Sinarmas Sekuritas Investment Research

Transcription

1 Sinarmas Sekuritas Investment Research PT INTI BANGUN SEJAHTERA Tbk 1 PT Inti Bangun Sejahtera (IBS) Tbk is an independent tower companies with total telecommunication tower sites of 1,989 (as of March 31, 2012) across Indonesian archipelago with concentration in the denser Jabodetabek area. The firm engages in leasing space and other broadcast equipment for wireless signal transmission at tower sites under long-term lease agreement with mobile operators and wireless cable television providers. As of March 31, 2012, IBS has a total of 2,531 tenants with Smartfren (PT Smartfren Telecom Tbk) dominates the tenants profile with total contracts of 1,865 (73.7%) through the sale and lease back deal that IBS engaged with Sinarmas Group (PT Dian Swastika Sentosa Tbk and PT Smartfren Telecom Tbk). The remaining 26.3% is occupied by Esia (6.8%), Axis (5.3%), XL (5.3%), Flexi (4.4%) and others. The firm has divested fully its inbuilding solution division and will focus on its higher-margin tower leasing division. The firm prides itself on providing excellent service and real-time solutions to mobile operators through implementation of state-of-the-art technology and frequent updates on its equipment. Summary (IDR mn) 2012E 2013F 2014F 2015F 2016F 2017F Revenue 448, , , , , ,330 yoy growth % 9.67% 15.47% 13.81% 11.35% 11.43% EBITDAR 365, , , , , ,306 EBITDAR Margin 81.68% 81.41% 81.52% 81.59% 82.48% 82.65% Adjusted Net Profit 205, , , , , ,559 yoy growth % 1.35% 17.41% 18.39% 17.17% 15.28% ROA 10.37% 9.22% 9.13% 9.54% 9.95% 10.25% ROE 19.16% 16.26% 16.43% 16.69% 16.77% 16.60% Net Debt/Equity 59.64% 52.01% 49.11% 41.51% 30.36% 19.51% Source: Company data, Sinarmas Sekuritas Research Estimate Initial Public Offering (IPO) PT INTI BANGUN SEJAHTERA Tbk Sector : Telecommunication Infrastructure IPO Price Range : IDR 950 1,250 Planned Issuance : 154mn shares Post-IPO shareholders: PT BTS 85% PT Inovasi Mas Mobilitas 0% Public 15% (assumes full redemption of convertible bonds) Bookbuilding 30 July 1 August 2012 Effective Date 15 August 2012 Offering Period August 2012 Allotment Date 29 August 2012 Securities Submission date 30 August 2012 Proposed Listing Date at IDX 31 August 2012 Wibowo Ng Research Analyst [email protected] Rheza Mihardja Research Associate [email protected] This is not classified as an objective report. Please read the disclosure at page 17. Image taken from: uploads/2011/01/cell-tower-looking-up.jpg

