PT Link Net Tbk Company Presentation August 2017 - 1H 2017 web
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PT Link Net Tbk Company Presentation August 2017
Table of contents
1. Company overview
2. Key investment highlights
3. Key financial overview
4. Appendix
1
Section 1
Company overview
2
Link Net – The gateway to Indonesian consumer homes
Targets large and
Leading NGBB(a)
fast growing affluent
provider in Indonesia
segment(b). Large
with ~1.9m Homes
subscriber base (~1.1m
passed and >10yrs
RGUs) with low and
track record
stable churn
Innovation led Strong enterprise
premium product portfolio offering
offering supporting with the government,
premium ARPUs financial institutions
with 97% (With IDX as a
bundling rate flagship customer)
Strong growth
Technology
trajectory – 18%
neutral, future proof
revenue CAGR(c)
state-of-the-art
with 59% EBITDA
network
margin along
with abundant
with resilient
capacity
balance sheet
Source: Company data as of 1H 2017
(a) NGBB: Next Generation Broadband
(b) 4.9m addressable homes – Based on addressable market of AB SES households as defined by Nielsen
(2015 definition of SES classification) (For Greater Jakarta, Greater Surabaya and Bandung) 3
(c) 2014 – 2016
NGBB provider of SCALE, operating in the most attractive
metropolitan areas of Indonesia
Total addressable (3 cities) AB HH’s: 4.9m(a)
Medan Total LN 1H 2017 homes passed: 1.90m(c)
• Addressable households(a) : 292k Total cable length 1H 2017: 24,861 km(c)
Batam
• Potential Homepass(b) :53k
Bandung
1
5%
• Addressable households(a): 318k
• Homes passed: ~97k 1
18%
• Estimated coverage ratio: ~31% Greater Surabaya
• Cable length: ~985km • Addressable households(a): 909k
• Homes passed: ~349k
Greater Jakarta
1
77%
• Estimated coverage ratio: ~37%
• Addressable households(a): 3,644k • Cable length: ~3,120km
• Homes passed: ~1.46m
• Estimated coverage ratio: ~40%
• Cable length: ~20,756km Bali
• Cable length: ~100km
• Focus on hotels
Source: Company data as of 1H 2017 1 City homes passed / Total homes passed
(a) Based on addressable market of AB SES households as defined by Nielsen (2015 definition of SES classification) – For Greater Jakarta, Greater Surabaya and Bandung
(b) Based on internal company data survey (in absence of Nielsen)
(c) For Greater Jakarta, Greater Surabaya and Bandung
4
Section 2 Key investment highlights
Key investment highlights
Large and attractive market in one of the most underpenetrated and fastest growing
1 broadband market globally(a)
2
1 A leading NGBB provider of scale with a proven and credible track record
Best-in-class, future proof state-of-the-art network with abundant capacity for
1
3 future data growth
Superior and innovative product offerings cementing premium ARPU position
4
1 and driving IOT(b) adoption
5
1 Best in class financial profile with potential leverage capacity
Highly experienced management team with strong shareholder support
6
1 (Lippo group and end-to-end TMT ecosystem)
(a) Most underpenetrated and fastest growing broadband market globally out of the top 20 largest global economies – Media Partners Asia
(b) IOT – Internet of Things 6
1
Indonesia – A large & exciting TMT market on the
cusp of explosive growth
Rapid population and GDP/capita growth in Indonesia(a) Increasing urbanisation with GDP concentration in cities(b)
(m) Increasing urbanisation Urban vs rural GDP concentration
Real GDP per capita (US$) % of national population % of national GDP
8,248 11,134 11,790 12,500 13,230 13,920 14,740
Urban Urban
53%
Population (m) 71% 74%
86%
+18%
265 268 +12%
256 258 261 263 47%
243 Rural Rural
29% 26%
14%
2010 2015 2016 2017 2018 2019 2020 2010 2030 2010 2030
Explosive growth in Indonesia’s Broadband and Pay TV
Underpenetrated Broadband and Pay TV segments(c)
markets(c)
Broadband penetration (2016) Pay TV penetration (2016) Broadband Pay TV
(Subscription revenues(d) (US$m))
ADSL NGBB DTH IPTV Cable DTT
(%) 55%
36%
441 778 1,526 227 539 742
(No of subscribers, ‘000)
~5.0x
~4.0x 11% 9,270
1%
9% 0.4%
2% 5,750 5,674
2% 7% 4,372
7% 1,982 1,666
IN APAC average IN APAC average
2011 2016 2020 2011 2016 2020
