PT Indosat Tbk. First Quarter 2012 Results 1
Today s Agenda Q1 2012 Results 2012 Guidance Operational Updates Financial Results Supplemental Information 2
Q1 2012 Annual Review YoY Results Consolidated Revenue growth 2.1% to IDR5.0tn Cellular Revenue growth 3.0% to IDR4.1tn EBITDA growth 3.6% to IDR2.3tn; EBITDA Margin growth of 0.7ppt to 47% Free Cash Flow declined 70% to IDR82.7bn, Profit Attributable to Owners of The Company declined 96.5% to IDR16.7bn Debt lower by 3.5% Customer base growth 14% to 52.1 million subscribers 3
Q1 2012 Quarterly Review QoQ Results Consolidated Revenue declined by 4.5% Cellular Revenue declined by 1.9% EBITDA growth of 1.8%; EBITDA Margin growth of 3ppt Free Cash Flow growth of 108.5% Profit Attributable to Owners of The Company growth 111.6% Debt lower by 1.2% 354k Net Additions in 1Q 2012 4
Today s Agenda Q1 2012 Results 2012 Guidance Operational Updates Financial Results Supplemental Information 5
2012 Guidance Key Metrics FY 2011 Actual 2012 Guidance Consolidated Revenue Growth 3.9% Growth inline with industry EBITDA Margin 46.3% 46-48% Cash CAPEX IDR 6.1tn IDR 6tn ±10% Expect ongoing commercial initiatives to improve 2H 2012 revenue profile Able to maintain overall CAPEX levels vs 2011 due to increased efficiency 6
Today s Agenda Q1 2012 Results 2012 Guidance Operational Updates Financial Results Supplemental Information 7
Key Highlights - Cellular Q1 seasonality - slightly lower revenues. Premium content revenue re-build ongoing, YoY impact negative IM3 Seru Anti Galau was launched as a cellular revenue growth driver primarily through SMS centric offers (CeeSan, IM3 Seru and IM3Community) Expected performance impacts from the ongoing integration process of IM2 into Indosat were seen, while the company launched Indosat Internet Broom, a new data offering launched to increase data revenue momentum One of the usage stimulation based promotions - launched in line with a renewed focus on CRM, stimulation and retention 8
Cellular Revenue Performance YoY QoQ Voice 6.6% 10.8% Customer migration to IM3 Voice minutes up 11.7% YoY & 1.5% QoQ SMS 48.1% 5.0% Successful SMS campaigns driving growth Data 9.4% 8.8% Migration from large-screen to small screen, IM2 integration Mobile Internet 20.0% 12.9% Wireless Broadband 49.5% 26.4% Subs fall 5.2% YoY and fall 3.3% QoQ VAS 63.9% 20.9% Mainly due to CP Regulation. SMS showed solid growth while Data is going through a transition from high ARPU wireless broadband to mobile internet 9
Data Revenue Performance 9.4% YoY Data Revenue Growth Wireless Broadband Business Mobile Internet Business 49.5% YoY 20% YoY Device Bundling Data Value Proposition Revamp CRM Data Business Integration Large scale customer shift from wireless broadband to mobile internet, has negative short term impact on revenues and positive impacts on margins. Anticipate improving data growth trend from second half of year. 10
Building a competitive advantage on data Build foundations for growth Accelerate growth momentum Youth Segment Focus Strengthen IM3 proposition to youth segment BTL and ATL campaigns Aggressive youth sub-segments & communities acquisition. Provide meaningful content MR - November - 2011 2011 Professional Segment Focus Strengthen Indosat Mobile presence for professional segment through device bundling strategy Launch differentiated-personalized packages to suit professional segment needs and behavior. Data Business Focus Revamp & build strong Indosat Internet value proposition for data segment Take leadership on mobile data innovation/technology. SME and SOHO to be increasingly important for growth Brand differentiation through great customer experience on a low cost high performance 3G network 11
Subscriber Market Shares Cellular customer growth maintained momentum and added 6.4 million net additions YoY End of 1Q-2012 GSM subscribers of 52.1 million Market Share Total Subscribers (million) Hutch NTS ISAT 34.3% 16.8% XL Total 240.15 million Subs TSEL YoY QoQ 14.0% 0.8% Sources : Company data & IA Estimation Note : Excluding CDMA Limited subscriber growth as market approaches a more mature stage Focus shifts to customer lifecycle management (CRM, retention) 12
Usage Trends 64% 12% (5%) Migration of voice and SMS traffic towards data; Steady growth in data traffic 13
3G network roll-out progress Node-B Stations & % to Total BTS 4,000 3,500 3,000 2,500 10% 2,000 19% 1,500 1,000 47% 500 50% 0 2008 2009 2010 2011 1Q 2012 Node-B Stations 1,316 1,968 2,892 3,437 3,772 %3G to Total 9% 12% 16% 18% 19% 25% 20% 15% 10% 5% 0% Reached 3,772 Node-B Stations by end of Q1 2012, Roll-out of low cost and high quality 3G/HSPA network key priority going forward Σ Cities with Node-B Stations 48 72 105 156 3G currently covering 156 cities across Indonesia. 2008 2009 2010 2011 14
