Indosat Tbk PT Q1 2020 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kresna P. Hutabarat - PT Mandiri Sekuritas, Research Division - Analyst : I have 3 questions, please. #1, would you be able to share any guidance on key financials for 2020? I mean any view on how much the industry can grow its revenues in 2020, especially good given this -- given the crisis from COVID-19. Also, any revision on your CapEx budget and EBITDA margin target for 2020? That's question #1. Question #2. Regarding the provision for claim warranty related to the tower sale in fourth quarter '19, could we expect this cost item to be reversed eventually? And what will be the conditions required in order to reverse this position? I will stop there. Yes. There's 2 questions only.

Question: Kresna P. Hutabarat - PT Mandiri Sekuritas, Research Division - Analyst : The second question is on the provision for claim warranty related to your tower sale in the fourth quarter '19. I think in your financial statement, an amount close to IDR 700 billion. Just wondering what sort of conditions required in order to reverse this position.

Question: Kresna P. Hutabarat - PT Mandiri Sekuritas, Research Division - Analyst : Sorry. Any color on the -- in the CapEx target for full year '20 and EBITDA margin target? That will be helpful.

Question: Prem Jearajasingam - Macquarie Research - Analyst : 2 questions from me, please. Firstly, could you share with us what percentage of your subscribers are currently using digital channels to reload their prepaid packs? And secondly, with regards to the trends that you're seeing, maybe you could get -- I'm wondering if you could get a bit granular. If you look at the last 2 weeks of March versus the first 2 weeks of April, have you seen any change in patterns around people's reload activities or even in terms of their spending patterns over that period?

Question: Prem Jearajasingam - Macquarie Research - Analyst : Sorry. I was referring more to both revenue as well as reload (inaudible). You compare the second half of March and the first half of April, is there any material slowdown and all that because of the lockdown?

Question: Prem Jearajasingam - Macquarie Research - Analyst : So it could have increased rather than decreased within that period?

Question: Ranjan Sharma - JP Morgan Chase & Co, Research Division - Analyst : (foreign language) A couple of questions from my side. Firstly, on the network rollout. Are you seeing any difficulties in rolling outside? First, that you have had to add capacity to existing sites instead of building new sites? And how does that compare to your initial plans? So that's the first question. Secondly, on the leverage, right, like how should we think about the leverage? Because if you sell more towers, your net debt-to-EBITDA will come down. But the way credit agencies look at tower sale and leaseback agreements is to adjust for the lease liabilities. So should we be adjusting our net debt-to-EBITDA ratio for these liabilities as well? I mean is that how your credit agencies and your debt covenants are based on? Those are the 2 main questions that I had. So if you could answer those.

Question: Ranjan Sharma - JP Morgan Chase & Co, Research Division - Analyst : So leverage, right, you show your net debt to EBITDA is declining. But that would happen if you are doing tower sale and leaseback agreements. Because not only are you getting cash upfront from the tower sale, but your EBITDA will rise as you account for like capital leases now. So -- but I know for the credit rating agencies, they look at tower sale and leaseback agreements as more credit neutral events, because you get cash upfront, but you also get lease liabilities. So should we not be adjusting your net debt to EBITDA by the lease liabilities? And I think that's what Ooredoo does as well. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. APRIL 29, 2020 / 9:00AM, ISAT.JK - Q1 2020 Indosat Tbk PT Earnings Call

Question: Ranjan Sharma - JP Morgan Chase & Co, Research Division - Analyst : So the question was when you look at your leverage ratios, your net debt-to-EBITDA ratios, should we also not add lease liabilities to the net debt to look at the underlying leverage ratio?

Question: Niko Margaronis - PT. Danareksa Sekuritas, Research Division - Analyst : And I have a few questions on competition basically. Noted on the -- your comments on the performance on the top line. I just want to -- maybe on the ARPU, yes, seeing that the revenue on Q-on-Q basis coming down. The ARPU has gone up. And can you explain what has driven this ARPU improvement in the first quarter 2020? That's my first question. Secondly, yes, given that this is very dynamic, I suppose, current with the market, how do you see the competition going into the second quarter? I mean what you've seen so far in April and going into March -- going into May? And thirdly, it's on -- we noticed the severance costs on the first quarter. Will there be additional costs going forward in relation to the employee terminations?

Question: Niko Margaronis - PT. Danareksa Sekuritas, Research Division - Analyst : Yes, Yes.

Question: Niko Margaronis - PT. Danareksa Sekuritas, Research Division - Analyst : On your -- on the remarks for the second quarter, I noticed that you also issue a new pack named Harian, which is very similar to smartfren package. Is there some competition brewing with -- yes, with smaller peers?