Indosat profits surge despite lower revenue

JAKARTA. PT Indosat, the country’s second-largest telecommunications operator, saw its net profits surge in the first half of the year after consecutive losses in the past few years although its revenue and subscribers weakened.

The publicly listed company recorded a net profit of Rp 226.3 billion (US$19.3 million) in the January-June period compared to the Rp 231.2 billion loss it saw in the same period last year, according to its recently published second quarter financial report.

The increase was mainly due to proceeds from the sale of the company’s stake in publicly listed tower company PT Tower Bersama Infrastructure (TBIG), foreign exchange gain and lower operating costs. Indosat’s revenue and subscribers, meanwhile, experienced a slump.

Indosat pocketed Rp 1.39 trillion from the sale of its entire 240,000 shares in Tower Bersama at the end of March this year to cash in on its investment and at the same time pay debts due this year.

The firm also pocketed Rp 133.6 billion from foreign-currency transactions during the first half, a positive trend compared to a loss of Rp 322.7 billion in the same period last year, while operational expenses decreased by 2.6 percent to Rp 10.2 trillion from Rp 10.5 trillion in the same period.

However, Indosat failed to see revenue growth as the top line decreased to Rp 11.6 trillion from Rp 11.7 trillion in the first half of last year.

“Our first half performance was still affected by our network modernization, but our firm’s overall profitability has shown a better trend compared to the same period in 2013,” said Indosat president director Alexander Rusli.

Indosat carried out major network modernizing in a number of cities, including Greater Jakarta, Bandung and Sukabumi (West Java), Semarang (Central Java), Yogyakarta, Surabaya (East Java) and Denpasar (Bali). This is expected to weaken its network connection temporarily and affect customers.

However, once the network modernization programs are set, the firm expects to see revenue growth by between 6 and 8 percent.

Alexander said that with significant improvements to its network as well as best commercial strategy, Indosat would continue to aim to be the prominent choice for customers looking for affordable and quality information as well as communication and technology (ICT) solutions.

Indosat reported that cellular subscriptions fell by 2.7 percent year-on-year (y-o-y) to 54.9 million as of the first half this year. Its traffic data, meanwhile, more than tripled to 34,556 terabytes from only 11,161 terabytes.

The firm’s cellular revenue dropped 2.2 percent, but was compensated by an increase in data and VAS income.

Revenue from fixed data and fixed call, meanwhile, increased 6.6 percent and 1.1 percent, respectively.

Indosat’s shares, which are traded on the Indonesia Stock Exchange (IDX) under the code ISAT, remained unchanged at Rp 4,110 at Friday’s close from the previous day. The stocks have dropped by almost 1 percent so far this year, underperforming the broader Jakarta Composite Index‘s (JCI) 22.1 percent advance. (Khoirul Amin)