DISCUSSION NOTE : PT Link Net Tbk

1. Background
PT Link Net is a subsidiary of PT First Media Tbk (KBLV) network provider Local
fied!switc"ed and packet!based #nternet service$ %o&pany in establis"ed since
'(() under t"e na&e PT *erulin+ #nda" Per&ai in t"e field of trade in +oods and
services, t"e co&pany turned to t"e #T business activities w"ic" is a broadband
internet service provider wit" t"e na&es MyNet and -i+italnet since ./// and
t"e co&pany be+an to +o into business operators pay television since ./''$
0evenue fro& t"e co&pany1s current t"ree products are broadband internet and
network (Fastnet), cable television (2o&e%able), and corporate -ata
co&&unication (-ataco&&)$ T"e lar+est revenue contribution in ./'3 are fro&
t"e Fastnet approi&ately 45$36, 33$.6 2o&e%able, and ot"ers ($)6$ T"e
%o&pany recorded Fastnet 333,/// retail custo&ers, 3.(,/// 2o&e%able
custo&ers, '')/ corporate custo&ers and ',5// custo&ers -ata
co&&unication$ %urrently, service covera+e is still in 3 cities7 8akarta, *urabaya
and Bandun+$ T"e co&pany is also workin+ on satellite pay!TV base known
na&ed Bi+ TV$
2. Sharehoder!
#n connection wit" t"e *"are"older9s issuance of bonds w"ic" is PT First Media
Tbk (KBLV) on 8une .5, ./'' a&ounted to 0p5..$3' billion usin+ KBLV owned
s"are"oldin+ in PT Link Net as collateral$ :sia Link -ewa Pte Ltd as t"e "older of
t"e bonds "ave t"e option to convert debt convertible into e;uity s"ares of t"e
%o&pany as &uc" as <4=,.<=,='< s"ares$ :sia Link -ewa Pte Ltd will
i&ple&ent t"e ri+"t option at t"e date of t"e #P> of t"e %o&pany on t"e *tock
?c"an+e so t"at owners"ip rose to <(6 w"ile t"e owners"ip of PT First Media
Tbk (KBLV) dropped to <'6$
". Indone!ia Internet #ro$th
#ndonesian #nternet users reac"ed 5'$'( &illion in ./'3, up by about '3 percent
fro& )3 &illion users in t"e previous year$ #nternet penetration "as continued to
+row, currently reac"in+ .= percent of t"e total population of around .<= &illion
people$ t"e nu&ber of #nternet users in #ndonesia is epected to reac" '/5
&illion in ./'< and to increase to '<( &illion users in ./'4$
@rowt" in #ndonesia9s internet sector is acceleratin+, wit" consensus forecasts
predictin+ t"at t"e nu&ber of internet users will +row fro& 44 &illion in ./'. to
'.4 &illion in ./'4$ *o fro& a user base t"at is already lar+er t"an Korea9s, t"e
+rowt" rate in #ndonesia will eceed 3/6 per annu& for t"e net five years$
T"ree key funda&entals underpin t"e co&in+ sustained period of +rowt"7
?cono&ic +rowt" is robust and consistent at around )6 per year, and
personal spendin+ levels are currently risin+ by over '/6 per year$
T"e &iddle class in #ndonesia is +rowin+ rapidly, brin+in+ wit" it stron+
de&and for tec"nolo+y devices and online services$
#ntense co&petition between t"e &obile co&panies is pus"in+ prices
down and also raisin+ consu&er awareness t"rou+" &ass &arket
advertisin+ ca&pai+ns$
*upportin+ t"e ar+u&ent t"at #ndonesia9s potential is currently bein+ under!
called are t"e "i+"er internet penetration rates in ot"er countries around t"e
re+ion$ *o w"ile #ndonesia currently stands at .<6, t"e P"ilippines is already at
336 and Vietna& at 4)6$ ?ven if #ndonesia reac"es t"e '4/ &illion internet
users of t"e upside forecasts, t"at would still be below Vietna&9s penetration
rate today$
Not only is t"e user base +rowin+ rapidly, t"e profile of t"e typical internet user
is c"an+in+ too$ Ait"in t"e user base, a bi+ s"ift in t"e a+e of users is currently
underway$ Traditionally t"e internet base in #ndonesia "as been do&inated by
t"e under!.4s, leadin+ to &usic, entertain&ent and social &edia bein+ t"e &ost
popular uses$
*tartin+ in ./'' t"e .4!4/ a+e +roup be+in to play catc"!up, and "as +rown so
;uickly over t"e past two years t"at t"e user base is now relatively evenly
spread across all a+e +roups$ T"is "as led to t"e rapid epansion of &ore
lucrative online services suc" as e!co&&erce, travel services and online
bankin+$
#ndonesia "as a se+&ent t"an &any overlook, and it "appens to include &ore
t"an '// &illion users7 internet access via &id!level &obile p"ones$ .@ and
.$4@ &obile p"ones are still a "u+e c"unk of t"e &arket in #ndonesia (around
546 of all "andsets), and &any users in #ndonesia use a feature p"one browser
to access t"e internet, &essa+in+, infor&ation and entertain&ent services$ *o
t"e internet sector is about &uc" &ore t"an deliverin+ di+ital services via
broadband and 3@ to P%s, laptops, s&artp"ones and tablets$ #t9s also about
&uc" &ore t"an tar+etin+ e!co&&erce services at credit card "olders$
*o alt"ou+" s&art p"ones "ave ;uickly +rown to '46 of t"e &obile &arket, it is
i&portant to reco+nise t"at t"ere are still over '4/ &illion feature p"ones in use$
Many of t"ese users are part of t"e &iddle class consu&er &arket, and t"is
se+&ent represents bot" a lar+e &arket for di+ital services and a very
si+nificant advertisin+ &arket$
%. Indone!ia Broadband and S&art'hone (arket
:fter a period of uncertainty, t"e #ndonesian teleco& sector "as settled into
w"at looks like a "ealt"y develop&ent p"ase$ T"is country of around .<4 &illion
people presents a "u+e potential &arketB "owever, it faces so&e particularly bi+