2 Investment Thesis Tower Leasing: Stable and Predictable Cash Flows The tower leasing industry is characterized by stable and predictable cash flow. The firm leases its towers on long-term basis (10 years) and locks in the annual/monthly leasing rate pre-specified by the contracts. The maintenance fee charged on mobile operators or clients are adjusted annually with inflation. The main cost component includes rental amortization, operations and maintenance costs and salaries and marketing fees to market its tower portfolios to clients. Even with rising costs, this industry operates on high margin with gross margin reaching above 80% and net margin above 45%. Current Low Gearing Ratio opens up opportunities for debt-financing acquisitions and expansions. The firm is currently negotiating with few local banks for a loan facility to redeem the convertible bonds issued by PT Dian Swastika Sentosa (DSS) Tbk. Even with the loan amounting to IDR 700bn, the firm s total debt/total equity will still be relatively low by industry standard, providing rooms for more debt-financing acquisitions of towers or building of new towers. We estimate that FY 2012E D/E of 0.64 is still below industry standard of around 2.27 (D/E of PT Sarana Menara Nusantara Tbk is around 3.35 while that of Tower Bersama is around 1.19). Key concerns might include the interest rate that the banks charged on the firm and the quality of collaterals (if they are contracts with operators) used for the loans limiting rooms for the firm to expand as planned. Growing Industry Landscape driven by Domestic Consumption The recent trend has witnessed collapsing voice and SMS tariffs due to intense competition among mobile operators. Consequently, given the elasticity of demand, the rate of use, calculated in terms of MoU (minutes of use), has increased significantly with F CAGR of 24.8%. Furthermore, mobile operators are now providing similar service with similar pricings and the only key differentiator is the service level and mobile coverage. Service level such as signal strength/mobile coverage, data services and video streaming which caters to the smart-phone user will be the key considerations that one will consider while selecting mobile operator. To boost its service level and thus meeting demands from subscriber, it is imperative that mobile operators continue to invest in its network capacity and coverage in low penetration area in Indonesia. This will boost demands for tower leasing as mobile operators are no longer interested in investing and maintaining telecommunication towers due to its capital intensive nature. With rising smartphone usage with 3G (and even 3.5G or H+) capability and data services, we expect demands for telecommunication towers will remain robust even in areas concentrated with towers, especially with rising income from the middle class and demands for faster and smoother service coverage. The current low penetration of smartphones and other mobile phones in the rural areas will provide opportunities for the firm to expand and boost its revenue through volume expansion. Valuations We derived our first price range of IDR 1,150 1,750 (median IDR 1,450) per share via Discounted Cash Flow (DCF) methodology with WACC of % and terminal growth rate of %. The target price range represents EV/EBITDAR12E of (median 5.7), which is significantly below the industry standard (EV/EBITDAR12E of TOWR and TBIG are estimated to be 12.4 and 14.8, respectively). For the comparables valuation, we assign 60% cut across all multiples to account for its concentrated risks, recent shift to telecommunication tower industry (and thus possible their lack of experience in managing portfolio of towers and clients) and more conservative growth profile. We derived estimated price range of IDR 800 IDR1,500 (median IDR 1,150) indicating EV/EBITDAR12E of and price range of IDR 1,730 IDR2,600 (median IDR 2,165) representing P/E12E of Based on the above valuation methodologies, we came out with price range of IDR 1,420 IDR 1,620 representing EV/EBITDAR12 of , P/E12E of and EV/TTM EBITDAR of Rich EV/ TTM EBITDAR is due to the recent shift in industry (the firm just acquired and shift to telecommunication tower industry in last quarter of 2011 and divest its in-building solution. The telecommunication tower industry provides better margin, revenue growth and predictable cash flow). 2

3 Key upside potential which might result in multiples expansions includes: (1) aggressive acquisition of strategically-located towers to boost its tower portfolio and expansion in volume; (2) Significant increase in asset productivity/tenancy ratio without sacrificing pricing power; (3) successful diversification of its tenants profile. Key risks include: (1) slower expansion of its key tenant resulting in slower demand for BTS and tower services. Its anchor tenant, Smartfren, is currently in infancy stage and suffering net loss is a norm for companies in this stage. Nevertheless, Smartfren s default or restructuring will have severe impact on IBS profitability, cash flows and its ability to service its debt obligations; (2) Duration mismatch and increase in land prices. The duration of the leasing contract with mobile operator is normally around 10 years subjected to renewal and the prices are locked in throughout the 10-year period. However, the duration of IBS lease of space in the city center is around 5 years and we surmise that, more likely, the lessor will want a price increase, especially if the location is highly strategic and shifting of towers are not feasible. However, this will only affect towers located in Jabodetabek (~20% of tower portfolio); (3) Current unfavorable exposure to CDMA players. With rising 2G and 3G (and upcoming 4G) technologies and pricing wars among operators making these technologies affordable, we see limited upside on CDMA technology. Chart 1: Indonesian Mobile Subscription by Technology It is clear that CDMA technology has limited room for growth as the market is dominated by GSM technology Source: Detecon 3