(a) Source: EIU
(b) Source: McKinsey Global Institute
(c) Source: Media Partners Asia
Asia Pacific includes Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Pakistan, Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam 7
(d) Subscription revenue is defined as the revenue earned from recurring subscription in exchange for the provision of broadband and Pay TV services to subscribers
1 Targeted expansion strategy into high GDP and population areas
focusing on the most lucrative and fastest growing demographics
Operating in provinces with high GDP Operating in cities with high population
% of Total
national 17% 15% 13% 3% population 31.7 7.1 2.5 255
GDP (millions)
2015 GDP (US$ bn) 150 Per km2 in 2015
127 79,432
115
30 18,378
14,745
134
Jakarta East Java West Java Rest of
(a) (a) (c)
Indonesia(b) Greater… Greater… Bandung Indonesia
Households in Link Net's operating cities (d,e)
9.2% A Fast growing AB segment
A 27.9%
17.8% B
23.2% C AB segment less price sensitive and very upgradable
B 35.0%
49.8%
D C Unsatisfied demand for quality broadband and premium
22.8%
entertainment experience
D 14.4%
2010 2015 Affordable entry level packages also available for C1 segment
AB : 27% AB : 63%
Source: Media Partners Asia, Biro Pusat Statistik (BPS), Nielsen (Assuming 4 pax per household) and Company data
(a) Key cities in East Java include Gresik, Bangkalan, Mojokerto, Surabaya, Sidoarjo, Lamongan and West Java includes Bandung Link Net target markets
(b) Rest of Indonesia figure is the average of the remaining top 12 provinces as per BPS excluding Jakarta, East Java and West Java
(c) Greater Jakarta include Bogor, Depok, Tangerang, Bekasi. Greater Surabaya include Malang, Gresik, Sidoarjo
(d) Cities include Greater Jakarta, Greater Surabaya and Bandung 8
(e) Based on Nielsen 2015, Monthly expenditure (A – IDR5m and above, B – IDR3m to 5m and above, C – IDR2m to 3m, D – IDR1.5m to 2m)
2 The preeminent NGBB provider in Indonesia, with proven
track record and driving adoption of Internet of things
…with Link Net as a leading provider of broadband and IP
Large and fast growing market with strong demand(a)…
services driving the adoption of Internet of Things…
% ADSL Subs.
of total BB subs 90% 90% 75% 52%
1Gbps
9,270
2016-20 Telkom
P0
3 100
CAGR : Mbps Mbps
4,470 32.5%
5,750
…and the anchor provider to affluent AB households in
Indonesia’s top 3 metropolitan cities
1,450
3,814
Others(c) Homes Passed(c)
414
Link Net 1.9m
1,982
240k
2.8% P0
193 4,800 ADSL & FTTH 17m
4,300
3,400 Others(c) 635k
Subs.
1,789 547k market
3 Key Metropolitan Cities share(b)
P0: FTTH
2011 2014 2016 2020
1,370k (d) Across 15 cities
ADSL (000) Cable & FTTx (000)
Note: NGBB defined as Next Generation Broadband
(a) Source: MPA 1H2016
(b) Source: TLKM and Link Net based on 1H 2017 earnings call report / disclosure
(c) Source: “Others” Homes passed data sourced from news articles and internal company data. Subs market share “Others” data from MPA (MNC Play, Biznet, MyRepublic, and Indosaat Ooredoo 9
(d) Source: calculated based on 1H2017 earnings call percentage of fiber versus non-fiber subscriber2 Established presence provides foundation for premium
ARPUs and core subscriber base
Despite increasing competition, Link Net has continued to expand its network, enlarge its subscriber base
whilst maintaining its premium ARPU
Increasing penetration rate despite increased competition and
Increasing homes passed
enlarged network size
Coverage
ratio(1) 29% 34% 37% 39%
1,826 1,909
('000) 1,673
1,433
28.5% 28.7%
27.4% 27.3%
2014A 2015A 2016A 1H 2017A 2014 2015 2016 1H 2017
Link Net broadband penetration
Growing RGUs with stable churn Maintaining premium ARPU vs peers(2)
('000) (IDR '000)
2.2% 2.3% 2.2% 2.3% 415 407 419
402
Premium
1,024 1,075 ARPU
890 344
341 vs peers
755
503 528 310
433
363
392 457 521 547
2014A 2015A 2016A 1H 2017A
2014 2015 2016 1H 2017
Broadband Cable TV Churn Link Net P0
Source: Company data and various public sources
(1) Coverage ratio derived by dividing homes passed by 4.9m estimated addressable homes in Greater Jakarta, Greater Surabaya and Bandung
