Describes the growth strategies and value creation of XL Axiata Indonesia in year 2011

1. Managing and Sustaining Profitable Growth
Growth Strategy and
Value Creation of XL Axiata
Pramita Wardani | 1140003121
1

2. CONTENTS
• XL Axiata at glance
• Macro Environment Analysis
• Industry Granularity Analysis
• XL Axiata Internal Environment
• XL Axiata Financial Review
• Conclusion and Recommendation
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3. XL Axiata
at Glance
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4. PT XL Axiata Tbk is one of Indonesia’s leading cellular service provider, offering various
types of telecommunications products and services such as :
Voice | SMS | Data | Other value-added mobile products & services
Growth Strategy and Value Creation of XL Axiata | 4

5. Macro Environment Analysis
Growth Strategy and Value Creation of XL Axiata | 5

6. Macro Environment Analysis
PESTEL Analysis
• There is no political events related to
telecommunications
Good economic
The telecommunication growth, and
law prohibits Indonesia is
monopolistic practices having a raise in
and unfair competition GDP.
The social
networkers
are also
expanding as
well
Go green society
The technology
changes is rapidly
Growth Strategy and Value Creation of XL Axiata | 6

7. Industry Granularity
Analysis
• Key Industry Players
• Porter 5 Forces
• Competitive Landscape
• Telecommunication Trends
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8. Industry Granularity Analysis
Key Industry Players
Telecommunication Market Share
(Indonesia, 2011)
Indonesia local telecommunication
shares foreign ownership
Growth Strategy and Value Creation of XL Axiata | 8

9. Industry Granularity Analysis
Alcatel-Lucent is targeting Asia. Now
Porter 5 Forces Potential New they already have a strong relationship
with Indosat and Telkom to expand
Entrants |
Telecommunication Industry their business in Indonesia.
in Indonesia Year 2012 MODERATE
Suppliers Buyers
Bargaining Bargaining
Power | HIGH Industry Rivalry | HIGH Power | HIGH
Ranging from the packaging, Most people are not only
card production, BTS rental, price sensitive but also wants
headphones, IT provides, a good services and networks
music label.
The substitute of Substitute
Substitute
mobile phone is fixed Products ||
line and also internet
Products
connection through
MODERATE
HIGH
laptops using lan cable
Growth Strategy and Value Creation of XL Axiata | 9

10. Industry Granularity Analysis
Competitive Landscape
Year 2010
The competitive landscape of
Telecommunication industry
in Indonesia year 2010
Growth Strategy and Value Creation of XL Axiata | 10

11. Industry Granularity Analysis
Telecommunication Trends
Mobile Phone Trend in 2009-2016
• The buyers in the mobile
phone market grew by 23,55
and the trend is increasing.
• In the 3G usage are also
increasing 25% in year 2011.
• This is the impact of the
increasing usage of Blackberry,
Iphones, Ipad, and others
smartphones or tablets.
Source : BMI, 2011
Growth Strategy and Value Creation of XL Axiata |11

12. XL Axiata Internal Environment
• Growth Decomposition
• Staircase
• Capability Platforms
• Business Model
• The 3 Horizon and Growth Map
Business Model Break out Strategy through Online Learning for Professionals |12

13. XL Axiata Internal Environment
GROWTH Decomposition
by product category YEAR 2007-2010
Share Revenue Revenue
Segment Portfolio M&A
Gain Growth CAGR
Momentum
Non-Voice
874
SMS 874 9%
Data & Vas 5,615 122%
Voice 100%
4,569
Others 2,849
23%
TOTAL 13,907
2007 2008 2009 2010 CAGR
Non Voice
SMS -1% 14% 34% -9% 9%
Data and Vas 142% 106% 84% 156% 122%
Voice 55% -13% 20% 16% 19%
Others 118% 166% 15% 0% 100%
total 45% 14% 27% 7% 23%
Growth Strategy and Value Creation of XL Axiata | 13

14. XL Axiata Internal Environment
XL Axiata Staircase
2011
2010
Transformatio
2009 n business
Majority strategy and
shareholders
2008 of XL Axiata
focus to
Conducted affordable
2005 Limited Public released 20% price an a new
TM Group Offering 1 to their shares to positioning
2001 demerger. the public
Telecom Axiata Shareholders
1997 Malaaysia acquired all XL Pirsiant to
Received a bought 23,1% shares
1996 Right
DCS 1800 and XL shares
Develop an fiber optic
integrated XL go Public
Obtained a backbone
microcell offering 20%
GSM 900
network in Issued its 1st of its shares
operating
Jakarta’s SCBD IDR Bonds
licenses XL go Public
Area worth 1,25T
offering 20%
of its shares
Capability Platforms:
Well-designed Product offerings • Continued Cost Management • Network Utilization
Capitalize on Data Opportunity • Focused and Selective Capex • Develop Non-Traditional
Revenue
Brand Development
BRAND DEVELOPMENT
Growth Strategy and Value Creation of XL Axiata |14

15. XL Axiata Internal Environment
Capability Platform
The success of XL Axiata is depends on their competencies
and technology-know-how and also the commitment of the
management.
Growth Strategy and Value Creation of XL Axiata |15

