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1 Indosat IR - New Template v23 1220.pptx PT Indosat Tbk Nine Months 2012 Results

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PT Indosat Tbk Nine Months 2012 Results

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2 Indosat Presentation 9M 2012

Agenda

Financial and Operational Results

Management Focus and Key Updates

Supplemental Information

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Financial and Operational Results

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4 Indosat Presentation 9M 2012

YoY Overview

Consolidated Revenue growth of 7.6% to IDR 16.51 trillion

EBITDA growth of 5.5% to IDR 7.65 trillion, EBITDA Margin declined -0.9 ppt to 46.3%

Profit Attributable to Owners of The Company increased to IDR 1.63 trillion

Free Cash Flow increased 111.1% to IDR 4.75 trillion

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QoQ Overview

Consolidated Revenue growth of 13.6% to IDR 6.13 trillion

EBITDA growth of 8.9% to IDR 2.77 trillion, EBITDA Margin declined 2.0 ppt to 45.1%

Profit Attributable to Owners of The Company increased to IDR 1.76 trillion

Free Cash Flow increased 210.2% to IDR 3.53 trillion

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6 Indosat Presentation 9M 2012

Solid financial results

15,349 Operating Revenue

EBITDA

EBITDA Margin

Profit Attribution to Owners of the Company

16,509

9M-11 9M-12 YoY

7.6%

7,246 7,647 5.5%

47.2% 46.3% -0.9ppt

1,047 1,628 55.5%

5,400 6,132

2Q-12 3Q-12 QoQ

13.6%

2,541 2,768 8.9%

47.1% 45.1% -2.0ppt

(149) 1,760 1,285.3%

In IDR billion

• Improvement in the top line during third quarter driving positive EBITDA growth

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7 Indosat Presentation 9M 2012

Strong annual growth in cellular and fixed data businesses

Operating Revenue Breakdown

in IDR billion

610 636739 672

699

730

2Q-12

+13.6% QoQ +15.5% YoY

3Q-12

6,132

5,124

278

5,400

4,447

254

1Q-12

4,977

4,080

225

4Q-11

5,213

4,160

314

3Q-11

5,307

4,357

315

2Q-11

5,168

4,259

299

Cellular

Fixed Data

Fixed Voice

9.4% / -11.7%

4.4% / 14.8%

15.2% / 17.6%

• Improvement in commercial execution driving strong growth in cellular business in 3Q-12

QoQ / YoY

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8 Indosat Presentation 9M 2012

Cellular revenue driven by strong voice and SMS revenue development

Voice

SMS

Data

VAS

-5.9%

YoY

70.2%

6.5%

-69.9%

15.5%

QoQ

31.5%

0.2%

0.3%

Successful IM3 Seru Anti Galau campaign and Promo 3 hari 3 malam

Successful SMS campaigns driving growth together with newly implemented SMS interconnection

Data value propositions currently focused on increasing number of data users and traffic

VAS revenue development impacted by uncertain market conditions

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9 Indosat Presentation 9M 2012

Strong growth in customer base

55.550.952.151.751.5

47.3

3Q-12

+7.8% YoY +8.9% QoQ

2Q-12 1Q-12 4Q-11 3Q-11 2Q-11

Number of cellular customers

in million

4.5

-1.2

0.40.2

4.3

1.5

3Q-12 2Q-11 2Q-12 1Q-12 4Q-11 3Q-11

Net customer additions

in million

• Successful campaigns and distribution improvements key to increased net adds • Improving churn trend

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ARPU improving on higher voice and SMS traffic

Voice traffic and MOU

18.115.013.814.114.213.4

+27.3% YoY

3Q-12

+20.4% QoQ

2Q-12 1Q-12 4Q-11 3Q-11 2Q-11

Voice Traffic

in billion minute in minute/subscriber

115

989190

9896

MOU

• Third quarter commercial programs resulted in positive voice traffic & revenue elasticity

ARPU and ARPM

30.826.925.125.229.729.7

2Q-12 1Q-12 4Q-11 3Q-11 2Q-11

+14.5% QoQ +3.7% YoY

3Q-12

ARPU

in thousand IDR (ARPU) in IDR (ARPM)

125130137152

166160

ARPM

in IDR/minute

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Improving SMS traffic trend; data usage picking up

Data usage

in TByte

4,032

3,4233,2402,842

2,5202,337

+17.8% QoQ +60.0% YoY

3Q-12 2Q-12 1Q-12 4Q-11 3Q-11 2Q-11

SMS delivered

in billion

7167

58636667

+8.0% YoY

3Q-12 2Q-12

+7.0% QoQ

1Q-12 4Q-11 3Q-11 2Q-11

• Good growth in SMS traffic in third quarter • Data usage showing good improvement, monetization focus short/medium term

