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Indosat turns to profit after booking loss in 2018
Publicly listed telecommunications provider PT Indosat booked a significant profit in 2019 after recording a loss in 2018, thanks to tower sales and improvements in its cellular business
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span>Publicly listed telecommunications provider PT Indosat booked a significant profit in 2019 after recording a loss in 2018, thanks to tower sales and improvements in its cellular business.
Indosat recorded a net profit of Rp 1.56 trillion (US$111.2 million) throughout 2019, bouncing back from a loss of Rp 2.43 trillion in 2018. The company pocketed Rp 26.1 trillion in total revenues or higher, almost a 13 percent year-on-year (yoy) increase as its cellular business grew robustly.
Last year, Indosat’s cellular business pocketed Rp 20.7 trillion in revenue or a 14.7 percent yoy jump as data traffic soared by more than 71 percent.
It also sold 3,100 telecommunications towers to PT Dayamitra Telekomunikasi (Mitratel) and PT Professional Telekomunikasi Indonesia (Protelindo) in an all-cash transaction amounting to Rp 6.39 trillion.
“This sale will support Indosat Ooredoo’s strategic plan to further improve our network experience, thus [improving our services] to customers,” Indosat chief executive officer Ahmad al-Neama said in a statement on Thursday.
“We have invested to expand our 4G network coverage and improve our performance. These steps have contributed to an increase in our subscriber base and data traffic volume.” Stocks of the company, traded at the Indonesia Stock Exchange (IDX) with the code ISAT, fell by 4.6 percent on Thursday against the Jakarta Composite Index’s (JCI) loss of 2.5 percent. The stocks have lost almost 37 percent of their value in the last year, Bloomberg data showed.
“As we move forward, we aim to continue to play a leading role in Indonesia’s digital ecosystem and deliver further improvements in our services and customer experience that will create value for our stakeholders,” said Al-Neama.
Indosat plans to set aside a capital expenditure of between Rp 8.5 trillion and Rp 9.5 trillion this year to support its efforts to reach a growth target that is “in line with market revenue growth”.
The company has taken further steps to improve its financial situation by laying off 677 employees as part of changes to its organizational structure. It aims to be more agile and focus on customers and market demand.
Indosat director and human resources chief Irsyad Sahroni said in a statement on Thursday that 90 percent of the laid-off workers had agreed to the compensation packages offered by the company. He made the statement following a visit by the House of Representatives Commission IX overseeing manpower on the same day.
“We told [the commission] that our business reorganization has run according to the plan and has been well accepted by the affected employees, [that the company has] taken fair steps in line with prevailing regulations and has communicated directly and transparently with all employees during the process,” Irsyad said.
“This was a difficult [decision] to make but necessary for Indosat Ooredoo to survive and grow.”
However, Indosat workers’ union conveyed a different message, saying it “is thankful and warmly welcomes the House Commission IX and the Manpower Ministry’s joint decision to ask Indosat Ooredoo’s management to halt the layoffs”.
