Frost & Sullivan Indonesia Telecom Outlook 2012 Indonesia Go Online

“We accelerate Growth” “Indonesia – Go Online”FEBRUARY 15, 2012“INDONESIA TELECOM OUTLOOK”

“From Voice to Data”

The Journey… to “Everything Online” Internet development in Indonesia is quite recent – spurred by social networking “Mobile Commerce” “Social Media” To offer goods… To share… To find merchandise… To express opinions… To advertise… To be a community member… To do payments…“Need to be connected” To contact somebody… To make appointment… To find information…. 2000-2007 2008-2011 2011-Onward

What we had in 2011… We are experiencing an era where “voice” market is maturing & mobile internet introduction to the market Subscribers penetration SIM vs. Unique Subs. (%) • In 2010, the wireless SIM-based350,000 124% 129% penetration rate was 97.3% 120% 113%300,000 106% 97% 77% • Average Indonesian held 1.68 SIM 74% 71%250,000 67% cards, resulting in a unique 63%200,000 58% subscriber penetration rate of only ~60%150,000100,000 • Service providers bundling end user 50,000 devices with subscription plans with lowering subscription fee - 2010 2011E 2012E 2013E 2014E 2015E • Trending down internet-able device price such as dongle, netbook, Number of SIM circulation tablets SIM Penetration Unique subs. Penetration Source: Company website, Bank reports, Frost & Sullivan analysis

Where we are now ….Critical mass is achieved with slowing-down growth rate Mobile Subscription Penetration Rate - SIM (%) 129% 153.8 106% 111.9 Mobile Subscriber Growth Rate (%) 12 Base Year (2011) 2015E Projections (2016) 4 Base Year (2011) Projections (2016) Source: Company website, Bank reports, Frost & Sullivan analysis

What happened on the revenue side…“Voice” revenue growth is tapering as market is maturing & operatorsneed to introduce new source of revenue growth Cellular Industry Market Revenue120,000 (IDR Bn) • As overall industry is maturing – total revenue growth is projected in100,000 range of 4% - 6% on the next 5 years 1.10 80,000 • Key factors impacting revenue & 60,000 1.06 investment: 1.05 1.05 1.04 • Increase in CAPEX needs in 40,000 line with increase in data services 20,000 • Data revenue monetization that is still in “learning curve” 0 • Operator anticipation for LTE 2008A 2009A 2010A 2011E 2012E 2013E 2014E network deployment Revenue growth Source: Company website, Bank reports, Frost & Sullivan analysis

…Still on the revenue side…“Non-voice” revenue is taking up as operators introducing data-centricservices to the market Voice vs. Non-voice Revenue Composition (%) 33% 38% 40% Data Service Revenue Composition (%) 67% 62% 60% 20% 18% 22% 2009 2010 2011 Voice Non-voice 80% 82% 78% 2009 2010 2011 SMS Non-SMS Source: Company website, Bank reports, Frost & Sullivan analysis

What happened on the network side… Majority of Operators’ BTS is 2G hence significant CAPEX will be needed within the next 3-5 years to improve 3G coverage BTS Composition (Three major operators)100,000 • Recent data surging mainly lead by 80,000 15% - 20% 3G enabled handset and expected to increase to 25% - 30% 60,000 3G in 2012 40,000 2G 20,000 - 2009 2010 Q1-11 Q2-11 Q3-11 Handset Market Composition (%) 2009 2010 Q1-11 Q2-11 Q3-11 2G 85% 80% 82% 82% 81% 3G 12% 17% 18% 18% 19% 9% 13% 18% 23% 30% 36% • Lack of 3G coverage has impact to 64% 64% 63% 3G+ Operators’ CAPEX spending going 62% 2.5G 59% 56% Non-GPRS forward in improving its data coverage & capacity 27% 23% 19% 15% 12% 9% 2009 2010 2011 2012F 2013F 2014F Source: Company website, Bank reports, Frost & Sullivan analysis

