Info Memo - XL Axiata
PT XL AXIATA TBK. (XL)
1Q 13
Disclaimer
This document cont ains cert ain financial informat ion and result s of operations, and may also cont ain cert ain project ions, plans, st rat egies and object ives of XL,
t hat are not st at ement s of hist orical fact w hich w ould be t reat ed as forw ard looking st at ement s w it hin t he meaning of applicable law . Forw ard looking
st at ement s are subject t o risks and uncert aint ies t hat may cause act ual event s and XL’s fut ure result s t o be mat erially different t han expect ed or indicat ed by
such st at ement s. No assurance can be given t hat t he result s ant icipat ed by XL, or indicat ed by any such forw ard looking st at ement s, will be achieved.
OVERVIEW
The t act ical st rategy t o im prove XL’s positioning w hich start ed in t he 4Q 12 has continued int o 1Q 13 wit h
furt her encouraging result s of underlying operational im provem ent s and t ract ion in t he m arket .
Despit e t he changes in indust ry dynamics and com petit ion, 1Q 13 saw XL achieving YoY revenue grow t h of 2%
w hich w as driven m ainly by grow t h in Dat a services. Wit h an aim t o im prove XL’s posit ioning amongst
cust om ers, price changes w ere m ade begining in the 4Q 12 price and cont inued in t he first half of 1Q 13 w hile
in t he second half of quarter we have st art ed t o bring price point s up again gradually, which w e anticipat e w ill
cont inue t o be done in t he second quarter. As such w hilst , operat ional m etrics of subscribers and t raffic have
recorded im proved m om ent um , t he price changes have had im pact t o t he revenue base. This t act ical approach
is aim ed at im proving XL’s positioning and wit h t he continued t ract ion, revenue im provem ent s w ill follow .
As such, com pared t o t he corresponding period a year ago, Dat a grew by 16% while Voice and SM S declined by
11% and 6% respect ively. With t he continued grow t h in Dat a, non-voice revenue now cont ribut es 53% of XL’s
t ot al usage revenue.
Data and VAS Business
Dat a rem ains t he key engine of grow t h as t he adoption of dat a cont inues t o be strong am ongst
Indonesians. Dat a traffic grew 40% com pared t o 1Q 12 wit h dat a subscribers reached 29.1 million
subscribers or close t o 60% of t he t ot al base. The trend in shifting consum er behavior t ow ards dat a has
result ed in higher dat a revenue contribution from 19% a year ago t o 22%.
1
Wit h an aim t o im prove affordabilit y of dat a and appeal t o new or incident al dat a users, XL launched
st art er pack “ XL BEBAS” w hich offers 150M B/ m ont h w it h m ont hly cost of Rp. 5000/ m ont h for 6 m onths
act ive period.
Cont inuing “ XL home for Android” cam paign in 2012, XL est ablished XL Rally Android Hotrod 3G+ in
M edan and Surabaya. This program st rengt hened XL’s posit ion as a st rong Dat a provider t hrough
Hot rod3G+ by providing a fast and st able experience.
XL is the first operat or to launch t he new est m obile advertising service t hat can be used by m arket ers t o
send com mercial m essages t o XL subscriber on a localised basis, called Location Based Advertising (LBA).
Through LBA, m arket ers are able t o int eract directly w ith their t arget m arket in a cert ain location and t im e
in all areas of Indonesia.
Int egrat ing w ith social net w orking, XL launched “ myXL st ore” t hat com bines net w ork dat a w it h Facebook,
w here XL subscribers (also FB users) are able t o access XL informat ion currently used (subsciber profile
such as XL num ber, active internet package, rem aining balance, et c), and also purchase ot her available XL’s
services.
XL collaborated wit h KakaoTalk in providing dat a packages, w here XL users are able t o use KakaoTalk w it h
affordable t ariff. Users are able t o buy em ot icons, t hem es and st ickers using t heir balance.
BlackBerry XL users are now able t o enjoy t heir favorit e songs by dow nloading “ Xlalu M usik” in BlackBerry
App World wit h access t o affordable qualit y m usic.
Infrastructure
Cont inued focus on dat a execution saw 13,295 Nodes Bs were inst alled as at 1Q 13, a 105% increase from
a year ago. This brings t ot al num ber of 2G and 3G BTS t o 39,819 BTS.
Wit h t he accelerated rollout of Node Bs and invest ment in dat a infrast ructure peaked in 2012, t his year
w ill see XL focus on capacity m anagem ent and effort s t o furt her increase netw ork utilisat ion. Investm ent s
w ill be furt her prioritised t o enhance service experience in dat a pot ential areas.
XL rem ains as flexible as before in carefully execut ing invest m ent s, in line wit h t he pot ent ial dat a dem and
in t he Indonesian m arket .
2
Voice and SM S Business
Follow ing t he effort s t o win back cust omers and im prove it s positioning wit h com petit ive offers, XL has
cont inued it s at t ract ive XLKU, Paket Serbu. This has result ed in continued m om ent um in st im ulating
subscribers usage wit h furt her quart erly grow t h of minut es and SM S at 8% and 23 % QoQ respect ively.
Overall annual grow t h of SM S usage has been im pacted by t he int roduction of SM S int erconnection in
June. Differentiat ed price bet w een on-net and off-net has result ed in decline in tot al outgoing SM S by 24%
YoY.
Effort s t o im prove posit ioning saw a t act ical decision t o adjust prices w hich led t o revenue pressure.