4 Telecommunication Industry Outlook The mobile phone market in Indonesia is becoming saturated with SIM cards penetration rate reaching almost 90% in 2010 and Frost & Sullivan estimate that the rate will only increase at slower rate to around 113% in While the market is almost saturated, we still see opportunities as: (1) Indonesian population is expected to increase further, creating more rooms for the industry to grow; (2) With rising GDP per capita, we should expect consumption rate to increase in line with income and telecommunication consumptions, especially the rising data services requiring more advanced technologies and more concentrated network coverage and thus more telecommunication towers, to rise in line with income as population becomes more mobile. GDP per capita has reached USD3,000 in 2010 and it is estimated to reach USD4,500 by 2015; (3) Indonesian economy is expected to grow in the range of 5.8%-6.5% in 2012 with relatively low inflation by historical standards; (4) While user penetration rate is high, it is not representative of mobile/handset penetration rate as one user might own more than one SIM cards via dual-sim or quad-sim handsets to take advantage of various promotions offered by mobile operators; (5) no actual churn rate has been reported so far but it is predicted to be in the range of 5-30%. The higher the actual churn rate, the lower the actual penetration. While SIM Card penetration rate is near the 100% mark, handset penetration rate is still relatively low as compared to its ASEAN peers and assuming the trend of one user with multiple SIM cards to continue, we should expect higher SIM cards penetration with people taking advantage of various promotions resulting in higher traffic of data or voice service usage. Hence, to remain competitive, operators have to boost its BTS and thus network coverage in order to meet the demands. Chart 2: SIM Card Penetration rate is currently at 90% and it is estimated to rise. Chart 3: Handset Penetration Rate remains low compared to its ASEAN peers. Source: Frost & Sullivan Chart 4: Smartphones and Non-smartphone handsets sold per annum. Source: Frost & Sullivan Chart 5: Income Demographics: Rising population with annual income of USD1,500-3,000 Source: Frost & Sullivan Source: AC Nielsen 4

5 Wireless revenue to grow significantly as wireline revenue Languishes Frost & Sullivan expects wireless revenue to grow strongly in line with growing subscribers and wireless broadband usage. Based on Frost & Sullivan estimates, the wireless voice service revenue is USD 6.7bn while the wireless data service revenue is USD 3.35 bn and they expect that wireless data service revenue to grow at E CAGR of 16.9% while wireless voice revenue is expected to grow at slower rate of CAGR of 2.3%. With increasing demands for data services, we expect the operators to boost their numbers of BTS in order to maintain sufficient network coverage for their customers. Data services and video streaming require even more concentrated BTS per km radius and thus we expect demands for telecommunication tower rental to remain strong, especially in the city center area. With declining Average Revenue per User (ARPU), as mobile operators are expanding into lower income segment of society by offering more affordable entry price plans and stiffening price competitions among operators to clinch market share, Minutes of Use (MOU) is expected to rise. The direct impact will be significant rise in demands for voice and data/video streaming services which, in order to cope with these demands, mobile operators have to boost its network coverage by placing more BTS on the high-rise telecommunication towers. We expect demands for tower to remain relatively strong and sharing of tower/collocation will be particular aspects that independent tower operators should leverage on as more mobile operators are trying to boost their shares in the same radius. Chart 6: Age profile of wireless users (dominated by users less than 34 years of age): a perfect match the population of Indonesia and Greater Jakarta. Chart 7: Wireless data revenue, a more BTS-intensive service provided by operators, will dominate the revenue mix in the next 3 years. Source: Frost & Sullivan Chart 8: Declining Aggregate ARPU as operators expand to lower income by providing cheaper entry points Source: Frost & Sullivan Chart 9: Rising MoU as users take advantage of promotions, resulting in rising demands for BTS to meet the required service coverage 5 Source: Frost & Sullivan Source: Frost & Sullivan

