An Indosat officer demonstrates the company's smart city modules in an event at BSD City, Tangerang, in 2018. (B1 Photo/Mohammad Defrizal)

Indosat Books $113m Profit After Sales of Towers


FEBRUARY 24, 2020

Jakarta. Indosat, Indonesia's third-largest telecom company by market capitalization, booked a third annual profit in the past seven years thanks to windfalls last year from the sales of its telecommunication towers, a jump in its cellular business and across-the-board cost-cutting efforts.

Indosat, controlled by Doha-based multinational telecom company Ooredoo, reported on Monday a 2019 net income of Rp 1.56 trillion ($113 million), recovering from the Rp 2.4 trillion loss incurred a year earlier.

This was just the third year since 2013, and the fifth in the past decade, that the company managed to turn a profit amid intense competition from rivals Telekomunikasi Seluler (Telkomsel) and XL Axiata in Indonesia's booming mobile telecommunication market. 

Indosat's financial performance last year was propped up by the sale of 2,100 telecommunication towers to Dayamitra Telekomunikasi (Mitratel), a subsidiary of Indonesia's largest telecommunication company Telekomunikasi Indonesia, and another of 1,000 towers to Profesional Telekomunikasi Indonesia (Protelindo), the operating unit of telecommunication tower operator Sarana Menara Nusantara, for a total of Rp 6.39 trillion.   

Indosat said Mitratel and Protelindo agreed to lease back the towers to the company for the next 10 years. The telecom company said it managed to book Rp 2.56 trillion profit from the deals. 

Indosat's operating income was up 13 percent in 2019 to Rp 26.1 trillion from Rp 23.1 trillion in 2018. 

"The increase in revenues largely came from our cellular business, which earned Rp 20.67 trillion in 2019, up 14.7 percent from Rp 18.02 trillion in 2018," Indosat said in a statement on Monday. 

Indosat's multimedia, data communication and internet revenues were also up 9.1 percent to Rp 4.78 trillion. But, revenue from its telecommunication business line shrank 9.2 percent to Rp 662 billion.

Indosat was also able to reduce its income burden to Rp 21.9 trillion in 2019, down 7.9 percent compared to Rp 23.6 trillion in 2018. Its income expense fell owing to the decline in general and administrative costs, which were 26 percent lower in 2019 at Rp 839 billion compared to Rp 1.12 trillion in 2018. 

The company's total asset value reached Rp 62.81 trillion in 2019, up 18 percent from 53.13 trillion in 2018, comprising current assets of Rp 12.4 trillion and non-current assets of Rp 50.4 trillion.

Indosat shares closed 1.4 percent lower at the Indonesia Stock Exchange on Monday to Rp 2,170 apiece, or 7.6 times its earnings.