Nevert heless, as usage m om entum continues, t he lagging effect of revenue w ill im prove over time.
Digital Service
XL cont inuously seeks t o explore further opport unities in dat a beyond t radit ional t elecom municat ion services.
Wit h t he cont inued st rong dem and for dat a, t here is growing t rend of behaviour t hat is int egrat ing dat a as part
of t heir daily lifest yle. To cat er for such needs, XL rem ains innovat ive in developing digit al services in t he areas
of m obile finance, comm erce and M 2M .
Below are som e product s/ services t hat XL has developed t hroughout t he first quart er:
M -finance: XL Tunai expands t he benefit for XL subscriber, not only for m oney rem it t ance and online
paym ent , XL Tunai can be used for online shopping (e.g. m ultiply.com , blibli.com , alphaonline.com ),
paym ent t o PLN, purchase airline ticket (Garuda and Lion Air), First M edia paym ent , and m -Insurance for
Cigna Insurance
M -Ads: XL launched “ Location Based Advert ising” in Indonesia. The t echnology is used t o pinpoint
consum ers locat ion and provide location-specific advert isem ent s on t heir m obile devices.
3
FINANCIAL M EASURES
Income Statement (Audited)
Financial Statement (in Rp Billion)
1Q12
Grow th
1Q13
Gross Revenue
Voice
2,032
1,814
SM S
1,146
1,076
-6%
Dat a and VAS*
831
987
19%
Cellular Int erconnect ion and Int ernat ional Roam ing Service
426
749
76%
55
62
13%
Cellular Telecommunication Service
4,489
4,687
4%
Other Telecommunications Services
436
360
-18%
4,925
5,047
2%
Ot hers
Gross Revenues
Less: Discount
Gross Revenue Net of Discount
Int erconnect ion and ot her direct expenses
(25)
(59)
-11%
-58%
4,866
5,022
3%
539
942
75%
Salaries & Em ployee Benefit s (Perm anent & Tem porary) * *
256
235
-8%
Sales and M arket ing Expense
290
326
12%
1,216
1,366
12%
172
127
-26%
Total OPEX
2,474
2,996
21%
EBITDA
2,391
2,025
-15%
Infrast ruct ure Expenses
Supplies and Overhead expenses
EBITDA M argin
49%
40%
-8%
Depreciation & Am ort izat ion
1,213
1,326
9%
EBIT
1,178
699
-41%
Ot her Expenses
Finance cost - net
(163)
(205)
26%
(74)
(26)
-65%
Forex loss - net
Ot hers
Total Other Expenses
Income before income tax
(23)
(24)
4%
(260)
(255)
-2%
918
443
-52%
Incom e Tax Expense
(251)
(128)
-49%
Profit for the period
667
316
-53%
78
37
-53%
Earnings Per Share (full amount)
Normalized Profit (In Rp Billion)
Profit for t he period
1Q12
1Q13
Grow th
667
316
Unrealized forex (gain)/ loss
64
33
Accelerat ed depreciat ion in Sum at era
39
-
-53%
-49%
-100%
Tax Im pact
(26)
Normalized Profit for the period
745
340
-54%
87
40
-54%
Normalized Earnings Per Share (full amount)
(8)
-68%
* Net VAS revenue
* * Implement at ion of PSAK 24 (Revise 2010) “ Employee Benefit s” , recognit ion act uarial gains or losses, t hrough ot her compr ehensive income
4
Operational Results
XL recorded gross revenue of Rp5.0 t rillion, a 2% YoY increase.
Cellular Telecomm unicat ion Service revenues increased by 4% t o Rp4.7 t rillion and contribut ed 93% t o
t ot al revenue. Voice revenue declined by 11% t o Rp1.8 t rillion w it h outgoing minut es decreased by
14% YoY. SM S revenue decreased by 6% w hilst Revenue from Dat a and Value Added Services (VAS)
w as up by 19% and cont ribut ed 25% t o t ot al usage revenues. Dat a alone show ed a robust grow t h of
16% driven by increased adoption of dat a and support ed by our investm ent in dat a infrast ruct ure.
The present at ion of VAS revenue is now on a net basis to reflect changes in t he Audit ed Financial
St at em ent. Previously, XL report ed VAS on a gross basis w here gross VAS revenue w as recognized
w hilst relat ed cost s recorded under Int erconnect ion and other direct expenses. The change w as m ade
ret rospect ively t o t he com parative period.
Ot her t elecomm unicat ions services revenue com prised of m ainly leased t ow ers, leased lines and
nat ional roam ing, declined by 18% t o Rp0.4 trillion, m ainly due t o term inat ion of agreem ent w it h Axis
in August 2012. Ot her t elecom m unicat ions services revenue contributed 7% t o t ot al revenue.
Operating Expenses
Tot al operat ing expenses increased by 21% YoY t o Rp3.0 trillion.
Int erconnect ion and ot her direct expenses increased by 75% YoY.
This increase w as m ainly due t o recognit ion of SM S int erconnect cost s w it h t he introduction of SM S
int erconnect ion t hat st art ed in June 2012.
Salaries and Em ployee Benefit s decreased by 8% YoY.
The decrease in salaries and em ployee benefit s w as part ly due t o t he t ransfer of em ployees in April
2012 t o Huaw ei relat ed t o the M anaged Service agreem ent.
Sales and M arket ing expenses increased by 12% YoY.