6 Regulatory Landscapes favoring Independent Tower Companies Local Player only The regulation forbids direct foreign ownership of telecommunication towers and the only way foreign institutions or entities can circumvent this is by investing in publicly-listed companies. This is to shield the industry from competitions by foreign companies as this industry is highly capital intensive but made use of very basic technology, posing low barrier to entry for entities with rich resources. Being local entity, IBS competition should be limited to local entities and even with this regulation, IBS market share is still low as the market is dominated by mobile operators and the big 2 independent tower companies that are expanding aggressively within the last 2 years. Tower sharing Regulation The government will implement tower sharing plan by the end of FY 2012 for the existing towers and the government has imposed this regulation on any new tower built in We view this as positive to the independent tower companies and we expect mobile operators to divest their towers to independent companies or spin-off these assets into an independent subsidiary with their own marketing team that will market the portfolio of towers to both internal and external clients. This regulation will re-allocate assets into more productive ways allowing mobile operators to concentrate on their core competencies while opening new market base for tower companies (both affiliates and independent tower companies). Chart 10: The tower industry strong growth is expected to come from area outside Jabodetabek as income distribution spreads out to other areas in Indonesia. However, collocation growth in Jabodetabek is still promising. Source: Detecon 6

7 Financials We estimate the firm will boost its tenancy/collocation ratio to 2.0 by 2017E and will continue to expand its tower portfolio organically at a rate of 150 towers per annum till 2014E and thereafter it will continue to grow at rate of less than 100 towers per annum. Possible upsides include acquisitions of towers from mobile operators or smaller tower companies which will boost its portfolio significantly. Revenue is projected to grow at F CAGR of 42.0% with gross margin in the range of above 80%. 7 Table 1: Income Statements (IDR mn) Income Statement 2009A 2010A 2011A 1Q11 1Q E 2013F 2014F 2015F 2016F 2017F Revenue 43,710 79, ,247 22, , , , , , , ,330 yoy growth 80.8% 28.1% 437.0% 342.6% 9.7% 15.5% 13.8% 11.3% 11.4% In-building solution 40,909 55,726 58,258 14,583 14,577 14, yoy growth 36.2% 4.5% 0.0% -75.0% Rent tower service 2,133 21,812 28,933 5,343 98, , , , , , ,261 yoy growth 922.6% 32.6% % % 12.7% 14.6% 12.9% 10.4% 10.6% Tower maintenance ,011 2,104 7,560 38,251 46,058 57,077 69,712 83,305 98,070 yoy growth 259.3% 173.0% 20.4% 23.9% 22.1% 19.5% 17.7% Others 668 1, yoy growth 122.0% -97.0% Cost of Revenue 38,430 50,896 51,636 11,287 20,199 81,540 92, , , , ,832 yoy growth rate 32.4% 1.5% 79.0% 57.9% 13.7% 13.5% 11.6% 9.6% 8.7% Operation and maintenance 8,885 6,669 15,378 5,914 8,369 36,413 40,952 45,923 50,776 54,926 58,518 yoy growth rate -24.9% 130.6% 41.5% 136.8% 12.2% 11.9% 10.4% 8.1% 6.5% Rent Ammortization 15,722 22,925 22,975 2,080 8,226 38,376 43,951 50,119 55,833 61,205 66,742 yoy growth rate 45.8% 0.2% 295.5% 67.0% 14.5% 14.0% 11.4% 9.6% 9.0% PPE Depreciation 12,503 19,090 10,541 2,653 2,861 2,861 2,861 2,861 2,861 2,861 2,861 yoy growth rate 52.7% -44.8% 7.8% -72.9% 0.0% 0.0% 0.0% 0.0% 0.0% Electricity 1,230 2,029 2, ,709 4,736 6,064 7,652 9,447 11,491 yoy growth rate 65.0% 29.4% 14.4% 44.5% 29.9% 27.7% 26.0% 23.3% 21.6% Insurance yoy growth rate 102.2% -36.3% 55.6% 55.2% 7.0% 6.6% 4.1% 2.0% 1.0% Gross Profit 5,280 28,125 49,611 11, , , , , , , ,499 Gross Margin 12.1% 35.6% 49.0% 49.8% 83.3% 81.8% 81.1% 81.5% 81.8% 82.1% 82.6% yoy growth rate 432.7% 76.4% 102.7% 638.8% 8.8% 15.9% 14.3% 11.7% 12.0% EBITDAR 18,295 48,989 51,999 9, , , , , , , ,306 EBITDAR Margin 41.9% 62.0% 51.4% 44.3% 86.3% 81.7% 81.4% 81.5% 81.6% 82.5% 82.7% yoy growth rate 167.8% 6.1% 945.9% 603.9% 9.3% 15.6% 13.9% 12.6% 11.7% Operating Expense 15,920 22,604 33,146 6,450 8,225 44,923 48,896 56,674 64,768 66,442 74,405 yoy growth 42.0% 46.6% 27.5% 35.5% 8.8% 15.9% 14.3% 2.6% 12.0% EBIT -10,640 5,521 16,465 4,747 92, , , , , , ,094 EBIT Margin n/m 7.0% 16.3% 21.1% 76.5% 71.8% 71.2% 71.5% 71.8% 72.9% 73.3% yoy growth rate n/m 198.2% % % 8.8% 15.9% 14.3% 13.0% 12.0% Non-Operating Income 16,054 2,616 66, ,383-47,956-72,477-79,983-78,183-72,278-66,349 Inc. in fair value of inv. Properties , , Gain on disposal of an op. assets ,187 7, Net interest income (expense) -1, , ,975-55,143-72,477-79,983-78,183-72,278-66,349 Interest income ,341 2,398 Interest and other financial charges -2, , ,106-55,358-73,265-80,883-79,005-73,619-68,747 Gain on foreign exchangenet 18,495 2,050 1, Others-net 17,808 2,443 30, Income before tax 5,414 8,137 82,720 4, , , , , , , ,745 Tax expense 1,978 2,007 1, ,196 68,417 69,341 81,410 96, , ,186 as % of PBT 36.5% 24.7% 1.8% 9.2% 5.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% Net Income 3,436 6,130 81,196 4, , , , , , , ,559 net margin 7.9% 7.8% 80.2% 20.0% 222.4% 45.8% 42.3% 43.0% 44.8% 47.1% 48.7% yoy growth rate 78.4% % 230.7% 152.8% 1.4% 17.4% 18.4% 17.2% 15.3% Net Income (adjusted) 3,436 6,130 54,933 4,493 68, , , , , , ,559 net margin (adjusted) 7.9% 7.8% 54.3% 20.0% 56.4% 45.8% 42.3% 43.0% 44.8% 47.1% 48.7% yoy growth rate 78.4% 796.1% % 273.6% 1.4% 17.4% 18.4% 17.2% 15.3% Dividend Payout 0% 0% 15% 15% 15% 15% Additions to Retained Earnings 205, , , , , ,975 Dividends Payment ,139 36,867 43,198 49,796 Source: Company data, Sinarmas Sekuritas Research