(2) For P0, ARPU represents the last quarter ARPU in 2015 and 2016
103 Solid technology ecosystem with state of the art network
Future proof network with abundant bandwidth capacity and high level of network redundancy
Headend Distribution hubs Node Subscriber premises
~25,000 km of cable across Indonesia Fully owned fiber backbone and last mile(a)
Has access to a total of 780 Gbps of International Offering a superior quality network:
bandwidth capacity
- Low average home-to-nodes ratio (~360 homes per node)(b)
Owns and operates >5 Tbps fiber lines to Singapore - HFC: Fully DOCSIS 3.0 enabled capable of speeds up to
gateway
1Gbps. Easily upgradeable to DOCSIS 3.1
- FTTH: In white areas for speeds >10 Gbps
Source: Company information - Innovations to reach less densed areas
(a) Limited exceptions for certain last mile owned by property developers
(b) Source: Media Partners Asia
11Winning price–value range of broadband and video
3 content packages
Catering to a large addressable market from a large C population to a fast growing AB segment
1 Gbps
167 channels
5,100
IDR '000
(US$)(1)
200 Mbps
167 channels
3,139
100 Mbps
167 channels
75 Mbps 2,195 (US$364)
167 channels
1,669
32 Mbps
20 Mbps 167 channels (US$224)
4 Mbps 12 Mbps 144 channels 869
103 channels 122 channels (US$157)
589
(2) 399 (US$119)
239 (US$62)
(US$28) (US$42)
(US$17)
Family D'Lite Elite Supreme Maxima Ultimate Infinite Mach 1
1 2 3 4 5 6 7 8
n Entry-level n Basic package n Incremental add-on n Package targeted n Designed for heavy n Highest tier packages, offering the highest speed possible combined
package offering offering for packages which for consumers who users of high with dedicated premium customer and technical service for users that
for subscribers with subscribers with deliver faster are looking for full speed internet who demand the best service available
basic Internet and basic Internet and Internet and more access to high require full access
TV Channel needs TV channel needs TV channel genres speed Internet and to all channels
all channels
Profitability margins are similar across all packages from entry-level to most premium tier package
Source: Company data as of Jul 2017
(1) USD/IDR exchange rate of 14,000
(2) Wireless Docsis 3.0 Modem (previously Docsis 2.0) and HD STB for FAMILY and D’LITE & Wireless Docsis 3.0 Wi-fi Modem and X1 4K STB (previously X1 HD STB) for ELITE up plus FirstMediaX 12
Note: All price is including CPE rental All price exclude 10% VAT4 Premium ARPU maintained based on proven track record
of product innovations and upselling
Combination of push and pull strategies
Superior innovation-led product strategy
to drive conversions and upselling
(No. of upgrade transactions each year)
2016
2015
1 Gbps
200 329,031
Mbps
2013 265,560
100
Mbps
2012 162,981
30 Mbps 2016
• SMART STB X1 4K
2009 (Android)
10 Mbps • STB 4K Ch
2007 • Fix – Wireless Bundle
2014 2015 2016
3 Mbps • My FirstMedia App
2015 • FM SMART LIVING
• FMX
• SMART STB X1 197,570
2013 2014 HD (Android)
• FM Go (OTT) • FM TV • Speed Booster
Anywhere 125,483
1H 2016 1H 2017
Multi-Screen Interactive Ultra High Definition Bringing Convenience TV Anywhere SMART Living
Experience with next Resolutions to Subscribers via with FMX
generation cable OTT STB My FM App
Source: Company data
Note: Upgrade transactions refers to any type of upgrade transaction a Link Net subscriber enters into which results in his overall ARPU increasing 135 Highly attractive financial profile with potential
leverage capacity
Revenue by segment
(IDR in billions)
842
719 57
47
2,954 308
262
2,564 199
2,136 165 477
1,086 410
144 940
2Q 2016 2Q 2017
795
Broadband Cable TV Others
1,670
1,460 1,651
1,197
1,393 102
85
607
2014A 2015A 2016A
519
Broadband Cable TV Others
942
789
Source: Company information 1H 2016 1H 2017
Broadband Cable TV Others
145 Highly attractive financial profile with potential
leverage capacity
EBITDA Net Profit
(IDR in billions) (IDR in billions)
EBITDA margin (%) Net Profit margin (%)
59.8% 59.1% 28.5% 29.7%
976 490
834 397
1H 2016 1H 2017 1H 2016 1H 2017
Capex (IDR bn)(1) Net Cash with potential leverage capacity(2)
