Although Indosat still posted a net loss (IDR 1.22 trillion/USD $90 million) in the first nine months of 2015, the loss narrowed 15.6 percent from the same period last year. Moreover, higher revenue and operating profit give rise to optimism. The company's revenue reached IDR 19.6 trillion (approx. USD $1.4 billion) in Q3-2015, up 10.5 percent from last year's IDR 17.7 trillion, primarily on good growth in data, voice calling and short text messaging. The company's corporate earnings are expected to continue to improve, implying that next year it will finally post a net profit again (after three straight years of posting net losses).

Halfway this year, Indosat completed modernizing its network and expanded its 3G network throughout the island of Java, Indonesia's most populous island, as well as 23 cities outside of Java. This expansion should translate into higher revenue and EBITDA next year. Indosat set aside IDR 7 trillion to upgrade its 4G network in 2016.

Meanwhile, Indosat has taken measures to ease electricity costs, debt and marketing costs. The company's US dollar-denominated debt is expected to decline further next year. Currently, US dollar debt accounts for about 30 percent of the company's total outstanding debt (at IDR 22.7 trillion as of the end of September 2015). However, this is estimated to decline to 20 percent next year through continued debt restructuring (in December 2015 the company plans to raise IDR 900 billion from a bond sale, proceeds of which will be used to pay back debt and to expand its network). In the first quarter of 2015, US dollar-denominated debt accounted for 55 percent of Indosat's total outstanding debt. Given the fragile rupiah (ahead of looming higher US interest rates) curtailing or hedging US dollar-denominated debt is important to safeguard liquidity.

Stock Quote Indosat - ISAT:

Indosat's customer base grew 14.8 million in the first nine months of 2015 to a total of 69 million users at the end of September.

Future Projection Indosat's Financial Highlights:

       2014     2015F     2016F     2017F     2018F
Operating Revenues    24,085    26,505    28,074    29,210    30,397
EBITDA    10,059    11,337    11,925    12,284    12,655
Net Income (loss)
   (1,987)    (1,590)     1,112     1,536     1,880
P/E Ratio (x)      25.6      18.0      14.5

in billion IDR (rupiah), unless stated otherwise
Source: Trimegah Securities

Stock Performance Indosat (ISAT), Telkom (TLKM) and XL Axiata (EXCL):*

* normalized stocks, 1 January 2015 = 100