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oody'€™s Investors Service says that PT Indosat Tbk'€™s financial performance for the first half of 2015 is broadly in line with expectations and supports its Ba1 rating and stable outlook.

Reported revenue in the first half grew by 8.7 percent year-on-year (yoy) to Rp 12.6 trillion, driven by strong revenue growth in data and value added services, which offset declines in voice and interconnection revenue.

'€œIndosat'€™s solid revenue growth, in particular from data services, is supported by improved network quality following the completion of its network-modernization efforts,'€ said Moody'€™s assistant vice president Nidhi Dhruv.

Following aggressive customer-acquisition marketing campaigns in recent quarters, Indosat'€™s subscriber base grew by 24.7 percent yoy to 68.5 million from 54.9 million. However, blended average revenue per user declined 5 percent yoy to Rp 25,300 from Rp 26,600, and reported earning before interest, tax, depreciation and amortization (EBITDA) margins declined slightly to 42.5 percent in the first half from 43.3 percent last year.

'€œWe expect a continuing contraction in EBITDA margins as data services contribute increasingly to total revenues, and data pricing and usage remains sub-optimal. Nonetheless, Indosat'€™s adjusted EBITDA margin remains strong for its rating category and compares favorably on a global basis,'€ said Dhruv, also Moody'€™s lead analyst for Indosat.

Although the bond redemption will shorten Indosat'€™s debt maturity profile to about 3.9 years from 4.5 years originally, Indosat would, Moody'€™s went on, have a well-laddered debt maturity profile with manageable payments due each year that the company could fund through a combination of internal cash flows and refinancing.