(IDR in billions)
154
452 408
531
377
1H 2016 1H 2017 Total Cash Total Debt Net Cash
Source: Company information
(1) Capex represents additions to property and equipment
(2) Total cash and debt position as of June 30, 2017. Total debt mainly comprises vendor financing
15Section 3 Key financial overview
Profit and loss summary
As at June 30 2Q ended June 30
(IDR bn) 1H 2016 1H 2017 2Q 2016 2Q 2017
Revenue 1,393.1 1,650.6 719.3 841.6
EBITDA 833.6 975.6 434.8 502.6
D&A (294.8 ) (314.1) (149.7) (158.6)
Operating Profit 538.8 661.5 285.1 344.0
Margin % 38.7% 40.1% 39.6% 40.9%
Finance Income 6.6 7.7 3.6 3.6
Finance Cost (17.5) (17.8) (10.4) (9.9)
Share in Loss of Associate - - - -
Profit Before Tax 527.9 651.4 278.3 337.7
Tax Expense (130.5) (161.2) (68.8) (83.6)
Net Profit 397.4 490.2 209.5 254.1
Margin % 28.5% 29.7% 29.1% 30.2%Balance sheet summary
As at Jun 30 As at Jun 30,
(IDR bn) 2016 2017
Current Assets
Cash and Cash Equivalents 453.9 531.0
Trade Receivables 291.3 419.5
Total Current Assets 782.4 1,006.7
Non-Current Assets
Property and Equipment - Net 3,663.5 3,916.9
Total Non-Current Assets 3,963.1 4,286.0
Total Assets 4,745.5 5,292.7
Net Cash of
IDR 376.9 bn
Current Liabilities
Payables 122.1 247.9
Current Maturities of Long-Term Debt &
38.7 42.4
Finance lease payable
Total Current Liabilities 566.6 890.5
Non-Current Liabilities
Long-Term Debt – Net of Current Maturities 143.1 111.8
Total Non-Curent Liabilities 245.4 235.2
Total Liabilities 812.0 1,125.8
Total Equity 3,933.5 4,166.9
Total Liabilities and Equity 4,745.5 5,292.7Section 4a Appendix
Introduction: Link Net’s deep and experienced management team
Irwan Djaja, Chief Executive Officer
§ Over 23 years of experience in auditing, consulting and corporate finance in various
industries
§ Holds two doctorate degress in Management and Law
§ Earned numerous accounting professional certifications
§ Has numerous leadership roles in leading successful companies under Lippo’s TMT
pillar to growth. Previously CFO and CEO First Media, CEO Berita Satu, CFO Link Net
Timotius Sulaiman, Chief Financial Officer Meena Adnani, Content Director
§ Over 21 years of experience in auditing, accounting in big five accounting firms, various § Over 23 years of experience in media, content and marketing and legal councel
leadership experience roles in multimedia and telco companies including Orange TV, § Previously EVP, Content Development and Business Affairs in First Media, Tbk
Nokia Siemens Network, and Mobile-8 Telecom
§ Holds a master degree in Management
§ Previously, Director and CFO in PT Internux (Bolt! 4G LTE)
Sutrisno Budidharma, Sales Director Desmond Poon, Chief Technology Officer & Product Director
§ Over 27 years of extensive experience in leading product sales teams in banking and § Over 22 years of experience in technology, media and networked
branch management in the banking sector § Previously VP/Head, Home Solutions and Architecture (SHINE) in StarHub Ltd
§ Previously Business Development and Direct Sales Director in PT Link Net, Tbk Singapore
Liryawati, Chief Marketing Officer Agus Setiono, New Roll Out (“NRO”) Director
§ Over 23 years of experience in area of marketing, sales and retail FMCG, major § Seasoned leader in operations, marketing in major foreign bank with more than 28
electronic company, and telco years of experience in technology, media and networks
§ Previously worked in Philip Morris International, Coca Cola, Samsung Electronics and § Previously VP of Cards Marketing in Citibank Indonesia
was a CMO for PT Internux (BOLT! 4G LTE)
Edward Sanusi, Operations Director Ferliana Suminto, Director of Corporate Resources
§ Over 21 years of experience in managing technology related business models for § Seasoned leader with more than 23 years of experience in finance, business
software development, ISP, Cable TV, Social Media and system integration development, information and communication technology, including an exposure in
§ Previously Director/CEO in PT Plexis Erakarsa Pirantiniaga (PlasMedia) UPH and PT. Matahari Putra Prima
§ Previously CFO in PT. Indonesia Media Televisi.