8 Chart 11: Revenue Breakdown by divisions Chart 12: Growth profile of profits Source: Company data, Sinarmas Sekuritas Research Source: Company data, Sinarmas Sekuritas Research Chart 13: Margins to rise significantly as the firm shifts to tower industry Chart 14: Tower and tenants portfolio with rising tenancy ratio Source: Company data, Sinarmas Sekuritas Research Source: Company data, Sinarmas Sekuritas Research Chart 15: Clients profile of IBS Source: Company data 8

9 Core Assumptions We assumes ASP monthly rental rate to decline due to discounts given to primary tenants (in this case Smartfren) if there is secondary tenants and, according to the management projection, the monthly rental rate for selected primary tenants will decline to IDR 8 mn after The firm charged higher rental fee for built-to-suit tower and there is no discount given to secondary tenants. We estimate the ASP to be around IDR 12.4 mn in 2012E and it will gradually decline to IDR 11 mn in line with the estimated amount charged to clients by the big two tower companies. The decline will be compensated by the increase in tenancy ratio and number of towers owned by the firm which results in overall increase in top-line revenue. Increase in tenancy ratio will also boost gross margin as rental amortization cost remains relatively stable regardless of number of tenants per tower and maintenance cost for the next tenant is usually cheaper. Table 2: Core Assumptions Core Assumptions Mar E 2013F 2014F 2016F 2017F Tower sites ,989 1,989 2,132 2,282 2,432 2,532 2,582 Tenants ,380 2,541 2,772 3,263 3,826 4,381 4,914 Tenancy Ratio ASP monthly rental rate ASP monthly maintenance fee Source: Company data, Sinarmas Sekuritas Research 9

