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 3 (2015 definition of SES classification) (For Greater Jakarta, Greater Surabaya and Bandung) (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 • 1 5% Bandung Addressable households (a) : 318k • 1 18% Homes passed: ~97k • Greater Surabaya Estimated coverage ratio: ~31% • Addressable households (a) : 909k • Cable length: ~985km • Homes passed: ~349k 1 • 77% Greater Jakarta Estimated coverage ratio: ~37% • Cable length: ~3,120km • Addressable households (a) : 3,644k • Homes passed: ~1.46m • Estimated coverage ratio: ~40% • Bali Cable length: ~20,756km • Cable length: ~100km • Focus on hotels • 1 City homes passed / Total homes passed Source: Company data as of 1H 2017 (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) 1 2 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 3 1 future data growth Superior and innovative product offerings cementing premium ARPU position 1 4 and driving IOT (b) adoption 1 5 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
Indonesia – A large & exciting TMT market on the 1 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$) % of national population % of national GDP 8,248 11,134 11,790 12,500 13,230 13,920 14,740 Urban Urban 53% 71% 74% Population (m) 86% +18% 268 +12% 265 263 261 258 256 47% 243 Rural Rural 29% 26% 14% 2010 2015 2016 2017 2018 2019 2020 2010 2030 2010 2030 Explosive growth in Indonesia’s Broadband and Pay TV Underpenetrated Broadband and Pay TV segments (c) markets (c) Broadband penetration (2016) Pay TV penetration (2016) Broadband Pay TV (Subscription revenues (d) (US$m)) ADSL NGBB DTH IPTV Cable DTT (%) 55% 36% 778 1,526 539 742 441 227 (No of subscribers, ‘000) ~5.0x ~4.0x 9,270 11% 1% 9% 0.4% 2% 5,750 5,674 7% 4,372 2% 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 7 Asia Pacific includes Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Pakistan, Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam (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
Targeted expansion strategy into high GDP and population areas 1 focusing on the most lucrative and fastest growing demographics Operating in provinces with high GDP Operating in cities with high population Total % of 31.7 7.1 2.5 255 17% 15% 13% 3% population national (millions) GDP 150 Per km 2 in 2015 2015 GDP (US$ bn) 79,432 127 115 18,378 30 14,745 134 Jakarta East Java West Java Rest of (c) (a) (a) (b) Greater… Greater… Bandung Indonesia Indonesia Households in Link Net's operating cities (d,e) A Fast growing AB segment 9.2% A 27.9% B 17.8% C 23.2% AB segment less price sensitive and very upgradable B 35.0% 49.8% Unsatisfied demand for quality broadband and premium C D 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 Link Net target markets (a) Key cities in East Java include Gresik, Bangkalan, Mojokerto, Surabaya, Sidoarjo, Lamongan and West Java includes Bandung (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 8 (d) Cities include Greater Jakarta, Greater Surabaya and Bandung (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)
The preeminent NGBB provider in Indonesia, with proven 2 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. 90% 90% 75% 52% of total BB subs 1Gbps 9,270 Telkom 3 100 2016-20 P0 Mbps Mbps CAGR : 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 Homes Passed (c) Others (c) 414 Link Net 1.9m 1,982 240k P0 2.8% 4,800 17m 193 ADSL & FTTH 4,300 3,400 Subs. Others (c) 635k 547k market 1,789 share (b) 3 Key Metropolitan Cities 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 subscriber
Established presence provides foundation for premium 2 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 29% 34% 37% 39% ratio (1) 1,909 1,826 ('000) 1,673 1,433 28.5% 28.7% 27.3% 27.4% 2014 2015 2016 1H 2017 2014A 2015A 2016A 1H 2017A Link Net broadband penetration Growing RGUs with stable churn Maintaining premium ARPU vs peers (2) (IDR '000) ('000) 2.3% 2.3% 419 415 407 2.2% 2.2% 402 Premium 1,075 1,024 ARPU 344 890 341 vs peers 755 528 310 503 433 363 547 521 457 392 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 10
Solid technology ecosystem with state of the art network 3 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 - Innovations to reach less densed areas Source: Company information (a) Limited exceptions for certain last mile owned by property developers (b) Source: Media Partners Asia 11
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