The increase w as m ainly due t o higher advert ising and prom ot ion wit h new offerings int roduced in
1Q 13.
Infrastruct ure expenses increased by 12% YoY.
The increase w as in line wit h our expansion in 3G net w ork coverage to support dat a business wit h
increase in rent al sites and t ow ers, partially offset by decrease in Ut ilities expense that w as
t ransferred t o Huaw ei under t he M anaged Services since April 2012. In addit ion M anaged Service fee
w as recognised from 2Q12 onw ards.
Supplies and Overhead expenses decreased by 26% YoY.
The decrease w as m ainly due t o decrease in G& A expense and ut ilities& pow er – non net w ork
EBITDA
EBITDA decreased by 15% YoY t o Rp2.0 trillion in 1Q 13 and EBITDA m argin w as dow n by 8 percent age point s
t o 40%. This was partly due t o t he introduct ion of SM S int erconnect and also reflect s t he changes in our
business m odel wit h t he expansion of t he dat a infrast ruct ure on a lease m odel t hus im pact ing net w ork cost s as
w e cont inue t o roll out. In addition furt her im pact on revenue from price adjust ment s t o im prove posit ioning.
Changes in revenue m ix w ill furt her add t o t he changes in EBITDA m argin m oving forw ard. Excluding t he im pact
of SM S int erconnection, EBITDA m argin w as at 44%.
5
Depreciation and Amortization Expenses
The depreciat ion and am ortization expenses grew by 9% YoY due t o increased investm ent in dat a t o support
t he business st rat egy t o capt ure grow t h in dat a.
Other (Expenses)/ Income
Ot her expenses in 1Q 13 decreased 2% t o Rp255 billion, due t o:
Forex gain in 1Q 13 of Rp6.4 billion com pared t o a loss of Rp10 billion from a year ago.
Unrealized forex loss in 1Q 13 decreased by 49% com pared t o 1Q 12.
Higher int erest expense due t o addit ional debt in 1Q 13.
Profit for the period
Profit for the period for 1Q13 am ounted t o Rp316 billion. Norm alized profit for t he period excluding t he im pact
of unrealized forex t ransact ions, and accelerated depreciat ion recorded at Rp340 billion.
Balance Sheet (Audited)
Balance Sheet (In Rp Billion)
1Q12
1Q13
Growth
Current Assets
Cash and cash equivalent s
1,886
517
-73%
Ot hers
2,797
3,860
38%
Total Current Asset s
4,683
4,377
-7%
Non-Current Asset s
29,136
32,714
12%
Total Assets
33,819
37,091
10%
3,837
4,183
9%
7,193
4,527
-37%
11,031
8,710
-21%
Long t erm loans and bonds
7,622
10,477
37%
Ot hers *
1,940
2,278
17%
9,562
12,755
33%
20,593
21,465
4%
Current Liabilities
Current mat urit y of long term loans and bonds
Ot hers
Total Current liabilities
Non-Current Liabilities
Total Non-Current Liabilit ies
Total Liabilit ies
Equity att ributable to owners of the parent ent it y
Share capit al & addit ional paid-in capital
6,282
6,313
1%
Ret ained earnings *
6,944
9,313
34%
Total Equity
13,226
15,626
18%
Total Liabilit ies and Equity
33,819
37,091
10%
* Implement at ion of PSAK 24 (Revise 2010) “ Employee Benefit s” , recognit ion act uarial gains or losses, t hrough ot her comprehensive income
In 1Q 13, t ot al asset s increased by 10% t o Rp37.1 trillion, due t o higher invest m ent in net w ork equipment , 3G
access and t ransm ission t o support t he dat a business.
Current asset s decreased by 7% YoY m ainly due t o decrease in cash and cash equivalent by 73% and
part ially offset by higher advances and ot her prepaym ent s of 38%.
Tot al liabilit ies increased by 4% YoY m ainly due t o increase in borrowings of 28% from Rp11.5 t rillion
t o Rp14.7 t rillion.
6
Capital Expenditure
Capital Expenditure (In Rp Billion)
1Q12
1Q13
Grow th
Capitalized capex
2,528
1,791
-29%
Paid capex
Commit ment s ent ered int o*
2,037
3,078
1,982
296
-3%
-90%
* The original amount is in IDR and USD. The USD port ion w as convert ed t o IDR using closing rat e 31 M arch 2012 and 2013.
The exchange rat e Rupiah against USD as of 31 M arch 2012 and 2013 w ere Rp9,180/ USD and Rp9,719/ USD, respect ively.
Cash Flow
Cash Flow (In Rp Billion)
Net cash flow generat ed from operat ing act ivit ies
Net cash flow used in invest ing act ivit ies
1Q12
1Q13
2,428
1,268
(2,089)
(2,466)
Growth
-48%
18%
Free cash flow
339
(1,197)
Net cash flow generat ed from financing act ivit ies
Net increase/ (decrease) in cash and cash equivalent s
549
888
922
(276)
68%
N/ A
Cash and cash equivalents at the beginning of the period
998
792
-21%
0
1,886
1
517
-73%
Effect of exchange rat e changes on cash and cash equivalent s
Cash and cash equivalents at the end of the period
N/ A
N/ A
Net cash flow generat ed from operat ing act ivit ies decreased by 48% t o Rp1.3 trillion due t o decrease
in receipt from cust om ers and ot her operat ors by 6% and increase in paym ent s t o supplier and ot her
expenses by 36%.
