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Jakarta Post

Indosat's losses double in Q1 amid organization rightsizing

  • Riska Rahman

    The Jakarta Post

Jakarta   /   Thu, April 30, 2020   /   05:16 pm
Indosat's losses double in Q1 amid organization rightsizing Technicians of Indonesian telecommunication company Indosat inspect an antenna tower in Central Jakarta on September 13, 2011. The publicly listed company recorded Rp 605.61 billion (US$40.37 million) in losses in the January-March quarter. (AFP/Bay Ismoyo)

Telecommunication company PT Indosat reported an increase in losses during this year’s first quarter despite growing revenue as its organization rightsizing added to costs.

The publicly listed company recorded Rp 605.61 billion (US$40.37 million) in loses in the January-March quarter, 107.04 percent higher than the corresponding period last year.

However, it booked a 7.9 percent year-on-year (yoy) increase in revenue to Rp 6.5 trillion during the quarter, largely driven by a 10.6 percent growth in cellular revenue to Rp 5.4 trillion, the company said in a statement on Wednesday.

It also saw an increase in average revenue per user (ARPU) to Rp 29,600, higher than the Rp 26,500 recorded in the same period of 2019, thanks to a 63 percent annual jump in data traffic.

“The rise in net losses was primarily driven by a one-off impact of organization rightsizing and losses in foreign exchange,” the company said in the statement.

The firm announced earlier this year that it was laying off 677 employees as part of a change in its business strategy “to bring the company’s closer to market needs”. The company allocated Rp 663 billion for compensation packages, with an additional bonus of Rp 18.3 billion to 92 percent of employees that accepted the decision.

The company’s costs went up by almost 9 percent annually in this year’s first quarter to Rp 6.33 trillion.

Despite the increased losses and looming risks from the COVID-19 pandemic, president director and chief executive officer Ahmad Al-Neama was still upbeat about the company’s performance, as it was still on track with its three years turnaround plan, saying the company still “sees positive momentum continuing in the coming quarters.”

Al-Neama also emphasized the company’s commitment to improving its network performance and services amid the implementation of large-scale social restrictions (PSBB) in several regions.

“We have accelerated our network rollout plan to make sure people can stay connected during these times and will continue to support the country through this pandemic,” he said in the statement.

Binaartha Parama Sekuritas equity analyst M. Nafan Aji told The Jakarta Post on Thursday that the PSBB measures could benefit Indosat’s performance in the second quarter of this year onward.

He expected the measures, which require people to work and study from home, to lead to an increase in data usage, which would boost Indosat’s revenue.

He also advised the company to find ways to make its business more efficient.

“Without efficiency measures, the company is less likely to improve its performance and turn its bottom line to a profit amid the highly competitive climate of the telecommunications industry,” he said.

Indosat shares, traded under the code ISAT, dropped 4.44 percent on Thursday versus a 3.26 percent jump on the main gauge Jakarta Composite Index (JCI).

 

Editor's note: This article has been revised to state that Indosat's average revenue per user (ARPU) is Rp 29,600, higher than the Rp 26,500 recorded in the same period of 2019.