Complementary skills and expertise with strong domestic and international track record
Source: Company information
20Key corporate milestones
Jun 2011
• CVC invested in Link Net
• Link Net acquired certain
2014 - 2017
network and related assets
2007 – 2008 from First Media
Launch of
broadband services
and bundled
packages
2002
Sole provider to
IDX of remote
trading network
2000 2013
Launch of Internet 2014 - 2017
services • 2014: Fully marketed secondary
placement (Oct 2014)
• 2016: Offer 1Gbps high speed
1999 Internet connectivity
2011
Launch of Cable 2013 • 2017: Shareholding (As of Jun
TV services 30, 2017)
2010 • 1 million homes passed
– First Media: 34.8%
• Expanded network to
Greater Surabaya and – CVC: 34.4%
Bandung – Public: 30.8%
2010 • First to offer 100 Mbps to
Launch of HD
1999 2000 2002 2007 – 2008 the residential sector
Network ownership under First Media Network ownership under Link Net
2010 Jun 2011 2012 2013 2014 2015 2016 1H17
Number of homes
passed (‘000) 506 655 933 1,194 1,433 1,673 1,826 1,909
Source: Company information
21Link Net industry accolades and awards
Service Quality Indonesia WOW Brand Top Telco
Award 2017 2015 & 2017 2014-2016
• Diamond (First Rank) •Silver Champion • Top Fixed Internet
Pay TV Category • for Pay TV Category, Category
• by Service Excellence • 2015 & 2017 • From Itech
Magazine and • Gold Champion for Fixed ISP Magazine
• Carre-CCSL Category, 2015
• From Markplus Inc
Indonesia Most Innovative Customer Loyalty Award Net
Business Award 2017 Promoter Leader Award 2016
Advertising, Printing, and Media Category Pay TV & Broadband/Fixed ISP category
From Warta Ekonomi SWA magazine, 2011-2016
Brand Finance plc
Brand Rating PEFINDO25 Index Net Promoter Leader 2015 Frost & Sullivan
Top Brand Award
2015 (01/08/2015 to Award 2011-2014 Indonesia Excellent
2012-2014
31/01/2016) Awards
Word Of Mouth
Marketing Award Corporate Image
2015 Award 2012-2014 22Lippo’s Technology Media and Telecommunications
businesses are an end-to-end ecosystem
Cable
Wireless Broadband & 4G LTE
Document
Data Broadband Optic Network Network
Management
Center (Radio frequency)
Satellite
Operator
Technology
Telecom
System
(Connectivity)
Integrator (Infrastructure)
Technology In Building
Media & Telecom Services
VSAT
IT & BP
Outsourcing &
E-Payment
Media Cable, Digital
& Satellite TV
(Content)
E-Commerce
Content
Production
Cinema Print & Online
Source: Company information MediaLink Net could generate synergies with Lippo’s various
business segments
Successfully built SCALE and rooted LEADERSHIP in Indonesia High-growth sectors
Combined Revenue US$ 4.9 billion
Provider of world-class Partner of choice for
Largest private service Market leader in strategic Gateway to reach
products and services to reputable global
group in Indonesia sectors in Indonesia Indonesia consumers
Indonesian consumers institutions
FINANCIAL SERVICES PROPERTY MALLS RETAILS
TECHNOLOGY MEDIA
HOSPITALITY HEALTH CARE EDUCATION
TELCO
PROPERTY
Source: Company information
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