A Widening Loss That Isn't (Yet) About the Pandemic
Indosat closed the first quarter of 2020 with revenue growing a healthy 7.9% year-over-year to Rp6,523.1 billion, driven almost entirely by Selular (cellular), which grew 10.6% and now makes up 82.4% of revenue. But the headline number that matters more is the one going the wrong direction: net loss attributable to owners of the parent widened from Rp292.5 billion to Rp605.6 billion, more than double a year earlier. Indonesia's government officially confirmed its first COVID-19 case on March 2, 2020, four weeks before this quarter closed - but based on what's actually disclosed in this filing, the pandemic isn't the main story behind the widening loss yet. That's a distinction worth holding onto, because it won't stay true for long: this is the first of what will likely be several quarters this site covers where COVID-19's economic disruption is a live, unfolding variable rather than a settled historical fact.
The real driver this quarter is cost, not revenue and not (yet) the virus. Employee expense more than doubled year-over-year (Rp369.2 billion to Rp893.2 billion, +141.9%) - the single largest swing on the income statement - while cost of services actually fell 4.6% and D&A grew a modest 4.0% in line with the network build. Three weeks after this quarter closed, on April 1, 2020, Indosat made a Rp295.3 billion cash payout to employees whose termination took effect that day (see Beyond the Usual) - a workforce reduction large enough to explain much of this quarter's employee-cost spike as termination accruals built ahead of the actual payout date.
The Prescription
Indosat should keep pushing capital and management attention toward MIDI (Multimedia, Data Communication, Internet) and away from Telekomunikasi Tetap (fixed-line). This quarter, MIDI posted a 10.2% segment operating margin while Telekomunikasi Tetap ran a -36.5% segment operating margin - a structural loss, not a rounding error. That's a real reversal from where this site's coverage started: back in Q1 2009, fixed-line was Indosat's highest-margin segment at 43.0%, while MIDI was the smallest and least profitable of the three. Eleven years later, the roles have completely flipped - fixed-line telephony has decayed into a persistent drag, and MIDI has grown into the segment actually carrying incremental profitability. Indosat's own capital allocation should reflect that this isn't a temporary dip; it's over a decade of divergent trajectories showing up in the same quarter's numbers.
What it should stop doing: letting workforce cost decisions run through the P&L as a lump-sum surprise instead of a disclosed program. This quarter's 141.9% employee-cost jump, and the Rp295.3 billion termination payout that followed three weeks after quarter-end, aren't explained in the filing beyond the bare cash-flow disclosure - no headcount before/after, no stated cost-savings target, no timeline for when the expense normalizes. A company running a real workforce restructuring program should say so plainly, both because investors deserve to model the payback, and because a large severance program landing at the exact moment a pandemic starts economic disruption invites questions about whether this was pre-planned cost discipline or a reactive scramble - a distinction this filing doesn't let a reader make.
Key Financial Metrics
Q1 2020 (quarter ended Mar 31, 2020) vs. Q1 2019, consolidated
FX: Rp16,367 = US$1 (Mar 31, 2020) and Rp14,244 = US$1 (Mar 31, 2019) - period-end market quotes, used only to convert the USD columns below; the rupiah figures are the company's own disclosed numbers. The rupiah's 14.9% depreciation against the dollar over the year is itself a COVID-era market move (capital flight from emerging markets in March 2020), separate from anything specific to Indosat's own operations.
| Metric | Q1 2020 (Rp) | Q1 2020 (US$) | Q1 2019 (Rp) | YoY (Rp) | YoY (US$) |
|---|---|---|---|---|---|
| Revenue | Rp6,523.1B | ~$398.6M | Rp6,046.2B | ✅ +7.9% | ⚠️ -6.1% |
| EBITDA» (operating income + D&A, company doesn't disclose its own figure this quarter) | Rp2,663.9B | ~$162.8M | Rp2,610.6B | ✅ +2.0% | ⚠️ -11.2% |
| Operating Income» | Rp196.3B | ~$12.0M | Rp237.5B | ⚠️ -17.3% | ⚠️ -28.0% |
| Net Loss (attributable to owners of the parent) | -Rp605.6B | ~-$37.0M | -Rp292.5B | ⚠️ loss widened 107.0% | ⚠️ |
| ...of which, consolidated total (incl. non-controlling interests») | -Rp593.1B | ~-$36.2M | -Rp280.5B | ⚠️ loss widened 111.5% | ⚠️ |
| Free Cash Flow» (operating cash flow - capex) | Rp762.1B | ~$46.6M | -Rp251.9B | ✅ swung positive | ✅ |
| Total Cash (vs. Dec 31, 2019 year-start; no year-ago quarterly balance sheet was disclosed) | Rp5,161.5B | ~$315.4M | Rp5,881.2B (Dec 2019) | ⚠️ -12.2% | ⚠️ |
Basic loss per share attributable to owners was Rp(111.45), against Rp(53.83) a year earlier. Operating cash flow actually grew 22.0% (Rp1,938.9 billion to Rp2,366.3 billion) while capital expenditure fell 26.8% (Rp2,190.8 billion to Rp1,604.2 billion) - a pandemic-era pullback in network spending that's the real reason free cash flow swung from negative to positive, not stronger underlying profitability. Total debt (loans, bonds, and sukuk, excluding lease liabilities) stood at Rp20,439.1 billion, roughly flat with year-start.