Net cash flow used in investing act ivities increased by 18% due t o Paym ent of Upfront 3G for t he new
5 M Hz block spectrum in 2100 M Hz.
Net cash flow generat ed from financing act ivit ies w as at Rp922 billion due t o higher cash proceeds
from long t erm loan, relat ed t o new bank loan in 2013 of Rp1.6 t rillion.
7
Description of Debts
The det ail of debt s as of 31 M arch 2012 and 2013 are as follow s:
(in Original Amount )
1Q 12
1Q 13
Descript ion
USD Loan (mn)
IDR Bank Loan (bn)
IDR Bond (bn)
*
Year of M aturity
US$
178
US$
129
US$
132
US$
44
US$
-
US$
110
US$
309
US$
283
Am ort izing sem i annually,
final repaym ent is in 2015
2013
Am ort izing annually,
final repaym ent is in 2016
Rp
1,250
Rp
1,250
2013
Am ort izing annually,
Rp
3,000
Rp
2,100
final repaym ent is in 2014
Am ort izing annually,
Rp
1,800
Rp
2,600
final repaym ent is in 2015
Am ort izing annually,
Rp
1,100
Rp
5,500
final repaym ent is in 2017
Am ort izing annually,
Rp
Rp
1,500
Rp
Rp
500
-
final repaym ent is in 2018
Paid
Rp
8,650
Rp
11,950
Unamortized Loan Issuance Cost (bn)
Rp
TOTAL INTEREST BEARING DEBT (in Rp. bn)*
Rp
(30) Rp
11,459
Rp
(43)
14,660
The USD port ion w as convert ed t o IDR using closing rat e 31 M arch 2012 and 2013. The exchange rat e Rupiah against USD as of 31 M arch
2012 and 2013 w ere Rp9,180/ USD and Rp9,719/ USD, respect ively.
Gearing Ratios
1Q12
1Q13
Debt / Equit y
0.9 x
Net Debt / Equit y
0.7 x
0.9 x
0.9 x
Debt / EBITDA
Net Debt / EBITDA
1.2 x
1.0 x
1.6 x
1.5 x
During 1Q 13, XL signed new IDR loan agreement s w it h Bank M andiri in January 2013 am ounted Rp500 billion
and Rp2.5 t rillion. The Rp500 billion facilit y has been fully draw dow n as of 31 M arch 2013. XL also signed new
USD loan agreem ent wit h BTM U in M arch 2013. The USD loan facilit y has been fully draw down w hich
am ount ed t o USD 110 m illion.
As of 31 M arch 2013, XL had hedged about 88% of USD debt.
8
OPERATING M EASURES
1Q12
1Q13
Growth
Tot al O/ G M inut es of Usage (billion minut es)
30.6
26.4
-14%
Tot al M inut es (billion m inut es)
Tot al O/ G SM S (billion SM S)
Tot al dat a t raffic (Pet abyt e)
61.3
77.6
5.7
52.9
59.4
8.0
-14%
-24%
40%
30%
Tot al BTS
30,732
39,819
2G
24,234
26,524
9%
3G
6,498
13,295
105%
2,458
1,978
-20%
Number of Employees (permanent & cont ract w it h permanent posit ion)
Post paid users (000)
313
354
13%
Prepaid sim cards (act ive and grace / million)
Tot al user base (million)
46.1
46.4
48.7
49.1
6%
6%
ARPU blended (Rp 000)
Post paid revenue/ sub (Rp 000)
Prepaid revenue/ sim card (Rp 000)
29
27
-7%
155
28
127
27
-18%
-4%
RECENT DEVELOPM ENT
XL w as aw arded t he t hird carrier for 3G of 5 M Hz in t he 2100 M Hz spect rum w hich is st rat egic and put s XL
in a st rong position in long run for Dat a business.
AGM S 2013 held on 11 April 2013 approved to increase t he dividend paym ent t o 40% of 2012 norm alized
profit.
Achievements
XL w as aw arded in Selular Aw ard 2013 for “ M ost Innovative Program (Paket Serbu), Best Dat a
Services, and CEO of The Year 2012” for CEO XL Hasnul Suhaimi.
In annual event of Eurom oney Best M anaged Com panies in Asia 2013, XL was aw arded as “ Best M anaged
Com pany in Indonesia” .
XL w as aw arded as “ Excellent Service Experience Aw ard (ESEA) 2013” in cellular operat or cat egory by
Carre Cent er for Cust om er Satisfaction and Loyalt y (CCSL) and Bisnis Indonesia.
XL received t w o awards in Indonesia Brand Cham pion Aw ard 2013 – Silver Brand Cham pion of M ost
Widely Used Brand, for Telecomm unication & ICT Gadget cat egory M obile GSM Int ernet Provider and GSM
Operat or, held by M arkPlus Insight .
XL w as aw arded as “ Best Operat or in Em erging M arket ” in the 16t h Telecom Asia Aw ards
GUIDANCE
2013
Revenue growth
EBITDA margin
Cash out capex
In line or bet t er t han m arket
Low 40’s
Bet w een Rp 8 - 9 t rillion
ABOUT XL
XL is a m ajor cellular provider in Indonesia w hich is 66.5% ow ned by Axiat a Group t hrough Axiat a Investm ent s
(Indonesia) Sdn. Bhd., and t he rem aining st akes are held by public including rest rict ed st ock (33.5%).
