Company Profile of Indosat: A Leading Indonesian Telecommunication Operator

Shares of Indosat surged 4.58 percent during the first two trading days of this week as a result of Jokowi’s remarks in a debate with other presidential candidate Prabowo Subianto. During the Megawati Sukarnoputri administration (2001-2004), Qatar Telecom (currently known as Ooredoo Asia Pte Ltd) bought a majority-stake in Indosat as the Indonesian government needed funds amid financial troubles (due to the ongoing impact of the Asian financial crisis which emerged in 1997-1998).

Indosat recorded net income of IDR 800 billion (USD $66.9 million) in the first quarter of 2014, a marked improvement from an IDR 71.1 billion loss (USD $5.9 million) in the same period last year. Meanwhile, revenue declined 0.3 percent (year-on-year) to IDR 5.7 trillion (USD $477 million) in Q1-2014.

Indosat’s main competitors in Indonesia are Telekomunikasi Indonesia (Telkom) and XL Axiata. As of March 2014, Telkom (through subsidiary Telkomsel) has 132 million cellular subscribers, while XL Axiata has 60.5 million.

Indosat Corporate News 2014:

• The company obtained an IDR 700 billion (USD $58.6 million) loan from state-owned Bank Negara Indonesia (BNI) to settle debts and to finance Indosat’s 2014 working capital. This loan will mature in 2015.

• Indosat plans to sell rupiah-denominated bonds to refinance a separate debt due in 2015. This sale is intended to reduce the company’s proportion of dollar-denominated debt to 25 percent from 50 percent currently. These rupiah-notes are expected to be sold in the second quarter of 2015.

• Indosat has an USD $650 million debt maturing in 2020. These bonds (coupon rate of 7.375 percent) are listed on the Singapore Stock Exchange. The company had a total debt of IDR 23.4 trillion (USD $1.96 billion) in May 2014.

• In March 2014, Indosat sold its five percent stake in mobile mast builder Tower Bersama Infrastructure for IDR 1.39 trillion (USD $116.3 million).

• Indosat has set aside a total of IDR 16 trillion (USD $1.34 billion) for capital expenditure in 2014 and 2015 to boost its network capacity and improve services.

Operational Highlights Indosat:

	2008	2009	2010	2011	2012	2013
Total Cellular Subscribers¹	36.5	33.0	44.3	51.7	58.5	59.6
– Prepaid¹	35.6	31.3	43.2	50.5	57.8	58.8
– Postpaid¹	0.9	1.8	1.1	1.2	0.6	0.8

^{¹ in millions}

Indosat's Financial Highlights:

	2008	2009	2010	2011	2012	2013
Operating Revenues	19.21	18.82	19.74	20.53	22.42	23.86
Operating Income	4.73	3.18	3.41	3.16	3.19	1.51
Net Income (loss)	1.88	1.50	0.66	0.97	0.38	(2.78)
EBITDA	9.32	8.75	9.64	9.66	10.54	10.38
Total Assets	51.69	55.04	53.32	53.23	55.23	54.52
Total Liabilities	33.99	36.75	35.07	34.26	35.83	38.00
Basic Earnings per Share¹	345,7	275,7	122,6	178,3	69,0	(511,97)
Dividend per Share¹	187,90	172,85	137,86	59,55	76,84

^{in trillion IDR (rupiah), unless stated otherwise}
^{¹ in IDR (rupiah)}
^{Source: Indosat, Annual Report 2013}

Future Projection Indosat's Financial Highlights:

	2012	2013	2014F	2015F
Operating Revenues	22,419	23,855	25,670	26,910
EBITDA	10,574	10,376	11,426	11,951
Net Income (loss)	375,1	(2,782)	1,172	2,020
Basic Earnings per Share¹	69,0	(511,97)	312,3	371,7
P/E Ratio (x)			15.8	13.3

^{in billion IDR (rupiah), unless stated otherwise}
^{¹ in IDR (rupiah)}
^{Source: Indosat, Annual Report 2013 & Investor Daily}

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