Revenue grew, operating cash flow grew, and free cash flow turned positive - but the loss attributable to owners still more than doubled, driven by a cost line (employee expense) that jumped 141.9% for reasons this filing discloses only partially. See Beyond the Usual below.
Key Operational Metrics
No investor presentation was located for this quarter - only the filed quarterly financial statements - so subscriber count, ARPU», and network/traffic metrics that a deck would normally lead with are not available for this specific post, the same gap Q1 2009's coverage flagged for this ticker's earliest quarters.
Segment Comparison
Indosat reports three segments: Selular (cellular voice, SMS, data, and value-added services), MIDI (Multimedia, Data Communication, Internet - enterprise data, internet, and corporate connectivity), and Telekomunikasi Tetap (fixed-line and fixed-wireless telephony). Segment operating profit below is measured before financing costs, taxes, and unallocated items, per the segment footnote, and is a different (narrower) cut than the "Operating Income" line in Key Financial Metrics above.
| Segment | Revenue Q1 2020 | Revenue Q1 2019 | YoY | Segment Op. Profit Q1 2020 | Margin | Share of Revenue |
|---|---|---|---|---|---|---|
| Selular (cellular) | Rp5,371.6B | Rp4,858.3B | ✅ +10.6% | -Rp137.7B | ⚠️ -2.6% | 82.4% |
| MIDI (enterprise/data/internet) | Rp1,007.5B | Rp1,026.2B | ⚠️ -1.8% | Rp102.7B | ✅ 10.2% | 15.4% |
| Telekomunikasi Tetap (fixed) | Rp143.9B | Rp161.6B | ⚠️ -11.0% | -Rp52.6B | ⚠️ -36.5% | 2.2% |
| Total | Rp6,523.1B | Rp6,046.2B | ✅ +7.9% | -Rp87.6B | ⚠️ -1.3% | 100% |
Selular
Still the overwhelming majority of revenue (82.4%) and the fastest-growing segment this quarter (+10.6%), but it swung to a small operating loss (-2.6% margin) - the heavier employee-cost and D&A load discussed above lands disproportionately here, since cellular carries the bulk of Indosat's network infrastructure and headcount.
MIDI
The only segment with a genuinely healthy operating margin this quarter (10.2%), even as its own revenue dipped slightly (-1.8%) - a mix shift within MIDI (more IT services, less fixed internet, per the pattern this site has seen in later ISAT quarters) rather than an outright demand problem. The Prescription above argues this is the segment Indosat should be building around.
Telekomunikasi Tetap
The smallest segment (2.2% of revenue) and by far the weakest: revenue fell 11.0% and the segment ran a -36.5% operating margin, continuing a multi-year decline from the 43.0% margin this same segment posted back in Q1 2009. Too small to move the consolidated numbers much on its own, but it's now a structural drag rather than a shrinking-but-profitable legacy business.
Beyond the Usual
A Satellite Meant to Extend the Fleet Exploded on Launch
On April 9, 2020 - nine days after this quarter closed - the Palapa N-1 satellite ("Nusantara Dua"), built to replace the aging Palapa D satellite, was launched but failed to reach its planned orbital slot and was reportedly destroyed. Indosat states the potential loss will be fully covered by insurance, and Palapa D itself continued operating, so this isn't a business-continuity event on its own. But it's a real setback to Indosat's satellite-fleet renewal plan, and worth tracking in later quarters for how the insurance claim and any replacement launch actually play out - satellite capacity underpins a meaningful share of Indosat's fixed and MIDI connectivity business, the same segment already running the weakest margin in this quarter's numbers (see Segment Comparison above).