10 Low Net Debt/EBITDAR paving way for leveraged expansion We estimate the net debt/ebitdar ratio of the firm to be around 1.7 which is lower than its peers opening room for the firm to expand inorganically through debt-financing. However, the firm, based on the prospectus and audited reports, does not have any large credit facility with feasible interest rate. The firm should establish strong relationship with financial institutions to secure large credit line which can be drawn down should the opportunity arise. It is a norm to use the contracts signed with mobile operators as collaterals in the loans for acquisitions of towers, provided that the mobile operators have excellent credit ratings and are the big 3 players in Indonesia (Telkomsel, Indosat and XL). However, majority of IBS tenants are not the big 3 players and their contracts, if used as collateral for loan, will suffer deeper haircut or the interest charge will still be high limiting the amount the firm can borrow from financial institutions without straining its bottom line growth and EBITDAR/total interest expense. Table 3: Capex Calculations FY 2012E FY 2013F FY 2014F FY 2015F FY 2016F FY 2017F Tenancy Ratio Existing Towers Tenants Primary Tenants Secondary/Tertiary tenants New Secondary/tertiary tenants Built-in/new Primary Tenants Secondary Tenants Tenancy ratio New Secondary/tertiary tenants Capex Capex to build a tower (in mn IDR) CME for secondary/tertiary tenants (in mn IDR) Total Capex (in mn IDR) 219, , , , , ,005 Source: Company data, Sinarmas Sekuritas Research 10

11 Valuations We derived our price range of IDR 1,150 1,750 (median IDR 1,450) per share via Discounted Cash Flow (DCF) methodology with WACC of 14.5%. We discretely forecast the growth rate till 2027 and thereafter, it will grow at steady state of 2.5%. Alternatively, we also estimate the terminal value via EV/EBITDAR(2027F) with multiples in the range of DCF methodology was chosen because of the clarity and predictability of its cash flows. The target price range represents EV/EBITDAR12E of (median 5.7), which is significantly below the industry standard (EV/EBITDAR12E of TOWR and TBIG are estimated to be 12.4 and 14.8, respectively). Unless the firm successfully diversifies its tenants profile away, boosts its towers portfolio aggressively to increase its market share in the tower industry organically or inorganically while maintaining its ASP and manages its durations (of leasing duration to clients and rental duration that the firm paid to lessor), we do not expect the firm to trade at industry standards multiples as the independent tower companies are highly concentrated to Sarana Menara Nusantara and Tower Bersama Infrastructure and both of these companies have expanded aggressively and only will continue to do so through acquisitions of towers from mobile operators. However, this provides key upside potential or multiple expansion if the firm succeeds in overcoming its shortfalls and expands its tower portfolios without straining its EBITDAR/total interest expense. For the comparables valuation, we assign 60% cut across all multiples to account for the abovementioned risks. Based on EV/EBITDAR12E of and P/E12E of , we estimated price range of IDR 800 IDR1,500 (median IDR 1,150) and IDR 1,730 IDR2,600 (median IDR 2,165), respectively. Combining all the above valuation methodologies, we came out with price range of IDR 1,420 IDR 1,620 representing EV/EBITDAR12 of , P/E12E of and EV/TTM EBITDAR of Its EV/ TTM EBITDAR is extremely rich as Solusi Tunas Pratama and Sarana Menara Nusantara were priced at 2.3 and 4.5 EV/TTM EBITDAR during their respective IPO, respectively while Tower Bersama Infrastructure was priced at premium due to its diversified tenant profile (with the big 3 players occupying more than 50% of portfolio) and aggressive growth strategy. The rich EV/TTM EBITDAR is due to IBS recent shift from inbuilding solution to telecommunication tower industry in the last quarter of 2011 and revenue contribution from telecommunication tower industry was still relatively small. Chart 16: Valuations summary Source: Sinarmas Sekuritas Research 11