c"allen+es t"at need to be confronted if it is to successfully continue t"e buildin+
of t"e teleco&&unications infrastructure re;uired to support a lar+e population
spread over w"at is a uni;uely co&ple +eo+rap"y$ Two of t"e &ore si+nificant
c"allen+es are t"e crowded operator &arket, especially t"e &obile se+&ent, and
t"e slow rate of i&ple&entin+ re+ulatory decisions$ :t t"e sa&e ti&e, on a
broader front, t"ere is no avoidin+ t"e fact t"at #ndonesia &ust also continue to
deal wit" a ran+e of social, political and econo&ic issues t"at "ave proved
proble&atic over t"e years$
T"e e&bracin+ of fied!wireless tec"nolo+y, after an early stu&blin+ start to
buildin+ t"e country9s fied!line network, provided a fres" basis for epansion$
Aireless "as now beco&e t"e do&inant co&ponent wit"in t"e fied &arket
se+&entB by ./'. wireless services &ade up 546 of t"e total fied!line
subscriber base$ T"e introduction of fied wireless "as also seen a &aCor upturn
in fied subscriber nu&bers wit" teledensity reac"in+ ')6 early in ./'3$
Aireless tec"nolo+y "as not only boosted t"e +rowt" rate in t"e last few yearsB
it "as provided &uc"!needed basic telep"one services to previously unserved
co&&unities$ #n a s"ort space of five years t"is tec"nolo+y platfor& "ad
transfor&ed t"e fied!line &arket in a positive fas"ion$
T"e #ndonesian teleco&s sector is first and fore&ost a &obile &arket, and t"e
.5=& &obile subscribers co&pletely overs"adow t"e (& fied lines and '.&
fied!wireless subscribers$ *o any discussion of teleco&s in #ndonesia inevitably
"as a pri&ary focus on &obile$
:t a "eadline level, t"e #ndonesian &obile &arket is c"aracterised by7
Prepaid ((=6 of subscribers are prepaid users)
: "u+e data &arket (''4& data users in ./'.)
0isin+ data revenues (already over 3/6 of t"e avera+e user9s spend)
2i+" volu&es of &essa+in+ and &obile ads
@rowt" was rapid t"rou+"out t"e .///s, wit" t"e subscriber base +rowin+ at an
avera+e of 356 per year fro& .//4$ T"e &arket "it its saturation point in ./'/
as penetration "it '//6, and as a result +rowt" slowed down to '.6 in ./''
and ./'.$
A"ile underlyin+ +rowt" is forecast to continue in &obile ('3/6 penetration D
33/& &obile subscribers D is t"e consensus forecast for ./'4), t"e &ain focus
of t"e &obile operators is now to drive t"e +rowt" of data subscribers and t"e
associated data revenues$
2avin+ s"own you t"e bi+ nu&bers, we s"ould also add a caveat7 one of t"e
unusual c"aracteristics of #ndonesia9s &obile &arket is t"e ubi;uity of &ultiple
*#Ms$ Many subscribers "old two or t"ree active *#M cards D and often own two
or t"ree p"ones$ People do t"is in order to find t"e best si+nal ;uality (for "i+"er
end subscribers) or t"e c"eapest prices (for lower end subscribers)$ *o t"e
nu&ber of uni;ue users in #ndonesia is actually around ')4&, w"ic" &eans on
avera+e eac" user "olds '$5 active *#M cards$
T"e 3@ services &arket is already siEeable, and was ranked t"e '/t" lar+est in
t"e world in ./''$ T"e &obile operators are pus"in+ data services very stron+ly,
backed up wit" "u+e advertisin+ bud+ets, and "elped alon+ by fallin+ device and
subscription prices$ :ll t"e bi+ t"ree operators D Telko&sel, #ndosat and FL D
"ave stated t"at sti&ulatin+ +rowt" in data services is now t"eir top &arket
priority$
:lt"ou+" s&artp"ones are +rowin+ rapidly, feature p"ones will still do&inate t"e
installed base for t"e co&in+ five years$ T"ere are currently '=/& active feature
p"ones in #ndonesia, and by ./'4 t"ere will still be '</& feature p"one users$
T"e nu&ber of fied connections in #ndonesia "as slowly risen fro& around ($5&
lines in .//4 to nearly ''& lines in ./'.$ %usto&ers are pri&arily businesses
and institutions, concentrated in t"e &aCor cities, w"o use fied lines to obtain
t"e "i+" broadband data speeds re;uired to run t"eir or+anisations$
Fied wireless connections +rew in t"e late .///s as part of efforts by Telko&
and #ndosat to increase fied line penetration in outlyin+ +eo+rap"ies, and
peaked at '=$5& users in ./'/$ T"is tec"nolo+y is now in a slow decline as
custo&ers &ove over to a full &obile service, and "ad around '<& custo&ers by
t"e end of ./'.$
Glti&ately, t"e fied line &arket will stay relatively s&all in #ndonesia, t"ou+" it
will be lucrative since t"is is w"ere t"e "i+"!revenue custo&ers con+re+ate$ #t is
a se+&ent w"ere tec" startups can t"rive, especially in t"e B.B sector, but t"e
"eadline action will re&ain in t"e &ass &obile consu&er &arket$
). Co&'etitor!
(NC Sk* +i!ion, Tbk
M*KH is t"e leadin+ provider of pay TV services in #ndonesia wit" .$3 &illion
subscribers and 5/6 of total subscriber &arket s"are$ T"is will account t"e
+rowt" of 3<6 co&pared wit" t"e last year subscribers wit" '$5. &illion
subscribers$ T"e co&pany is well positioned to capitaliEe on risin+ penetration of
pay TV in #ndonesia, w"ic" is seein+ acceleratin+ subscriber +rowt"$
T"e %o&pany is en+a+ed in satellite !based subscription television services ,
wit" a network cover t"rou+"out #ndonesia t"rou+" two subscription television
brand is #ndovision and Top TV and also t"rou+" >keVision brand wit" a
se+&ented &arketin+ approac"$ M*KH is part of t"e MN% +roup, ))6 owned by
PT @lobal Mediaco&, tbk and (6 "eld by PT B"akti #nvesta&a, Tbk, and a ./6
public$