If we see Indonesia in the Region… Double digit growth a thing of the pastNear saturating market for penetration rate coupled with reducing ARPU is limiting the revenuegrowth Mobile Revenue & Penetration Rate APAC, 2010 16.0% India 14.0% 12.0% Mobile Revenue CAGR (2009-2015) 10.0% Bangladesh (2009 Cambodia 8.0% Indonesia 6.0% China Pakistan Vietnam Philippines Malaysia Hong Kong 4.0% Sri Lanka Thailand Singapore South Korea Australia 2.0% New Zealand Japan Taiwan 0.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 140.0% 160.0% 180.0% -2.0% 2010 Mobile Penetration Rate (%) Source: Company website, Bank reports, Frost & Sullivan analysis 9

Indonesia amongst others in the Region While lags behind other countries, coverage expansion & speed improvement in major cities are increasingBroadband Penetration (fixed & wireless Mobile Data Average & Peak dongles as % of pop) Broadband Speed (Kbps) Avg Kbps Peak Kbps 7,792 37.9% 7,139 2010 4,990 13.3% 1,086 1,071 1.9% 518 Singapore Malaysia Indonesia Singapore Malaysia Indonesia While fixed and mobile internet penetration is still relatively low, we are now can find many hotspots in metropolitan areas – most of them are free for use Source: Frost & Sullivan, ITU, Internetstats, AMDA

“Everything” is online… are we ready? As of 2010, broadband penetration is approx. 2% but is expected to reach around ~60% by 2016 driven mainly by “small-screen” mobile Internet Penetration (Mn) 160 145.2Millions 140 2010 2015 120 100 80 29.7% 60 3.6% 6.3% 39.6 40 21.8 CAGR: 2.8% 22.9 16.9 18.3 20 Data connections (Mn) 3.7 4.2 0 Singapore Malaysia Indonesia Thailand 167 CAGR 21.9% 62 2011 2016 Source: Company website, Bank reports, Frost & Sullivan analysis

How big is the market… Indonesia has a very small online market revenue but potential for growth is there…Online Commerce Market Size, 2010 (USD Mn) Mobile Commerce Revenue Projection (USD Bn) 1.03 Ads 67% $8, 39% CAGRGaming$11, 54% 0.1 Video/music $2, 7% 2010 2011 2012 2013 2014 2015 • Indonesia potentially reach 10 times its current m-commerce industry value by 2015 with a proper ecosystem and infrastructure, technology, & regulatory framework Source: Company website, Bank reports, Frost & Sullivan analysis

How big is the market… E-enablement of Indonesia starting now Market Size (US$ mn) Market Drivers2,000 1,808 E-commerce Rakuten’s entry into Indonesia through JV1,800 (transaction Other international players scouting for JVs – revenues) Korean and US based1,600 Indonesia online shopping % half of 650 Thailand1,4001,200 E-Commerce Digital Many app developers looking at Indonesia as Content a base for global development Ecosystem enablers Huge interest from local entrepreneurs1,000 378 Difficulty in monetization Digital Content 800 Ecosystem Payment mechanisms still a concern in 600 enablers Indonesia Mobile payments – issues in regulation 400 349 780 120 200 57 172 0 2010 2015 Source: Company website, Bank reports, Frost & Sullivan analysis

Some key takeaway… Demand is As the market has shown, the demand for “everything online” is there..are there – from a simple browsing to mobile payment & transaction. we ready? The next question: Are we ready? In terms of basic infrastructure, market education, human competency, and market readiness Who drives “CAPEX” is key function in delivering good-experience on data the centric services i.e. cross platform, cross devices, cross “CAPEX”? geographical areas The next question: Who drives the budget? As almost all of Indonesian operators are in majority owned by foreign investment and budget allocation is certainly governed by interest of the major shareholders

See you somewhere…online

Frost & Sullivan Indonesia Telecom Outlook 2012 Indonesia Go Online

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