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Indosat sees bright outlook as debts restructured
Publicly listed telecommunications firm PT Indosat is hoping that early repayment of a US$650 million debt will improve its financial performance after suffering losses in the first half of this year as a result of the plunging rupiah
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Publicly listed telecommunications firm PT Indosat is hoping that early repayment of a US$650 million debt will improve its financial performance after suffering losses in the first half of this year as a result of the plunging rupiah.
Indosat, a subsidiary of Qatar-based telecommunications group Ooredoo, recorded net loss of Rp 733.8 billion ($525 million) in the January-June period this year, compared with a Rp 1.12 trillion loss in the same period last year.
An 8.7 percent increase in revenues to Rp 12.62 trillion in the first half this year was not enough to compensate the company's currency loss, which reached almost Rp 1 trillion in the first half, versus Rp 133.6 billion currency gain in the same period last year.
Indosat's investor communications division head, Andromeda H. Tristanto, said that the loss was mostly caused by the unpaid $650 million bonds.
'Now that they have been paid, we hope the balance will improve,' Andromeda said during a media briefing in Jakarta on Friday. Indosat repaid the bonds fully in July this year, although they are supposed to mature in 2020, using a 'more competitive loans facility' from a bank that cannot be disclosed.
The repayment was part of Indosat's efforts to restructure its debts and reduce the company's reliance on forex-denominated borrowing in light of the rupiah's volatility. The currency has lost around 14 percent of its value so far this year to break the Rp 14,000 barrier for the first time since the 1998 crisis, making it the second-worst performing currency in the region.
As of June, the company recorded foreign debts amounting to $1.17 billion, 54.8 percent of its total debts of Rp 28.4 trillion.
The early repayment reshaped Indosat's debts structure from 54.8 percent of dollar-denominated debts in June to 39 percent. The total debts were also down from Rp 28.4 trillion in June to Rp 23.4 trillion as of July.
Meanwhile, in the first half of this year, Indosat's rising revenues were primarily supported by its cellular revenues, which account for 81 percent of its overall top line, and which grew 9.2 percent year-on-year (yoy) to Rp 10.22 trillion from Rp 9.36 trillion.
The firm's subscribers jumped 24.7 percent yoy to 68.5 million users from 54.9 million recorded last year. However, cellular average revenue per user (ARPU) was down 5.9 percent yoy from Rp 26,200 to
Rp 24,700.
Data traffic skyrocketed 148.6 percent yoy to 85,907 terabyte from 34,556 terabyte.
Costs of goods sold flat-lined at Rp 11.58 trillion in the first half, from Rp 11.61 trillion a year ago.
Andromeda insisted the plunging rupiah had had little impact on his firm, as Indosat's operational costs denominated in dollars were less than 10 percent. The company, he said, was now focused on debt- restructuring to mitigate risks related to the rupiah's fluctuations against the greenback.
'The rupiah has been depreciating since 2013. However, we have applied a hedging policy since 2009,' he said.
Indosat's policy requires it to hedge a minimum of 35 percent of its total debts in foreign currencies. As of June, the firm had secured hedging facility contracts worth $609.5 million or 52.24 percent of its total bank loans and bonds denominated in dollars.
Andromeda claimed that the company's liquidity was healthy. 'Cash and its equivalents are worth Rp 9.4 trillion, and we also have loans facilities that have not been withdrawn amounting to Rp 3.37 trillion and $160 million,' he said. (prm)
