Indosat Ooredoo’s financials weakened significantly in 2018 as it suffered sharp declines in subscribers and revenue, and was forced to boost capex to improve its limited 4G coverage after years of underinvestment, Moody’s reported.
The operator’s 2018 revenue fell 23 per cent year-on-year to IDR23.1 trillion ($1.64 billion), due mainly to a 26 per cent decline in its mobile business, which was hit by continued recuctions in voice and SMS revenue.
Following a government-mandated prepaid SIM registration effort, its subscriber base fell 47 per cent to 58 million at end-2018 from 110 million a year earlier, while ARPU dropped 8 per cent to IDR18,700 over the same period.
Its market share by fell from 25 per cent at end-2017 to 16.5 per cent, data from GSMA Intelligence showed. Number three XL Axiata, with nearly 55 million mobile connections, had a 15.6 per cent share at end-2018.
After a leadership change in October 2018, with Chris Kanter replacing Joy Wahjudi as CEO, Indosat significantly increased its capex budget for 2019 to 2021 to IDR30 trillion to expand 4G coverage outside the island of Java.
Nidhi Dhruv, a Moody’s senior analyst, said the accelerated capex investment is key to Indosat’s strategy to remain competitive.
Moody’s downgraded its outlook for the operator to negative from stable.
“The negative outlook reflects a weakening in Indosat’s financial metrics driven by the company’s plans for accelerated 4G capex amid an intensely competitive operating environment for the Indonesian mobile sector,” Dhruv said.
She noted the operator is exploring alternative funding options, including the sale of its towers and monetising its stakes in some subsidiaries.
Moody’s expects moderate growth in the Indonesian mobile market following tariff increases by incumbents since Q3 2018.
“Although the Indonesian mobile sector remains intensely competitive, there has been some uptick in quarter-on-quarter ARPUs and revenue growth,” Dhruv said.Subscribe to our daily newsletter Back