16. XL Axiata Internal Environment
Business Model
XL Axiata Business Model before year 2010
• Packaging • Internet • High Price • Customer • Personal
Vendors Services with low Care 24 • Corporate
• BTS Rentals • Customer volume hours/day
• IT Providers Services • Voice-Centric
• Complicated • Data-Centric
promotions • Domestic
Backbone
• Various of
products
category
• Marketing • Website
• Sales • Branches
• IT Services
• Call Center
Services
BTS Rental | Network and Voice | SMS | Data | Other value-
infrastructure expand | added mobile products & services |
Maintenance equipment's |
promotions
Growth Strategy and Value Creation of XL Axiata |16

17. XL Axiata Internal Environment
Business Model
XL Axiata Business Model after year 2010
• Packaging • Internet • Low Price- • Customer • Personal
Vendors Services High Volume Care 24 • Corporate
• BTS Rentals • Customer • Single product hours/day
• IT Providers Services • Voice-Centric
• Music Labels • Simple and • Data-Centric
• Collaboration attractive • Domestic
with 3rd parties : promotions Backbone
Blackberry,
Iphone, Ipad,
Samsung
• Marketing • Website
• Sales • Branches
• IT Services • Mobile
• Call Center Applications
Services • Dealerships
• Outsourcing
BTS Rental | Network and Voice | SMS | Data | Other value-
infrastructure expand | added mobile products & services |
Maintenance equipment's | Ringtones | collaboration with 3rd
promotions parties
Growth Strategy and Value Creation of XL Axiata |17

18. XL Axiata Internal Environment
Business Model
High Price – Low Price –
Grand Strategy
Low Volume High Volume
Functional Strategy
• Price • High • Low
• Product • Many Product Brands • Single Product
• Place • Direct • Dealership
• Promotion • Complicated • Simple & Attractive
Growth Strategy and Value Creation of XL Axiata |18

19. XL Axiata Internal Environment
The 3 Horizon and Growth Map
HORIZON 3
Create viable
Strong Tailwind HORIZON 2 option
Build emerging
HORIZON 1 businesses
Extend and defend
core businesses
Expanding to
PORTOFOLIO communication from
MOMENTUM machine-to-machine
(M-to-M).
Expansion non-voice Expanding to m-
MERGER & data traffic with the help commerce and m-
ACQUSITION (M&A) by Cisco Systems. payment
High Price – Low Low Price – High Invest heavily on
SHARE GAIN Volume Volume 3G/data Network
Growth Strategy and Value Creation of XL Axiata |19

20. Financial Analysis
• Industry Financial Highlight
• Average Revenue Per Usage
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21. Financial Review
Financial Highlights
CAGR:
6% 13% 2% -1% 5% 10% 2% -13% 23% 22% 29% -2883%
Legend :
Source : Annual Report
2007-2011 Growth Strategy and Value Creation of XL Axiata |21

22. Financial Review
Financial Ratio
Legend :
Source : Annual Report
2007-2011
No Ratio (%) 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
Margin
1 EBITDA 65 60 61 58 57 51.65 48.52 46.47 48.46 45.74 41.9 42.2 44.7 52.7 49.4
2 Margin EBIT 35 28 30 27 26 12.1 9.78 7.96 3.27 4.06 21 14.4 17.8 29.3 24.7
3 ROA 33 24 24 21 22 4.51 3.63 2.72 1.23 1.6 1.6 -0.1 6.1 10.6 9.7
4 ROE 55 43 45 38 35 12.34 10.79 8.34 3.63 4.55 5.7 -0.3 26.1 28.2 22.3
Growth Strategy and Value Creation of XL Axiata |22

23. Financial Review
ARPU
• The revenue trend is
increasing while the ARPU
trend is declining.
• Telecommunication industry
is a very competitive
industry
No Provider 2009 2010 2011 2012f 2013f 2014f 2015f
1 Telkomsel 48,000 40,000 32,065 28,440 25,672 23,571 22,249
2 Indosat 37,330 34,700 26,692 23,327 20,850 19,144 18,070
3 XL Axiata 38,000 32,000 28,761 26,260 23,704 21,549 20,341
4 Bakrie Telecom 29,000 24,000 17,879 14,925 13,076 11,768 10,888
Market Average 38,083 32,675 26,349 23,238 20,825 19,008 17,887
Growth Strategy and Value Creation of XL Axiata |23

24. Conclusion and
Recommendation
Growth Strategy and Value Creation of XL Axiata |24

25. XL Axiata Internal Environment
Conclusion
IHSG Growth 108%
High
Growth GIANTS
Revenue Growth
: 23%
Growth Performance Matrix TRS : 116%
In period 2007-2011
Revenue
Growth : 6%
TRS : na Indonesia
GDP 5,65%
PERFORMERS
Revenue
Growth : 5%
TRS : na
Low
Low High
Growth Strategy and Value Creation of XL Axiata |25

26. Financial Review
Recommendations
High Low
Stars Question Marks
• 4G Technology
High
• HSPA+ ,
• WIMAX
• Cloud Computing • LTE
• E-money
Cash Cow Maintain Dog
Voice –
and centric
Low
Building a
BTS by the
outsource
company
High Low
Growth Strategy and Value Creation of XL Axiata |26

27. Managing and Sustaining Profitable Growth
Growth Strategy and
Value Creation of XL Axiata
Pramita Wardani | 1140003121
27