Smartfren Telecom

PT Smartfren Telecom Tbk is an Indonesian telecommunication services provider. The company is an internet service provider and CDMA cellular operator. After acquiring Smart Telecom (Smartel) in 2011, the company changed its name from Mobile-8 Telecom to Smartfren Telecom.

At the end of 2012, Smartfren Telecom had service coverage on the islands of Java and Bali, parts of North and South Sumatra, Sulawesi and Kalimantan. The company had approximately 11 million customers.

Smartfren Telecom is controlled by the Sinar Mas Group conglomerate.

Profile

Industry Sector Infrastructure, Utilities & Transportation
Industry Sub Sector Telecommunication
Established 16 December 2002
Listed 29 November 2006
Listed Company Code FREN
Listed Shares 17,795,870,091
Dividend No
Major Shareholders (>5%) Wahana Inti Nusantara (32.81%)
Global Nusa Data (24.81%)
Bali Media Telekomunikasi (24.10%)
Key Subsidiaries Smart Telecom
Mobile 8 Telecom Finance Company

In January 2012, Smartfren conducted a reverse stock split with a 20:1 ratio

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Business Summary

Fitch Ratings warned in late-2012 that Smartfren Telecom is at the risk of default. In October 2013, the credit ratings assessor reaffirmed this warning when it stated that “Smartfren does not currently [October 2013] have funds in place to meet its debt, interest and lease obligations in 2013.” Smartfren's EBITDA has been negative since 2008.


Smartfren Telecom's Financial Highlights:

       2010      2011      2012
Net Revenue     376.5     954.3    1,649.2
EBITDA (loss)
   (510.3)   (1,170.6)    (542.7)
Net Income (loss)
  (1,401.8)   (2,399.9)   (1,562.8)
Income before Tax (loss)
  (1,363.8)   (2,649.5)   (1,811.6)
Total Assets    4,483.6   12,296.6   14,339.8
Total Liabilities    4,603.1    9,027.6    9,355.4
Earnings per Share¹² (loss)
    (38,9)    (317,7)     (28,7)

in billion IDR rupiah unless otherwise stated
¹ in IDR rupiah
² numbers adjusted to 20:1 reverse stock split
Source: Smartfren Telecom, Annual Report 2012


Future Outlook of the Indonesian Telecommunication Sector

Indonesia is unique in the sense that mobile phones are the primary tool for telecommunication. Not only with regard to telephony but also in terms of internet usage. Mobile phones are used as main tool device to access the internet by Indonesians. Mobile phone penetration has surged from 20 percent in 2005 to - currently - over 80 percent (although about 30 percent of Indonesian subscribers hold more than one SIM card). This indicates that the mobile phone subscription market is heading towards saturation; growth in voice and SMS revenue is stagnating. Internet penetration, however, is relatively low, thus having ample room for growth in the near and middle term future. High-speed broadband services are now the new focus of telecommunication companies. However, profit from call services remains to be the primary source of income for Indonesian mobile operators.

Indonesia is also unique in the sense that the country is predominantly a voice market due to low voice tariffs set by operators. Over 60 percent of total revenue in the mobile service sector is derived from voice services, while the remainder comes from non-voice or data services. The growing popularity of smartphones, however, contributes heavily to the growing data revenues. According to data from Frost & Sullivan, a consulting firm, smartphone penetration in Indonesia will exceed 50 percent in 2015 from only nine percent in 2012. The firm believes that the Indonesian market is in the early to middle stage of data usage increase.

Due to the promising perspectives of the mobile phone sector in the last decade, a number of companies are in fierce competition for market shares. Out a total of 11 telecommunication operators, five companies control a combined market share of around 90 percent. These five are: Telekomunikasi Indonesia - and its subsidiary Telekomunikasi Seluler (Telkomsel) -, Indosat, XL Axiata and Bakrie Telecom. Competition has brought tariffs for mobile phone services down significantly, while a new group of subscribers (from the poorer segments of society) has limited spending capacity. Instead, companies now focus on data services (broadband services) and value added service to attract subscribers, both of which are estimated to grow by 35 percent up to 2014. In 2011, there were around 70 million mobile phone data services users. This is estimated to increase to 160 million by 2015.

Contact Details

Jalan H. Agus Salim No. 45 Menteng - Sabang
Jakarta - 10340
Phone: +62 21 319 22255
Fax: +62 21 315 6853
Email: corpsec.division@smartfren.com
www.smartfren.com

Location