Indosat Tbk PT Q3 2020 Earnings Call Transcript

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

Question: Niko Margaronis - PT. Danareksa Sekuritas, Research Division - Analyst : Yes. Thank you for the good results. Congratulations. Basically, my question is about the OpEx and whether you have any one-offs. I see that some of the OpEx items have gone up a little bit. That's my first question. Second question is about what do you see so far from the school subsidy? What is the impact so far on your ARPU? Is it neutral? And whether you have upside on your revenue. Yes, those 2 questions first.

Question: Niko Margaronis - PT. Danareksa Sekuritas, Research Division - Analyst : I see. And do you expect that you have upside on your revenue mainly due to this education program?

Question: Choong Chen Foong - CIMB Research - Analyst : This is Foong from CIMB. A couple of questions from me. Firstly, just to go back to the question on the free education consumption. Just wanted to ask a question from the network side, whether the traffic has gone up significantly in October. And in terms of the network utilization rate, has it caused it to go up significantly? And yes, this program is extended beyond into the next year. Do you think that it may put some pressure on Indosat to raise CapEx to add network capacity? That's the first question. Second question, I wanted to ask a bit more for some color on the competition, if you could provide some color there. The -- you registered quite decent growth in subscribers, and your data yield was also just down just slightly. So I wanted to understand whether competition was not as bad as you had feared, or you were just able to sort of eke out some good gains because of your network against your competitors. And if you could also provide some color as to how the numbers are looking right into -- so far into October and November. And third question, there was a big spike in maintenance costs Q-on-Q. What drove that? Was there any one-off there? Yes, those are my 3 questions.

Question: Choong Chen Foong - CIMB Research - Analyst : Okay. Before we go on to the last question I mentioned, maybe I can just put in a follow-up question to Vikram. So in terms of -- on the ground, right, do you see your competitors being quite aggressive on pricing? And so far, there has been no -- not much of a trend in terms of your customer base going into October.

Question: Choong Chen Foong - CIMB Research - Analyst :

Question: Kresna P. Hutabarat - PT Mandiri Sekuritas, Research Division - Analyst : Congrats on the strong revenue and EBITDA performance in this third quarter 2020. Two questions for me, please. My first question is on the impact from Job Creation law. So the Job Creation law has been officially signed this month, finally, and the law sets the path for network sharing and infrastructure sharing in the Indonesian telcom industry. So can I just get your thoughts what this will mean to Indosat? And realistically speaking, what sort of infra or spectrum sharing format that you think the industry can look forward to have in the near future? That's my first question. My second question is on leverage. If you get your leverage today, it's already at relatively low level, around 2x. Do you intend to keep it around this level? Or do you see the need for leverage to go higher in the next 12, 24 months?

Question: Kresna P. Hutabarat - PT Mandiri Sekuritas, Research Division - Analyst : Sorry, I think I was on mute just now. Okay. Yes. Can I just have 1 follow-up question to the answer -- to your answers on Job Creation law?

Question: Kresna P. Hutabarat - PT Mandiri Sekuritas, Research Division - Analyst : Yes. So basically, if we speak with the ministry, this -- that infrastructure -- sorry, the spectrum sharing that is being talked about revolves around system sharing in the use of new technology such as 5G. Is that what you guys are hearing, too? Is that -- or do you think there's room for this opportunity for spectrum sharing for current technology for 4G LTE, for instance? I just want to get your thoughts on what you guys think about that opportunity.

Question: Niko Margaronis - PT. Danareksa Sekuritas, Research Division - Analyst : Yes. With regards to your network improvements, I would like to ask about what is the current levels of fiberization of the towers? Yes, that's the question basically. And where do you actually -- so far, I understand that the CapEx expenditure is about IDR 5.5 trillion year-to-date. This is allocated to what elements of your network optimization? I noticed also that you're switching off a lot of 3G BTSs and going to 4G BTSs. Is that a lot of expenditures going on to that project? Is there a one-off cost to remove and input new equipment, 4G-related? Yes, that's number one. Number two, can you give a full year estimate now that we're moving into -- well into the fourth quarter for this year?

Question: Niko Margaronis - PT. Danareksa Sekuritas, Research Division - Analyst : I see. I see. With regards to your expenditure towards leasing space, leasing equipment, this is -- this should be a neutral -- should have a neutral effect, right? It's -- I mean going from 3G to 4G, is that some kind of upgrade on your systems? Or you...

Question: Niko Margaronis - PT. Danareksa Sekuritas, Research Division - Analyst : Okay. Okay. With regards to the second question, I mean, maybe you can offer us some guidance for full year results, revenue, perhaps and EBITDA?

Question: Ranjan Sharma - JPMorgan Chase & Co, Research Division - Analyst : It's Ranjan Sharma from JPMorgan. I just have 1 question. There's been a lot of news flow around Huawei and restrictions by the U.S. Department of Commerce. Can you please share what you see the impact to Indosat if Huawei was not to see any relief from the current or the next administration in the U.S.?

Question: Ranjan Sharma - JPMorgan Chase & Co, Research Division - Analyst : Can I just say like what forms do these business continuity plans take? Because there's a risk that Huawei might run out of inventory, right, unless there is relief measures given specifically to them or to the vendors.

Question: Prem Jearajasingam - Macquarie Research - Analyst : This is Prem from Macquarie. A good set of results. Just wondering, I appreciate that Indosat is paving its own way in growing revenues and cash flows and profits. But could you talk about where the biggest pain points could come from, from a price competition standpoint? Is that still pretty REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 03, 2020 / 8:00AM, ISAT.JK - Q3 2020 Indosat Tbk PT Earnings Call much in Java? Or do we think that it is spreading outside? And also, could you talk about your plans expanding outside of Java? How much of your USD 2 billion CapEx plan would be for a wider coverage? And how far, do you think, that coverage needs to go before we can call it over?