Operational expenses as percentage of revenue 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 Cost of Service (CoS) 42.9% 42.1% 40.5% 42.1% 40.4% Personnel 7.4% 6.9% 6.8% 7.6% 7.8% Marketing 3.0% 4.6% 3.8% 6.8% 4.

20 Operational expenses as percentage of revenue 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 Cost of Service (CoS) 42.9% 42.1% 40.5% 42.1% 40.4% Personnel 7.4% 6.9% 6.8% 7.6% 7.8% Marketing 3.0% 4.6% 3.8% 6.8% 4.7% General and Administration 3.8% 4.2% 2.9% 3.0% 3.7% Total Operating Expenses 57.3% 57.7% 54.0% 59.6% 56.5% Depreciation and Amortization 33.9% 32.2% 29.8% 35.1% 32.6% Total Expenses 91.2% 89.9% 83.8% 94.7% 89.1% Moderated operational expenses G&A ratio was higher due to professional fees related to new marketing strategy and campaign being implemented 20

21 EBITDA performance in IDR billion EBITDA and EBITDA margin 42.7% 2, % 42.3% 43.5% 40.4% +13.7% YoY +1.9% QoQ 3,205 2,758 2,906 2,961 EBITDA performance is supported by strong revenue growth combined with strict cost management initiative that started to deliver result 1Q-15 2Q-15 EBITDA 3Q-15 4Q-15 1Q-16 EBITDA Margin 21

22 Net profit in IDR billion Net profit % YoY % YoY 217 Strong revenue growth, good cost management and stabilized currency resulted in positive net profit Q-14* 1Q-15 1Q-16 * Restated due to implementation of PSAK 24 (revised 2013) effective 1 January

23 Balance sheet Gross debt* and gross debt/ebitda in IDR billion % YoY 27,174 27,398 25,913 Net debt* and net debt/ebitda in IDR billion % YoY 23,649 23,924 23,331 1Q-14 1Q-15 1Q-16 1Q-14 1Q-15 1Q-16 Gross Debt Gross Debt/EBITDA Net Debt Net Debt/EBITDA * IDR 3.73tn, IDR 4.07tn and IDR 3.76tn of obligation under finance lease are included in 1Q14, 1Q15 and 1Q16 respectively Gearing level continuously improved Reducing US debt portion is progressing 23

24 Free cash flow & Capex Free cash flow Capex and Capex/Revenue in IDR billion in IDR billion in % ,096 1, ,414 1, ,869 2, ,663 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 1Q-15 2Q-15 3Q-15-1,509 4Q-15 1Q-16 Capex Capex/Revenue Moderated capex to revenue ratio as a result of price negotiation supported by Ooredoo, the parent 24

25 Network & Data User Number of BTS Data User +28.2% YoY +3.2% QoQ In million +6.0% YoY -8.0% QoQ 50,687 52,326 40,831 43,075 46,361 3,361 3, ,544 20,067 22,671 23,730 25, ,212 22,902 23,525 23,596 23,714 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 4G 3G 2G Strong network performance to support data service Shifting the focus from acquisition toward monetization 25

26 Management focus & Key updates

Management Focus Continue to transform Indosat Ooredoo to become the leading digital telco in Indonesia, both from a product offering perspective as well as the way it interacts with its stake

27 Management Focus Continue to transform Indosat Ooredoo to become the leading digital telco in Indonesia, both from a product offering perspective as well as the way it interacts with its stake holders Continue to build operational excellence and efficiency as part of the company culture To explore industry synergies to become more efficient and effective To further strengthen the corporate (b2b) offering to build a stable base through connectivity and services. 27

28 2016 Guidance FY 2015 Actual FY 2016 Guidance Consolidated Revenue Growth 11.1% In line with market EBITDA Margin* 42.9% Low to Mid 40 s CAPEX IDR 7.3 trillion IDR trillion * Restated due to implementation of PSAK 24 (revised 2013) effective 1 January

29 Thank You Investor Relations & Corporate Secretary Jl. Medan Merdeka Barat No. 21 Jakarta Tel: Investor@indosatooredoo.com

30 Supplemental Information

IM2 case development On September 16, 2014, the South Jakarta Attorney Office ( Kejaksaan Negeri Jakarta Selatan ), without preliminary notification, executed the Supreme Court s Decision on Mr.