Dat e: 1 M ay 2013
9
1Q 13
Disclaimer
This document cont ains cert ain financial informat ion and result s of operations, and may also cont ain cert ain project ions, plans, st rat egies and object ives of XL,
t hat are not st at ement s of hist orical fact w hich w ould be t reat ed as forw ard looking st at ement s w it hin t he meaning of applicable law . Forw ard looking
st at ement s are subject t o risks and uncert aint ies t hat may cause act ual event s and XL’s fut ure result s t o be mat erially different t han expect ed or indicat ed by
such st at ement s. No assurance can be given t hat t he result s ant icipat ed by XL, or indicat ed by any such forw ard looking st at ement s, will be achieved.
OVERVIEW
The t act ical st rategy t o im prove XL’s positioning w hich start ed in t he 4Q 12 has continued int o 1Q 13 wit h
furt her encouraging result s of underlying operational im provem ent s and t ract ion in t he m arket .
Despit e t he changes in indust ry dynamics and com petit ion, 1Q 13 saw XL achieving YoY revenue grow t h of 2%
w hich w as driven m ainly by grow t h in Dat a services. Wit h an aim t o im prove XL’s posit ioning amongst
cust om ers, price changes w ere m ade begining in the 4Q 12 price and cont inued in t he first half of 1Q 13 w hile
in t he second half of quarter we have st art ed t o bring price point s up again gradually, which w e anticipat e w ill
cont inue t o be done in t he second quarter. As such w hilst , operat ional m etrics of subscribers and t raffic have
recorded im proved m om ent um , t he price changes have had im pact t o t he revenue base. This t act ical approach
is aim ed at im proving XL’s positioning and wit h t he continued t ract ion, revenue im provem ent s w ill follow .
As such, com pared t o t he corresponding period a year ago, Dat a grew by 16% while Voice and SM S declined by
11% and 6% respect ively. With t he continued grow t h in Dat a, non-voice revenue now cont ribut es 53% of XL’s
t ot al usage revenue.
Data and VAS Business
Dat a rem ains t he key engine of grow t h as t he adoption of dat a cont inues t o be strong am ongst
Indonesians. Dat a traffic grew 40% com pared t o 1Q 12 wit h dat a subscribers reached 29.1 million
subscribers or close t o 60% of t he t ot al base. The trend in shifting consum er behavior t ow ards dat a has
result ed in higher dat a revenue contribution from 19% a year ago t o 22%.
1
Wit h an aim t o im prove affordabilit y of dat a and appeal t o new or incident al dat a users, XL launched
st art er pack “ XL BEBAS” w hich offers 150M B/ m ont h w it h m ont hly cost of Rp. 5000/ m ont h for 6 m onths
act ive period.
Cont inuing “ XL home for Android” cam paign in 2012, XL est ablished XL Rally Android Hotrod 3G+ in
M edan and Surabaya. This program st rengt hened XL’s posit ion as a st rong Dat a provider t hrough
Hot rod3G+ by providing a fast and st able experience.
XL is the first operat or to launch t he new est m obile advertising service t hat can be used by m arket ers t o
send com mercial m essages t o XL subscriber on a localised basis, called Location Based Advertising (LBA).
Through LBA, m arket ers are able t o int eract directly w ith their t arget m arket in a cert ain location and t im e
in all areas of Indonesia.
Int egrat ing w ith social net w orking, XL launched “ myXL st ore” t hat com bines net w ork dat a w it h Facebook,
w here XL subscribers (also FB users) are able t o access XL informat ion currently used (subsciber profile
such as XL num ber, active internet package, rem aining balance, et c), and also purchase ot her available XL’s
services.
XL collaborated wit h KakaoTalk in providing dat a packages, w here XL users are able t o use KakaoTalk w it h
affordable t ariff. Users are able t o buy em ot icons, t hem es and st ickers using t heir balance.
BlackBerry XL users are now able t o enjoy t heir favorit e songs by dow nloading “ Xlalu M usik” in BlackBerry
App World wit h access t o affordable qualit y m usic.
Infrastructure
Cont inued focus on dat a execution saw 13,295 Nodes Bs were inst alled as at 1Q 13, a 105% increase from
a year ago. This brings t ot al num ber of 2G and 3G BTS t o 39,819 BTS.
Wit h t he accelerated rollout of Node Bs and invest ment in dat a infrast ructure peaked in 2012, t his year
w ill see XL focus on capacity m anagem ent and effort s t o furt her increase netw ork utilisat ion. Investm ent s
w ill be furt her prioritised t o enhance service experience in dat a pot ential areas.
XL rem ains as flexible as before in carefully execut ing invest m ent s, in line wit h t he pot ent ial dat a dem and
in t he Indonesian m arket .
2
Voice and SM S Business
Follow ing t he effort s t o win back cust omers and im prove it s positioning wit h com petit ive offers, XL has
cont inued it s at t ract ive XLKU, Paket Serbu. This has result ed in continued m om ent um in st im ulating
subscribers usage wit h furt her quart erly grow t h of minut es and SM S at 8% and 23 % QoQ respect ively.
Overall annual grow t h of SM S usage has been im pacted by t he int roduction of SM S int erconnection in
June. Differentiat ed price bet w een on-net and off-net has result ed in decline in tot al outgoing SM S by 24%
YoY.
Effort s t o im prove posit ioning saw a t act ical decision t o adjust prices w hich led t o revenue pressure.