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Operational expenses development

Cost of Service

Depreciation and Amortization

Personnel

Marketing

35.3%

2Q-11

31.0%

12.6%

5.2%

As percentage of revenue

General and Administration

Total Expenses

2.3%

86.3%

35.2%

3Q-11

31.5%

7.0%

5.9%

1.4%

81.0%

38.5%

4Q-11

33.3%

6.9%

4.9%

5.7%

89.2%

37.7%

1Q-12

34.2%

6.8%

4.9%

3.7%

87.3%

39.4%

2Q-12

32.0%

6.7%

4.7%

2.1%

84.9%

41.1%

3Q-12

38.1%

5.8%

5.6%

2.4%

93.0%

• Cost of service and deprecation impacted by SMS interconnect and change in network equipment useful life

• Operational efficiency program on track

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13 Indosat Presentation 9M 2012

Strong EBITDA growth

EBITDA and EBITDA margin

2,7682,5412,3382,2952,681

2,308

+8.9% QoQ +3.3% YoY

3Q-12 2Q-12 1Q-12 4Q-11 3Q-11 2Q-11

EBITDA

in IDR billion

45.1% 47.1% 47.0% 44.0%

50.5%

44.7%

EBITDA Margin

Normalized EBITDA bridge

in IDR billion Q3

YTD

• EBITDA margin pressured by SMS interconnect and additional lease fees and loss of revenue as a result of the tower sale and lease back

2,8792,768

Normalized SMS

Interconn.

5

Tower

Transaction

106

Reported

7,7717,647

Tower

Transaction

Normalized SMS

Interconn.

18 106

Reported

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Net profit* boosted by tower sale

Net profit

1,628

1,047

531

+55.5% YoY

+97.3% YoY

9M-12 9M-11 9M-10

in IDR billion

Normalized net profit bridge

in IDR billion Q3

YTD

• Normalized Net Profit strengthening on better financial performance and a more stable FX situation in Q3

485

1,760

Normalized Change in

Useful Life

505

Tower

Transaction

1,780

Reported

353

1,628

Normalized Change in

Useful Life

505

Tower

Transaction

1,780

Reported

* Net profit is Profit Attribution to Owners of the Company

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15 Indosat Presentation 9M 2012

Change in useful life assessment

Change in useful life of cellular network equipment from 10 years to 8 years

Reflect the shorter technology life cycle in the telecommunication industry

In line with Qtel Group policy and industry practice in Indonesia

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Net debt to EBITDA ratio improved on receipt of tower sale proceeds

Gross debt and gross debt/EBITDA Net debt and net debt/EBITDA

22,09921,92924,421

9M-11 9M-10 9M-12

+0.8% YoY

Gross Debt

in IDR billion

2.222.24

2.56

Gross Debt/EBITDA

17,75120,12018,236

9M-12 9M-10 9M-11

-11.8% YoY

Net Debt

1.79

2.061.91

Net Debt/EBITDA

in IDR billion

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17 Indosat Presentation 9M 2012

Strong free cash flow

Free cash flow

in IDR billion

3,527

1,137

83

-970

9061,070

3Q-12 2Q-12 1Q-12 4Q-11 3Q-11 2Q-11

Capex and Capex/Revenue

1,3341,731

1,403

2,298

1,2021,349

3Q-12 2Q-12 1Q-12 4Q-11 3Q-11 2Q-11

Capex

in IDR billion

22.3%

32.1% 28.2%

44.1%

22.7% 26.1%

Capex/Revenue

• Free cash flow boosted by tower sale proceeds of IDR2.8 trillion during Q3

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18 Indosat Presentation 9M 2012

Network roll-out progress

Number of BTS

+3% QoQ +15% YoY

3Q-12

21,642

17,211

4,431

2Q-12

21,039

16,898

4,141

1Q-12

20,063

16,291

3,772

4Q-11

19,253

15,816

3,437

3Q-11

18,776

15,577

3,199

2Q-11

3,061

15,347

18,408

2G 3G

Revenue per BTS

In IDR million

538586

405446

278331

H1 2012 H1 2011

XL

Indosat

Telkomsel

• Modernization of the network key focus based on regulatory approval of technology neutral 900 MHz spectrum (3G on 900MHz)

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Management Focus and Key updates

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20 Indosat Presentation 9M 2012

We are improving our commercial execution to accelerate the momentum

Continue prepaid portfolio re-design and pricing fine-tuning

Brand portfolio refresh

Introduce new data strategy focused on increased relevance in the market and better profitability

Sales and distribution revamp

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Near term management focus

Continue improving execution & keep good commercial momentum

Strengthen data growth & performance

Enhance customer experience; roll-out high performance data network (3G 900) Operational efficiency program

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22 Indosat Presentation 9M 2012

2012 Guidance maintained

FY 2011 Actual FY 2012 Guidance

Consolidated Revenue Growth 3.9% In line with Industry

EBITDA Margin 46.3% 46.0% - 48.0%

Cash CAPEX IDR 6.1 trillion IDR 6.0 trillion +/- 10%

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23 Indosat Presentation 9M 2012

Thank You

Any further questions?

