Indonesian operators report sharp drops in 9M earnings on weak rupiah

4 Nov 2013

Indonesian Code Division Multiple Access (CDMA) operators Bakrie Telecom (BTel) and Smartfren Telecom have reported sharp declines in net income for the nine months ended 30 September 2013, impacted by slow revenue growth and sizeable foreign-exchange losses. The Jakarta Post writes that BTel, whose payroll includes Anindya N Bakrie, son of tycoon and presidential hopeful Aburizal Bakrie, saw 9M13 revenue fall 10.2% year-on-year and an even bigger fall in net profits, due to high costs arising from a plummeting rupiah (IRD) versus the US dollar (USD) in the third quarter. As a result, BTel booked a net loss of IDR1.5 trillion (USD133.5 million) for the period under review, 55.4% higher than in the same period a year earlier, with industry watchers noting that its fortunes are being exacerbated by a loss of market share as users switch to the more ubiquitous GSM platform.

Similarly, fellow CDMA provider Smartfren Telecom suffered nine-month net losses of IDR1.5 trillion (+52.2% y-o-y), despite a 60% annualised improvement in revenue to IDR1.7 trillion, as IDR3 trillion-worth of operating expenses (around 76.5% of which related to operations and maintenance, as well as depreciation and amortisation) impacted on its bottom line.

The FOREX-related losses are not restricted to Indonesia’s CDMA operators either. Number two player by subscribers, PT Indosat, posted net losses of IDR1.8 trillion in January-September 2013, compared to a profit of IDR476 billion in the corresponding year-earlier period, as the weakening rupiah combined with the carrier’s poor performance in the market, which saw it bleeding customers to other GSM operators. The cellco said that revenue from cellular and non-cellular operations rose 9.2% y-o-y to IDR17.8 trillion, although operational costs climbed 21% to IDR16.3 trillion. As a result, Indosat posted an operating profit of IDR1.5 trillion but took an IDR2.3 trillion hit from depreciation related to the rupiah, as the local currency slumped 20% versus the USD in the third quarter. Adding to its woes, Indosat’s subscriber based fell to 53.8 million at end-September, from 55.5 million, as mobile voice and data users switched in increasing numbers to competitors such as state-owned PT Telkomsel and XL Axiata.

For its part, XL Axiata said nine-month revenue edged up slightly to IDR15.8 trillion from IDR15.7 trillion, aided by growth in data revenue – which contributed 23% of total turnover, up from 19% in 9M12. The carrier said mobile data traffic rose 125% on an annualised basis and data users now account for 58% of its total user base. Approximately 9.2 million of XL Axiata’s subscribers now use smartphones, up 55% y-o-y. The cellco closed out September with 58.1 million mobile users up 7% on a year earlier, while market leader Telekomunikasi Indonesia (PT Telkomsel) earlier reported an 11% increase in 9M profit on surging domestic demand for quality service. Net income for January-September 2013 rose to IDR11.1 trillion from IDR10.0 trillion in the same period a year ago. Revenues were up 8% at IDR61.5 trillion for the company which controls a roughly 40% mobile market share.