Nevert heless, as usage m om entum continues, t he lagging effect of revenue w ill im prove over time.
Digital Service
XL cont inuously seeks t o explore further opport unities in dat a beyond t radit ional t elecom municat ion services.
Wit h t he cont inued st rong dem and for dat a, t here is growing t rend of behaviour t hat is int egrat ing dat a as part
of t heir daily lifest yle. To cat er for such needs, XL rem ains innovat ive in developing digit al services in t he areas
of m obile finance, comm erce and M 2M .
Below are som e product s/ services t hat XL has developed t hroughout t he first quart er:
M -finance: XL Tunai expands t he benefit for XL subscriber, not only for m oney rem it t ance and online
paym ent , XL Tunai can be used for online shopping (e.g. m ultiply.com , blibli.com , alphaonline.com ),
paym ent t o PLN, purchase airline ticket (Garuda and Lion Air), First M edia paym ent , and m -Insurance for
Cigna Insurance
M -Ads: XL launched “ Location Based Advert ising” in Indonesia. The t echnology is used t o pinpoint
consum ers locat ion and provide location-specific advert isem ent s on t heir m obile devices.
3
FINANCIAL M EASURES
Income Statement (Audited)
Financial Statement (in Rp Billion)
1Q12
Grow th
1Q13
Gross Revenue
Voice
2,032
1,814
SM S
1,146
1,076
-6%
Dat a and VAS*
831
987
19%
Cellular Int erconnect ion and Int ernat ional Roam ing Service
426
749
76%
55
62
13%
Cellular Telecommunication Service
4,489
4,687
4%
Other Telecommunications Services
436
360
-18%
4,925
5,047
2%
Ot hers
Gross Revenues
Less: Discount
Gross Revenue Net of Discount
Int erconnect ion and ot her direct expenses
(25)
(59)
-11%
-58%
4,866
5,022
3%
539
942
75%
Salaries & Em ployee Benefit s (Perm anent & Tem porary) * *
256
235
-8%
Sales and M arket ing Expense
290
326
12%
1,216
1,366
12%
172
127
-26%
Total OPEX
2,474
2,996
21%
EBITDA
2,391
2,025
-15%
Infrast ruct ure Expenses
Supplies and Overhead expenses
EBITDA M argin
49%
40%
-8%
Depreciation & Am ort izat ion
1,213
1,326
9%
EBIT
1,178
699
-41%
Ot her Expenses
Finance cost - net
(163)
(205)
26%
(74)
(26)
-65%
Forex loss - net
Ot hers
Total Other Expenses
Income before income tax
(23)
(24)
4%
(260)
(255)
-2%
918
443
-52%
Incom e Tax Expense
(251)
(128)
-49%
Profit for the period
667
316
-53%
78
37
-53%
Earnings Per Share (full amount)
Normalized Profit (In Rp Billion)
Profit for t he period
1Q12
1Q13
Grow th
667
316
Unrealized forex (gain)/ loss
64
33
Accelerat ed depreciat ion in Sum at era
39
-
-53%
-49%
-100%
Tax Im pact
(26)
Normalized Profit for the period
745
340
-54%
87
40
-54%
Normalized Earnings Per Share (full amount)
(8)
-68%
* Net VAS revenue
* * Implement at ion of PSAK 24 (Revise 2010) “ Employee Benefit s” , recognit ion act uarial gains or losses, t hrough ot her compr ehensive income
4
Operational Results
XL recorded gross revenue of Rp5.0 t rillion, a 2% YoY increase.
Cellular Telecomm unicat ion Service revenues increased by 4% t o Rp4.7 t rillion and contribut ed 93% t o
t ot al revenue. Voice revenue declined by 11% t o Rp1.8 t rillion w it h outgoing minut es decreased by
14% YoY. SM S revenue decreased by 6% w hilst Revenue from Dat a and Value Added Services (VAS)
w as up by 19% and cont ribut ed 25% t o t ot al usage revenues. Dat a alone show ed a robust grow t h of
16% driven by increased adoption of dat a and support ed by our investm ent in dat a infrast ruct ure.
The present at ion of VAS revenue is now on a net basis to reflect changes in t he Audit ed Financial
St at em ent. Previously, XL report ed VAS on a gross basis w here gross VAS revenue w as recognized
w hilst relat ed cost s recorded under Int erconnect ion and other direct expenses. The change w as m ade
ret rospect ively t o t he com parative period.
Ot her t elecomm unicat ions services revenue com prised of m ainly leased t ow ers, leased lines and
nat ional roam ing, declined by 18% t o Rp0.4 trillion, m ainly due t o term inat ion of agreem ent w it h Axis
in August 2012. Ot her t elecom m unicat ions services revenue contributed 7% t o t ot al revenue.
Operating Expenses
Tot al operat ing expenses increased by 21% YoY t o Rp3.0 trillion.
Int erconnect ion and ot her direct expenses increased by 75% YoY.
This increase w as m ainly due t o recognit ion of SM S int erconnect cost s w it h t he introduction of SM S
int erconnect ion t hat st art ed in June 2012.
Salaries and Em ployee Benefit s decreased by 8% YoY.
The decrease in salaries and em ployee benefit s w as part ly due t o t he t ransfer of em ployees in April
2012 t o Huaw ei relat ed t o the M anaged Service agreem ent.
Sales and M arket ing expenses increased by 12% YoY.