Cost efficiency program delivering positive results Cost Breakdown by Quarter Cost as % of Revenue COS Maintenance Marketing SG&A Personnel XX% QoQ changes (%) 49.8% 31.7% 5.1% 3.3% 4.2% 5.5% 54.4% 31.5% 4.9% 3.8% 3.6% 10.5% 56.0% 31.0% 4.1% 5.2% 3.4% 12.4% 56.6% 50.1% 35.6% 31.5% 4.9% 4.0% 4.9% 5.9% 1.9% 4.0% 6.9% 7.2% 53.1% 33.9% 4.1% 5.0% 3.6% 6.5% -5% -17% +1% -10% -9% Increased efficiency seen in Maintenance and Personnel Costs. Key focus to further address Cost of Sales, network & IT operations costs and CAPEX efficiency through e.g. network sharing Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 15
Today s Agenda Q1 2012 Results 2012 Guidance Operational Updates Financial Results Supplemental Information 16
Q1 2012 Revenue Profile Figures in IDR billion YoY (2%) 3% (16.7)% 1.5% 12.0% 4.5% QoQ (15)% (1.9)% Competitive environment impacting cellular growth, data growth not yet enough to compensate 17
Q1 2012 Segmented Revenue Figures in IDR billion Fixed MIDI Fixed Voice 4.5% 12.0% (9.0%) 4.0% (28.3%) (3.3%) YoY QoQ YoY QoQ YoY QoQ 3.0% (1.9%) 3,961 4,080 4,160 4,080 13.8% (9.0%) (30.2%) (28.4%) 322 314 225 225 Seasonal Q1 impact to revenues. Data migration (large to small screen) impacting ability of Data to replace traditional wireless revenues in short term 18
10.2% EBITDA (1.0%) Q1 2012 EBITDA Figures in IDR billion EBITDA YoY 3.6% QoQ 1.8% 1.9% EBITDA Margin (2.2%) EBITDA Margin YoY 0.7% QoQ 3% Improving cost control and efficiency results in QoQ growth in the face of revenue headwinds 19
Q1 2012 Profit Attributable to Owners of the Company Figures in IDR billion YoY (96.5%) (56.8%) 29.0% QoQ 111.6% Significant negative FX impact partly offset by lower financing costs resulted in decline of Profit Attributable to Owners of the Company 20
46% Q1 2012 FCF and CAPEX Figures in IDR billion YoY QoQ 113.3% Free Cash Flow (70%) 108.5% YoY QoQ (38.8%) (7.3%) 16.0% (33.3%) CAPEX efficiency is the primary driver of FCF generation. Recent network tender and network sharing to further optimize CAPEX spend 21
Q1 2012 Debt Summary Figures in IDR billion Net Debt to Equity 1.13X Covenants (3.8%) (3.8%) Gross Debt to Equity 1.23X 2.5X Net Debt to EBITDA 2.24X Gross Debt to EBITDA 2.43X 3.5X Interest Coverage 5.72X 3.0X *Before amortised issuance cost, to calculate ratio (2.5%) (1.4%) Note : RCF Mandiri is placed in 2014 Stable gearing profile Approaching short term Debt/EBITDA target of 2X 22
Today s Agenda Q1 2012 Results 2012 Guidance Operational Updates Financial Results Supplemental Information 23
Ratings Updates 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 10 February 2012, S&P placed its BB long-term corporate credit rating on Indonesia-based telecom operator PT Indosat Tbk. And the BB rating on the company s guaranteed senior unsecured notes on CreditWatch with positive implications. On 30 April 2012, FitchRatings upgraded Indonesia-based P.T. Indosat Tbk's (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. At the same time, the agency has assigned Indosat a National Long-Term Rating of AAA(idn) and AAA(idn) ratings to the proposed IDR2.5trn bond and IDR500bn sukuk ijarah. 24
Financial KPIs Key Performance Indicators Q1 2011 Q1 2012 YoY (%) QoQ (%) Cellular (bn IDR) 3,960.6 4,079.8 3.0 (6.6) Fixed Data (bn IDR) 591.0 672.3 13.7 (8.7) Fixed Voice (bn IDR) 322.4 224.9 (30.2) (27.4) Operating Revenue (bn IDR) 4,874.0 4,977.0 2.1 (4.5) EBITDA* (bn IDR) 2,256.3 2,337.7 3.6 1.8 EBITDA Margin* (%) 46.3 47.0 0.7 3 Profit Attributable to Owner of The Company (bn IDR) 483.7 16.7 (96.5) 111.6 Cellular continues to outgrow other segments in the business an ongoing trend which is expected to continue 25
Q1 2012 Operating Expenses Figures in IDR billion YoY Operating Expenses 4.2% 8.5% Q1-2011 Q1-2012 4.7% QoQ (6.6%) Q1-2011 Q1-2012 Increase in marketing expenses, rent site, and other cost of services have resulted in higher Operating Expenses YoY, while lower Operating Expense QoQ attributable from lower Personnel Expense 26
Operational Overview Q1 2012 (23.7%) (18.9%) (11.4%) Relatively stable metrics with good potential to stimulate usage 27
Thank You Indosat Investor Relations Jl. Medan Merdeka Barat No. 21 Jakarta - 10110 Tel: +62 21 30442615 Investor@indosat.com Any further questions? 1H-2012 Results Mid Q3 2012 Upcoming events 28
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 29