A Large, Mostly Unexplained Termination Payout Landed Right at Quarter-End
Indosat disclosed a Rp295.3 billion cash payout to employees whose termination became effective April 1, 2020 - one day after this quarter closed. Employee expense for the quarter itself already jumped 141.9% year-over-year (Rp369.2 billion to Rp893.2 billion), and the timing strongly suggests the termination program's accrual is a major driver of that jump, even though the filing doesn't explicitly link the two. No headcount figures, cost-savings target, or program timeline are disclosed - only the cash amount and effective date. A workforce reduction this size, landing in the same month Indonesia's COVID-19 disruption began in earnest, is worth watching closely in the next few quarters' employee-cost trends and any further disclosure.
A Decade-Old Corruption Case Still Sits on the Balance Sheet, Unchanged
Indosat's Rp1,358.6 billion "provision for legal case" - tied to the 2012-2015 corruption case against former subsidiary IM2 and its former president director, covered in detail in this site's FY2018 special post - remains unchanged in amount this quarter. Nothing new is disclosed about the case's status; it's carried forward as a flat liability, the same figure it's held since 2014.
The Company Told Investors COVID-19 Hadn't Materially Hit the Business Yet - As of Late April
Indosat's own subsequent-events note (dated April 28, 2020, the day this filing was signed) states management assessed COVID-19's potential impact on the business and liquidity and "do not foresee any material uncertainty" threatening going-concern. That's a forward-looking management judgment made barely eight weeks after Indonesia's first confirmed case, before the disruption's full scope was knowable - worth treating as a snapshot of April 2020 sentiment, not a settled fact, and revisiting against what the next few quarters' numbers actually show.
Target Valuation Range
Bottom line: too early to assign real conviction to a number here - this is the first of Indosat's 2020 quarters on this site, so no trailing-quarter trend exists yet, and the company is heading into a pandemic-disrupted year with a widening net loss. Directionally, the ~2.23x annualized EV/EBITDA multiple looks reasonable for a stable-revenue telecom, but nothing here argues strongly for undervalued or overvalued.
Indosat's shares closed Q1 2020 at a split-adjusted Rp388.75 on a historical price basis - Indosat completed a 1-for-4 forward stock split in October 2024, so multiplying by 4 recovers the actual nominal price quoted on the Indonesia Stock Exchange that day: Rp1,555.
| Market cap → enterprise value | Q1 2020 (period-end) |
|---|---|
| Share price (period-end, nominal) | Rp1,555 |
| Shares outstanding (1 Series A + 5,433,933,499 Series B) | 5,433,933,500 |
| Market capitalization | ~Rp8,450.8B (~$516.4M) |
| Plus: total principal debt (loans, bonds, sukuk; excl. lease liabilities) | Rp20,439.1B |
| Less: cash and cash equivalents | Rp5,161.5B |
| Enterprise value | ~Rp23,728.9B (~$1.45B) |
| Peer/multiple sanity check | Q1 2020 |
|---|---|
| EBITDA (annualized ×4) | Rp10,655.6B |
| EV / EBITDA (annualized) | ~2.23x |
| Net debt (total debt - cash) | Rp15,277.6B |
| Net debt / EBITDA (annualized) | ~1.43x |
| P/E | not meaningful (net loss this quarter) |
Indosat's shares fell hard over the two years into this quarter's close: from a split-adjusted Rp945 in April 2018 to Rp388.75 at the end of Q1 2020, a 58.9% decline, with a low of Rp421.25 in December 2018 and a partial recovery to as high as Rp912.5 in August 2019 before COVID-era selling pressure took the stock back down through Q1 2020. Nominal terms tell the same story at 4x scale: roughly Rp3,780 to Rp1,555 over the window. Nothing in this quarter's operating numbers - revenue still growing, cash generation actually improving - explains a decline this steep; it reads as a market-wide de-rating (Indonesian and broader emerging-market equities sold off sharply in March 2020) layered on top of Indosat's own multi-year share-price weakness rather than a fundamentals-driven move specific to this quarter.
A rough EV/EBITDA multiple of ~2.23x is cheap by historical telecom standards - comparable to what this site later found for Indosat's own Q1 2026 quarter (~2.62x) - suggesting this depressed-multiple pattern isn't new to the pandemic era; it shows up as early as 2020. A full DCF or reverse-DCF isn't attempted this quarter: this is the first of Indosat's 2020 quarters on this site, the company just posted a net loss (making a P/E-based cross-check meaningless), and COVID-19's economic impact on Indonesia was still unfolding as this filing was signed - any multi-year cash-flow projection built on this quarter's numbers would be guessing at a disruption nobody, including Indosat's own management (see Beyond the Usual above), could size accurately yet.
PT Indosat Tbk's unaudited interim consolidated financial statements for the three months ended March 31, 2020 and 2019, as reviewed and signed by the Board of Directors on April 28, 2020.