The increase w as m ainly due t o higher advert ising and prom ot ion wit h new offerings int roduced in
1Q 13.
Infrastruct ure expenses increased by 12% YoY.
The increase w as in line wit h our expansion in 3G net w ork coverage to support dat a business wit h
increase in rent al sites and t ow ers, partially offset by decrease in Ut ilities expense that w as
t ransferred t o Huaw ei under t he M anaged Services since April 2012. In addit ion M anaged Service fee
w as recognised from 2Q12 onw ards.
Supplies and Overhead expenses decreased by 26% YoY.
The decrease w as m ainly due t o decrease in G& A expense and ut ilities& pow er – non net w ork
EBITDA
EBITDA decreased by 15% YoY t o Rp2.0 trillion in 1Q 13 and EBITDA m argin w as dow n by 8 percent age point s
t o 40%. This was partly due t o t he introduct ion of SM S int erconnect and also reflect s t he changes in our
business m odel wit h t he expansion of t he dat a infrast ruct ure on a lease m odel t hus im pact ing net w ork cost s as
w e cont inue t o roll out. In addition furt her im pact on revenue from price adjust ment s t o im prove posit ioning.
Changes in revenue m ix w ill furt her add t o t he changes in EBITDA m argin m oving forw ard. Excluding t he im pact
of SM S int erconnection, EBITDA m argin w as at 44%.
5
Depreciation and Amortization Expenses
The depreciat ion and am ortization expenses grew by 9% YoY due t o increased investm ent in dat a t o support
t he business st rat egy t o capt ure grow t h in dat a.
Other (Expenses)/ Income
Ot her expenses in 1Q 13 decreased 2% t o Rp255 billion, due t o:
Forex gain in 1Q 13 of Rp6.4 billion com pared t o a loss of Rp10 billion from a year ago.
Unrealized forex loss in 1Q 13 decreased by 49% com pared t o 1Q 12.
Higher int erest expense due t o addit ional debt in 1Q 13.
Profit for the period
Profit for the period for 1Q13 am ounted t o Rp316 billion. Norm alized profit for t he period excluding t he im pact
of unrealized forex t ransact ions, and accelerated depreciat ion recorded at Rp340 billion.
Balance Sheet (Audited)
Balance Sheet (In Rp Billion)
1Q12
1Q13
Growth
Current Assets
Cash and cash equivalent s
1,886
517
-73%
Ot hers
2,797
3,860
38%
Total Current Asset s
4,683
4,377
-7%
Non-Current Asset s
29,136
32,714
12%
Total Assets
33,819
37,091
10%
3,837
4,183
9%
7,193
4,527
-37%
11,031
8,710
-21%
Long t erm loans and bonds
7,622
10,477
37%
Ot hers *
1,940
2,278
17%
9,562
12,755
33%
20,593
21,465
4%
Current Liabilities
Current mat urit y of long term loans and bonds
Ot hers
Total Current liabilities
Non-Current Liabilities
Total Non-Current Liabilit ies
Total Liabilit ies
Equity att ributable to owners of the parent ent it y
Share capit al & addit ional paid-in capital
6,282
6,313
1%
Ret ained earnings *
6,944
9,313
34%
Total Equity
13,226
15,626
18%
Total Liabilit ies and Equity
33,819
37,091
10%
* Implement at ion of PSAK 24 (Revise 2010) “ Employee Benefit s” , recognit ion act uarial gains or losses, t hrough ot her comprehensive income
In 1Q 13, t ot al asset s increased by 10% t o Rp37.1 trillion, due t o higher invest m ent in net w ork equipment , 3G
access and t ransm ission t o support t he dat a business.
Current asset s decreased by 7% YoY m ainly due t o decrease in cash and cash equivalent by 73% and
part ially offset by higher advances and ot her prepaym ent s of 38%.
Tot al liabilit ies increased by 4% YoY m ainly due t o increase in borrowings of 28% from Rp11.5 t rillion
t o Rp14.7 t rillion.
6
Capital Expenditure
Capital Expenditure (In Rp Billion)
1Q12
1Q13
Grow th
Capitalized capex
2,528
1,791
-29%
Paid capex
Commit ment s ent ered int o*
2,037
3,078
1,982
296
-3%
-90%
* The original amount is in IDR and USD. The USD port ion w as convert ed t o IDR using closing rat e 31 M arch 2012 and 2013.
The exchange rat e Rupiah against USD as of 31 M arch 2012 and 2013 w ere Rp9,180/ USD and Rp9,719/ USD, respect ively.
Cash Flow
Cash Flow (In Rp Billion)
Net cash flow generat ed from operat ing act ivit ies
Net cash flow used in invest ing act ivit ies
1Q12
1Q13
2,428
1,268
(2,089)
(2,466)
Growth
-48%
18%
Free cash flow
339
(1,197)
Net cash flow generat ed from financing act ivit ies
Net increase/ (decrease) in cash and cash equivalent s
549
888
922
(276)
68%
N/ A
Cash and cash equivalents at the beginning of the period
998
792
-21%
0
1,886
1
517
-73%
Effect of exchange rat e changes on cash and cash equivalent s
Cash and cash equivalents at the end of the period
N/ A
N/ A
Net cash flow generat ed from operat ing act ivit ies decreased by 48% t o Rp1.3 trillion due t o decrease
in receipt from cust om ers and ot her operat ors by 6% and increase in paym ent s t o supplier and ot her
expenses by 36%.
