DBS EXCL Excellence in Execution

• XL beat street expectations - strong data-revenue growth and cost control were key highlights
• Management raised revenue and EBITDA margin guidance; FY10F/11F raised 29%/20%.
• Maintain BUY, Rp5900 TP offers > 24% upside potential

2Q10 EBITDA 18% above consensus. 2Q10 EBITDA of Rp2289bn (+ 57% yoy, +7% qoq) was 18% above expectations. EBITDA margin of 54% was also ahead of expectations as XL reduced its interconnection costs and starter pack costs by re-routing and re-designing starter packs. Non-voice revenue (+50% yoy, +8% qoq) comprised
33% of group revenue in 2Q10, compared to 32% in 1Q10 and 29% in 2Q09, demonstrating that XL is benefiting from growing SMS usage and mobile Internet. XL added 2.3m
subscribers in 2Q10 (1.5m in 1Q10).

Management guidance revised up. (i) FY10F revenue growth guidance revised to more than 20% from high teens previously; (ii) EBITDA margin guidance raised to 50% from
high 40’s. With 1H10 revenue up 35% yoy and EBITDA margins of 52%, we model 24% revenue growth and 50.8% EBITDA margin for FY10F. We forecast FY11F/12F revenue
growth of 16%/14% and EBITDA margin of 48.5%/47.6%. FY10F/11F/12F earnings are revised up 29%/20%/18% respectively.

ROIC improvement from prudent capex. As subscribers chose SMS and data over voice minutes, XL does not need to raise capex for voice-minutes. Management targets ROIC
above 15% compared to existing 14% and could start paying dividends from FY11F onwards. Our DCF based (WACC 13%, terminal growth 3%) TP is raised to Rp5900.