Aug 25, 2010

Indosat financing cost up to Rp1.1trio

Indonesia's second largest cellular operator PT Indosat Tbk (ISAT)'s net profit fell to Rp287 billion (-72% year on year) even though operationally the results were in-line on revenue and operating levels. 
The rise in financing costs (+22% year on year) to Rp1.1 trillion and lower foreign exchange gain due to rupiah strengthening (-49% year on year) of Rp370 billion led to the shortfall in net earnings way below consensus and ours. 
In a morning digest published by Mandiri Sekuritas today, Indosat's 1H 2010 subscribers were at 37.8 million (+35%yoy), however this is lower than the subscriber base in 1Q10 of 39.1 million.
Apparently, among the 3 major telco operators, only Indosat registered a qoq decline on subscribers as of 1H 2010. 
On the bright-side, despite the drop in subscriber numbers, its cellular revenues grew the highest qoq at 7.7% versus PT XL Axiata Tbk (EXCL) and  PT Telekomunikasi Selular (Telkomsel)'s 4.2% and 5.7% growth respectively.  
Among the big 3 operator’s revenue market share of ISAT stood at 18% and continues to trail Telkom (66% revenue market share) but is still ahead of EXCL (which accounted for 16% revenue market share among the 3 operators). Currently the stock trades at PER10F 15.4x. 

Disclosure: No position at the stock mentioned above.

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