Net cash flow used in investing act ivities increased by 18% due t o Paym ent of Upfront 3G for t he new
5 M Hz block spectrum in 2100 M Hz.
Net cash flow generat ed from financing act ivit ies w as at Rp922 billion due t o higher cash proceeds
from long t erm loan, relat ed t o new bank loan in 2013 of Rp1.6 t rillion.
7
Description of Debts
The det ail of debt s as of 31 M arch 2012 and 2013 are as follow s:
(in Original Amount )
1Q 12
1Q 13
Descript ion
USD Loan (mn)
IDR Bank Loan (bn)
IDR Bond (bn)
*
Year of M aturity
US$
178
US$
129
US$
132
US$
44
US$
-
US$
110
US$
309
US$
283
Am ort izing sem i annually,
final repaym ent is in 2015
2013
Am ort izing annually,
final repaym ent is in 2016
Rp
1,250
Rp
1,250
2013
Am ort izing annually,
Rp
3,000
Rp
2,100
final repaym ent is in 2014
Am ort izing annually,
Rp
1,800
Rp
2,600
final repaym ent is in 2015
Am ort izing annually,
Rp
1,100
Rp
5,500
final repaym ent is in 2017
Am ort izing annually,
Rp
Rp
1,500
Rp
Rp
500
-
final repaym ent is in 2018
Paid
Rp
8,650
Rp
11,950
Unamortized Loan Issuance Cost (bn)
Rp
TOTAL INTEREST BEARING DEBT (in Rp. bn)*
Rp
(30) Rp
11,459
Rp
(43)
14,660
The USD port ion w as convert ed t o IDR using closing rat e 31 M arch 2012 and 2013. The exchange rat e Rupiah against USD as of 31 M arch
2012 and 2013 w ere Rp9,180/ USD and Rp9,719/ USD, respect ively.
Gearing Ratios
1Q12
1Q13
Debt / Equit y
0.9 x
Net Debt / Equit y
0.7 x
0.9 x
0.9 x
Debt / EBITDA
Net Debt / EBITDA
1.2 x
1.0 x
1.6 x
1.5 x
During 1Q 13, XL signed new IDR loan agreement s w it h Bank M andiri in January 2013 am ounted Rp500 billion
and Rp2.5 t rillion. The Rp500 billion facilit y has been fully draw dow n as of 31 M arch 2013. XL also signed new
USD loan agreem ent wit h BTM U in M arch 2013. The USD loan facilit y has been fully draw down w hich
am ount ed t o USD 110 m illion.
As of 31 M arch 2013, XL had hedged about 88% of USD debt.
8
OPERATING M EASURES
1Q12
1Q13
Growth
Tot al O/ G M inut es of Usage (billion minut es)
30.6
26.4
-14%
Tot al M inut es (billion m inut es)
Tot al O/ G SM S (billion SM S)
Tot al dat a t raffic (Pet abyt e)
61.3
77.6
5.7
52.9
59.4
8.0
-14%
-24%
40%
30%
Tot al BTS
30,732
39,819
2G
24,234
26,524
9%
3G
6,498
13,295
105%
2,458
1,978
-20%
Number of Employees (permanent & cont ract w it h permanent posit ion)
Post paid users (000)
313
354
13%
Prepaid sim cards (act ive and grace / million)
Tot al user base (million)
46.1
46.4
48.7
49.1
6%
6%
ARPU blended (Rp 000)
Post paid revenue/ sub (Rp 000)
Prepaid revenue/ sim card (Rp 000)
29
27
-7%
155
28
127
27
-18%
-4%
RECENT DEVELOPM ENT
XL w as aw arded t he t hird carrier for 3G of 5 M Hz in t he 2100 M Hz spect rum w hich is st rat egic and put s XL
in a st rong position in long run for Dat a business.
AGM S 2013 held on 11 April 2013 approved to increase t he dividend paym ent t o 40% of 2012 norm alized
profit.
Achievements
XL w as aw arded in Selular Aw ard 2013 for “ M ost Innovative Program (Paket Serbu), Best Dat a
Services, and CEO of The Year 2012” for CEO XL Hasnul Suhaimi.
In annual event of Eurom oney Best M anaged Com panies in Asia 2013, XL was aw arded as “ Best M anaged
Com pany in Indonesia” .
XL w as aw arded as “ Excellent Service Experience Aw ard (ESEA) 2013” in cellular operat or cat egory by
Carre Cent er for Cust om er Satisfaction and Loyalt y (CCSL) and Bisnis Indonesia.
XL received t w o awards in Indonesia Brand Cham pion Aw ard 2013 – Silver Brand Cham pion of M ost
Widely Used Brand, for Telecomm unication & ICT Gadget cat egory M obile GSM Int ernet Provider and GSM
Operat or, held by M arkPlus Insight .
XL w as aw arded as “ Best Operat or in Em erging M arket ” in the 16t h Telecom Asia Aw ards
GUIDANCE
2013
Revenue growth
EBITDA margin
Cash out capex
In line or bet t er t han m arket
Low 40’s
Bet w een Rp 8 - 9 t rillion
ABOUT XL
XL is a m ajor cellular provider in Indonesia w hich is 66.5% ow ned by Axiat a Group t hrough Axiat a Investm ent s
(Indonesia) Sdn. Bhd., and t he rem aining st akes are held by public including rest rict ed st ock (33.5%).
Dat e: 1 M ay 2013
9