Upcoming events FY-2012 Results in 1Q 2013

Indosat Investor Relations Jl. Medan Merdeka Barat No. 21 Jakarta - 10110 Tel: +62 21 30442615 [email protected]

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24 Indosat Presentation 9M 2012

Disclaimer

• PT Indosat Tbk cautions investors that certain statements contained in this document state management's intentions, hopes, beliefs, expectations, or predictions of the future are forward-looking statements

• Management wishes to caution the reader that forward-looking statements are not historical facts and are only estimates or predictions. Actual results may differ materially from those projected as a result of risks and uncertainties including, but not limited to:

• Our ability to manage domestic and international growth and maintain a high level of customer service

• Future sales growth

• Market acceptance of our product and service offerings

• Our ability to secure adequate financing or equity capital to fund our operations

• Network expansion

• Performance of our network and equipment

• Our ability to enter into strategic alliances or transactions

• Cooperation of incumbent local exchange carriers in provisioning lines and interconnecting our equipment

• Regulatory approval processes

• Changes in technology

• Price competition

• Other market conditions and associated risks

• The company undertakes no obligation to update publicly any forward-looking statements, whether as a result of future events, new information, or otherwise

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Supplemental Information

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Credit ratings maintained

On 30 April 2012, FitchRatings upgraded Indonesia-based Indosat Long-Term Foreign and Local-Currency Issuer Default Ratings (IDR) and Foreign Currency senior unsecured rating to ‘BBB’ from ‘BBB-‘. The Outlook is Stable.

On 3 July 2012, Standard and Poor’s (“S&P”) has upgraded Long-Term Credit Rating and the Indosat’s Guaranteed Notes Rating to ‘BB+’ from ‘BB‘. S&P also removed all the ratings from their CreditWatch. The Outlook is Stable to reflect S&P expectation that Indosat's operating performance will be stable. The agency also raised their long-term ASEAN regional rating scale on Indosat to ‘axBBB+’ from ‘axBBB-’.

On 12 June 2012, Pefindo assigned Indosat, all its IDR Bond and Sukuk Ijarah rating ‘idAA+’, ‘idAA+’, and ‘idAA+(sy)‘ respectively. The Outlook is stable. The ratings reflect the strong parent support, Indosat’s stable market position, and its stable operating performance. However, the ratings are offset by Indosat aggressive capital structure and intense competition within the telecommunication industry.

On 8 February 2012, Moody’s affirmed Indosat Ba1 ratings and Stable outlook, follows

announcement that Indosat has agreed to sell 2,500 of its communications towers to PT Tower

Bersama Infrastructure Tbk.

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Impact on Q3 financials of tower sale and lease back transaction

Operating expense

Gain on sale of towers

Tax and others

Income Statement

Balance Sheet

Assets

Liabilities

Equity

Net profit

-73

2,610

2,083

-195

1,780

1,780

830

Net impact as of Sep 2012 in IDR billion

Revenue -35

• Accounting treatment for tower sale and lease back transaction is predominantly classified as operating lease

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We are within our covenants

Net debt to equity

Gross debt to equity

Net debt to EBITDA

Gross debt to EBITDA

0.87

9M-12

1.08

1.79

2.22

Interest coverage 5.86

< 2.5x

> 3.0x

< 3.5x

0.85

1.14

1.91

2.56

4.59

9M-10

1.05

1.15

2.06

2.24

5.48

9M-11

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Debt maturity profile

Debt maturity profile

In IDR trillion

1.33

3.06

0.77 1.37 1.50 1.500.47 0.320.21

3.98

2.65

2012

0.68

6.32

6.32

2019

1.69

0.19

2018

0.19

0.19

2017

1.75

0.38

2013 2020 2022

1.50

2016

1.36

0.59

2015

0.98

0.66

2014

3.72

0.66

IDR

USD in IDR

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Spectrum overview for top 3 cellular operators

10.0

900 Mhz

7.5

7.5

Indosat

Telkomsel

XL Axiata

20.0

1800 Mhz

22.5

7.5

10.0

2100 Mhz

10.0

10.0

15.0

2300 Mhz

15.0

0.0

in Mhz