12 Table 4: Valuations Matrix Price per Market Cap share (IDR mn) EV (IDR mn) EV/EBITDAR P/E EV/Towers TTM 2012E 2013F 2014F 2012E 2013F 2014F 1Q E ,233,976 1,872, ,285,392 1,924, ,336,807 1,975, ,388,223 2,027, , ,439,639 2,078, , ,491,054 2,129, , ,542,470 2,181, ,097 1, ,593,886 2,232, ,123 1, ,645,301 2,284, ,148 1, ,696,717 2,335, ,174 1, ,748,133 2,387, ,200 1, ,799,548 2,438, ,226 1, ,850,964 2,489, ,252 1,168 Source: Sinarmas Sekuritas Research 12

13 Appendix 1) Proceeds of Funds 85% of the proceeds will be used for expansion of its tower portfolios ( 35% of this will be used to build 50 towers (as per request from clients as the firm does not engage in speculative building of tower) and 65% will be used to set up 450 units of CME for collocations). The remaining 15% is for working capital, rental and maintenance costs. 13

14 2) Comparison of Tenants Profile, Tower Sites and locations profiles of IBS with its peers. Table 5: Comparison of IBS to its local peers Number of Towers PT Inti Bangun Sejahtera Tbk 1,989 Total Tenants: 2,541 Tenants Profile Locations Profile PT Sarana Menara Nusantara Tbk 6,767 Total Tenants: 11,480 PT Tower Bersama Infrastructure Tbk Est. 6,143 (post acquisition of 2,500 towers from Indosat); Total Tenants: ~10,000 PT Solusi Tunas Pratama Tbk 1,309; Total Tenants : 2,114 Source: Various Companies data, Sinarmas Sekuritas Research 14

15 3) Overview of Mobile Telecommunications Operators in Indonesia Table 6: Telecommunication Operator in Indonesia Top 3 Market Leader Shareholder System Frequency Spectrum (MHz) market share BTS Coverage Telkomsel 65% Telkom GSM 900/ / % 31,000 Nationwide 35% SingTel UMTS Indosat 65% Qtel of Qatar GSM 900/ /20 19% 16,400 Nationwide 14.3% Govt of Indonesia UMTS XL Axiata 86.5% Axiata Group GSM 900/ /7.5 17% 19,300 Nationwide 13.3% Etisalat of UAE UMTS GSM Late entrants 60% Hutchinson HCPT/"3" Telecom GSM *) 8,800 Java, Sumatra, Bali (focus) + UMTS Kalimantan, Sulawesi NTS/"Axis" 51% Saudi telecom GSM *) n/a Java, Sumatra, Bali 44% Maxis Malaysia UMTS Incumbent owned CDMA Telkom Flexi 100% Telkom CDMA *) 5, cities StarOne 72.5% Indosat CDMA *) 1,400 Jakarta/Surabaya Independent CDMA Operators Mobile- 19.6% Jerash 8/ Fren Investment 12.7% Corporate United Inv. Ltd 12.0% E-Trading Securities CDMA *) 1,563 Jakarta, Bali, Sumatra and Kalimantan (big cities) Bakrie Telecom/ Esia Smart Telecom/ Smart 34.4% Bakrie Brothers CDMA *) 3,947 SinarMas Group CDMA 1900 na *) n/a Java, Sumatra, Kalimantan and Bali (big cities) Java, Sumatra, Sulawesi, Bali and Nusa Tenggara (big cities) STI / Ceria Sampoerna CDMA 450 n/a *) n/a Notes: *) Smaller Telcos have a combined market share of 15% 11 provinces in Java, Sumatera, Bali and Lombok Source: Detecon (Indonesian Mobile Landscape 2009) 15

