DEPOK (eNBe Indonesia) - Shares of second largest telco operator Indosat Ooredoo Hutchison (ISAT) ended substantially higher by 4.22% to Rp6,175 on Monday (Feb 13) even when the company’s profit attributable to owners declined by 30% to Rp4.72 trillion in 2022.
Bear in mind that Indosat Ooredoo and Hutchison 3’s merger was effective in January 2022. The last quoted price reflected PE multiple 10.5 on full year 2022 earnings per share (EPS) and valued 1.6 x equity (Rp31.6 trillion).
Probably full impact of the merger will take sometime. We will have better comparisons in the first quarter of 2023.
ISAT’s revenue grew 48.7% y/y to Rp46.75 trillion, but expenses jumped by 71.4% to Rp36.1 trillion. As a result, operating profit was relatively flat.
Cellular segment contributed Rp40.2 trillion, a 60% y/y rise, and multimedia-data communication-internet (MIDI) contributed Rp5.7 trillion, a 5.5% y/y growth.
On expenses, cost of revenues jumped 61.5% y/y to Rp21 trillion and depreciation & amortization increased 34.3% y/y to Rp5.7 trillion.
Personnel expenses also jumped 72.6% y/y to Rp3.78 trillion, and marketing expenses grew 35% y/y to Rp1.4 trillion.
ISAT’s Ebitda grew 40.2% y/y to Rp19.47 trillion, inline with the impact of the business merger (with PT Hutchison 3 Indonesia/H3I) and strong operational momentum. EBITDA margin reached 41.6%.
With the strength of the two brands as well as the business merger, ISAT’s subscribers increased by 62.5% to 102.2 million subscribers in 2022.
This increase in subscribers has had a slight impact on the decline Average Revenue per User (ARPU) to Rp33,900 in 2022, from the previous Rp34,400 in 2021.
ISAT said the expansion of the subscriber base resulted in strong data traffic growth of 91.8% y/y in 2022.
In addition, ISAT’s network coverage has also increased in line with the increase in the number of 4G base stations it has reached 137 thousand, so it can handle a high increase in traffic.
ISAT’s assets reached Rp113.88 trillion per December 2022 while liability reached Rp82.2 trillion. Then the equity was Rp31.6 trillion.
It’s cash and cash equivalent reached Rp9.51 trilion, with net debt of Rp11.8 trillion. As of December 31, 2022, ISAT’s principal debt amounted to Rp21.3 trillion.
ISAT spent capital expenditure (capex) of Rp12 trillion last year, of which about 93.3% capex was allocated to cellular business to support data service requests and the remainder allocated to capital expenditures for MIDI, infrastructure and IT.
For this year, ISAT allocates capex of Rp13 trillion, mostly to fund network development in the eastern part of Indonesia, also to fund the expansion of digitalization and infrastructure.
Meanwhile its peers, Telkom Indonesia (TLKM) and XL Axiata (EXCL) also allocate trillions of capex for infrastructure development.
EXCL allocated capex of Rp9 trillion for 2022. TLKM’s capex this year is projected to be around 25% of its total revenue. In 2022, TLKM’s capex budget was Rp40 trillion.***