31 IM2 case development On September 16, 2014, the South Jakarta Attorney Office ( Kejaksaan Negeri Jakarta Selatan ), without preliminary notification, executed the Supreme Court s Decision on Mr. Indar Atmanto. The execution was done based on a quotation of the Supreme Court s Decision, which states, among others, that (i) Mr. Indar Atmanto is found guilty and sentenced to eight years imprisonment and charged with penalty of Rp300,000,000,- (if the penalty is not paid, Mr. Indar Atmanto would serve an additional six months imprisonment), and (ii) IM2 pay the losses sustained by the State amounting to Rp1,358,343,346,674,-. Subsequently, on January 16, 2015, Mr.Indar Atmanto and/or his lawyer or IM2 received the document on the Supreme Court s decision regarding the litigation case. As of the issuance date of the consolidated financial statements, Mr. Indar Atmanto and IM2 plan to conduct further legal act by submitting a reconsideration request peninjauan kembali ( PK ). On March 16, 2015, Mr. Indar Atmanto s submission of Judicial Review [Peninjauan Kembali ( PK )] was officially registered at the Corruption Court under No. 08/AKTA.PID.SUS/PK/TPK/2015/PN.Jkt.Pst. On November 4, 2015, the Supreme Court s official website announced that the Judicial Review filed by Mr. Indar Atmanto was rejected based on Supreme Court s decision dated October 20, However, no detailed information regarding the exact content of such Supreme Court s decision was available. As of the issuance date of the interim consolidated financial statements, the official copy of such Supreme Court s decision hasn t been received. 31

Credit ratings On 15 March 2016, Fitch Ratings has upgraded the Long-Term Local-Currency Issuer Default Rating (LC IDR) of Indonesia s second-largest telecommunications operator, PT Indosat Tbk

Fitch has also affirmed the National Long-Term Rating at AAA(idn). The Outlook on the ratings is Stable.

32 Credit ratings On 15 March 2016, Fitch Ratings has upgraded the Long-Term Local-Currency Issuer Default Rating (LC IDR) of Indonesia s second-largest telecommunications operator, PT Indosat Tbk (Indosat Ooredoo), to BBB+ from BBB. The agency has simultaneously affirmed Indosat Ooredoo s Long-Term Foreign-Currency IDR (FC IDR) and its foreigncurrency senior unsecured rating at BBB. Fitch has also affirmed the National Long-Term Rating at AAA(idn). The Outlook on the ratings is Stable. On 25 January 2016, Standard & Poor's Ratings Services ( S&P ) affirmed its 'BB+ longterm corporate credit rating on PT Indosat Tbk. The outlook is positive. S&P also affirmed their 'axbbb+' long-term ASEAN regional scale rating on the Indonesia-based telecommunications company. S&P affirmed the rating because they expect Indosat to maintain its solid No.2 position in Indonesia's growing cellular market. The positive outlook reflects their view that the company's financial risk profile will improve over the next months. On 21 October 2015, Moody's Investors Service says that PT Indosat Tbk's (Ba1 stable) 1H 2015 results were in line with their expectations, with continued improvement in operating performance from the second half of The stable outlook reflects Moody's expectation that Indosat will maintain its position as a leading mobile operator in Indonesia amid increasing competition for data services, and leverage, in terms of adjusted debt/ebitda will remain in the 2.5x -3.0x range for the next months as Indosat continues its high capex for network modernization. On 28 September 2015, PEFINDO has affirmed its idaaa ratings for PT Indosat Tbk (ISAT) and its Shelf-Registered Bond I/ , Bonds V/2007 Serie B, Bonds VII/2009 Serie B, and Bonds VIII/2012. PEFINDO has also affirmed its idaaa(sy) ratings for ISAT s Sukuk Ijarah I/ , Sukuk Ijarah IV/2009 Serie B, and Sukuk Ijarah V/2012. The outlook for the corporate rating is stable. The ratings reflect ISAT s strong support from its majority shareholder, strong market position, and stable operating performance. 32

33 Debt maturity profile* In IDR trillion IDR USD in IDR * Excluding obligation under capital lease 33

Spectrum overview in Mhz Number of BTS 850 Mhz 900 Mhz 1800 Mhz 2100 Mhz 2300 Mhz Indosat 2.5 10.

0 10.0 - * Telkom and Bakrie Telekom have the same spectrum, differentiated by its operational areas

34 Spectrum overview in Mhz Number of BTS 850 Mhz 900 Mhz 1800 Mhz 2100 Mhz 2300 Mhz Indosat ** Telkomsel * ** XL Axiata Hutchison * Telkom and Bakrie Telekom have the same spectrum, differentiated by its operational areas ** Indosat/IM2: West Java exclude Bogor, Depok & Bekasi ; Telkom/Telkomsel: Maluku & North Maluku 34

35 Disclaimer PT Indosat Tbk ( Indosat or Company ) cautions investors that certain statements contained in this document state its management's intentions, hopes, beliefs, expectations, or predictions of the future are forward-looking statements The Company 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: The Company s ability to manage domestic and international growth and maintain a high level of customer service Future sales growth Market acceptance of the Company s product and service offerings The Company s ability to secure adequate financing or equity capital to fund our operations Network expansion Performance of the Company s network and equipment The Company s 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 35

PT Indosat Tbk 1Q 2015 Results

PT Indosat Tbk 1Q 2015 Results Agenda Financial and Operational Highlights Management Focus and Key Updates Supplemental Information 2 Financial and Operational Highlights 3 1Q15 QoQ Overview Consolidated