16 Fiscal Year End F 2013F 2014F 2015F 2016F 2017F Income Statement (IDR mn) Sales Revenue 43,710 79, , , , , , , ,330 Gross Profit 5,280 28,125 49, , , , , , ,499 Operating Income -10,640 5,521 16, , , , , , ,094 Depreciation & Amortization 28,935 43,468 35,534 44,374 50,252 56,952 63,214 69,100 75,212 EBITDAR 18,295 48,989 51, , , , , , ,306 Other non-operating income 17,808 2,443 67,467 7, Net Interest Income -1, ,212-55,143-72,477-79,983-78,183-72,278-66,349 Profit before tax 5,414 8,137 82, , , , , , ,745 Tax expenses 1,978 2,007 1,524 68,417 69,341 81,410 96, , ,186 Profit after tax 3,436 6,130 81, , , , , , ,559 Minority Interests Net Profit 3,436 6,130 81, , , , , , ,559 Net Profit (adjusted) 3,436 6,130 54, , , , , , ,559 Cash Flow (IDR mn) Operating Cash Flow 11,374 21,671-30, , , , , , ,038 Capex ,527 32,140 75,000 15, Property Investment , , , , , ,005 Free Cash Flow -95,824-9, ,194-86,645-26,371-28,297 54, , ,033 Investing Cash Flow -107,198-31, , , , , , , ,005 Financing Cash Flow 100,397-2, , ,138 40,675 39,549-62, , ,304 Balance Sheet (IDR mn) Cash & cash equivalents 19,207 6,551 9,947 64,440 49, , , , ,646 Account Receivables 7,371 18,723 33, ,024 73,249 88,815 98, , ,888 Inventories , , , , ,681 Other Current assets 23,442 27, , , , , , , ,735 Net fixed assets 97, ,637 99,959 91,161 99,860 93,027 85,645 77,751 69,280 Property Investments 78,952 87,890 1,204,374 1,423,704 1,688,834 2,067,728 2,402,286 2,699,384 2,975,006 Other Non-Current Assets 30,743 24,835 94, ,178 95, , , , ,802 Total Assets 257, ,623 1,589,193 1,979,176 2,257,105 2,676,451 3,031,336 3,404,430 3,811,085 Short term Liabilities 55,225 66, , , , , , , ,172 Long term Liabilities 176, , , , , ,695 1,019,163 1,076,553 1,120,398 Total Liabilities 231, , , , ,923 1,189,673 1,298,780 1,383,889 1,458,570 Shareholders Equity 25,567 33, ,969 1,071,159 1,279,182 1,486,778 1,732,556 2,020,540 2,352,515 Minority Interest Total Equity & Liabilities 257, ,624 1,589,195 1,979,176 2,257,105 2,676,451 3,031,336 3,404,430 3,811,085 Key Ratio Revenue Growth (%) n/a 80.78% 28.13% % 9.67% 15.47% 13.81% 11.35% 11.43% Adjusted EPS Growth (%) n/a 78.41% % % 1.35% 17.41% 18.39% 17.17% 15.28% EBITDAR Margin (%) 41.86% 61.99% 51.36% 81.68% 81.41% 81.52% 81.59% 82.48% 82.65% Payout Ratio (%) 0.00% 0.00% 0.00% 0.00% 0.00% 15.00% 15.00% 15.00% 15.00% ROE (%) 13.44% 18.23% 8.26% 19.16% 16.26% 16.43% 16.69% 16.77% 16.60% Quick Ratio ( ) Debt/Equity (%) Source: Company Data, Sinarmas Sekuritas Research 16

17 Disclosure Sinarmas Sekuritas will act, or have acted, as joint-lead manager in a public offering of equity security for PT Inti Bangun Sejahtera Tbk. Sinarmas Sekuritas currently has PT Inti Bangun Sejahtera Tbk as its investment banking clients and will seek compensation for investment banking-related services from PT Inti Bangun Sejahtera Tbk within the next 3 months. 17

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