#ndovision offer a pre&iu& c"annel packa+e and co&plete c"oice and intended
for t"e &iddle!inco&e &arket se+&ent up in urban areas $%urrently #ndovision
is a television wit" as &any as '$4 &illion subscribers representin+ subscription
television &arket by <4$//6$

Top TV is t"e second &odel of t"e %o&pany , w"ic" offers a &ore affordable
packa+e and ai&ed at consu&ers in t"e &iddle!inco&e se+&ent and t"e lower
&iddle$
Top TV is t"e second lar+est by nu&ber of custo&ers as 5//,/// representin+
t"e subscription television &arket by ./$/' 6 $

T"e %o&pany also offers subscription television c"annels under t"e brand >K
Vision to potential new custo&ers t"rou+" t"e co&pany1s cooperation wit"
related parties$ >keVision subscription is t"e sit" lar+est brand in #ndonesia , as
&any as '//,/// custo&ers transferred to t"e %o&pany, w"ic" accordin+ to
researc" MP: representin+ subscription television &arket by <$4 6 $

T"e %o&pany offers its custo&ers a broad selection , includin+ local television
pro+ra&s andinternational broadcast directly to t"e "o&e or place of business
custo&ers t"rou+" * ! band transponders on #ndostar D ## *atelitte $
). Initia Pubic O--ering
PT Link Net, Tbk is +oin+ for #P> in . 8une ./'<$ Below are t"e listin+ statistics$
#ndustry 7 Teleco&&unication
*ub!industry 7 #nternet *ervice Provider and %able TV
No&inal 7 0p'//
#P> Price 7 #-0 ',)//
Percent of ?nlar+ed %apital 7 '/6
*"ares >ffered 7 3/<,.)4,///
PI? ./'<F 7 '/$54
-eal siEe 7 #-0 <=)$=.< billion
Gse of Proceeds 7 '//6 will be transferred to 2oldin+
%o&pany PT First Media, Tbk$ *o Link Net
will not receive any funds fro& t"e #P>$
Gnderwriter 7 PT %iptadana *ecurities
.. /inancia!
01 2002 2010 2011 2012 'er Oct3"1!t
ID4 5biion /62011 /62012 /6201"
0evenue 4=3 ',3/' ',))4
@ross profit <)= ',/</ ',3''
GP % 80.31 79.95 78.78
NP:T '<= 33( 3).
NPAT % 25.47 26.07 21.76
ID4 7biion /62011 /62012 /6201"
Total assets 2,%20 ",020 ",22)
Total liabilities .82 1." 80.
?;uity 1,111 2,1)8 2,)12
Total liabilities and e;uity 2,%20 ",020 ",22)
#n ./'3, FastNet accounted for 45$.)6 of Link Net total revenue, 2o&e%able
for 33$'(6 and wit" t"e re&ainin+ ($446 balance ca&e fro& ot"ers$ -urin+ t"e
last t"ree years Link Net posted a robust <'$=(6 %:@0 in revenue to #-0 ',))<
bn in ./'3$