Credis Suisse Bakrie Telecom - 2Q10 results: Bakrie has lost revenue market share

● Bakrie Telecom reported an 8.0% QoQ and 2.6% YoY decline in gross service revenue in 2Q10, while net service revenue declined by 5.7% QoQ and 0.6% YoY.

● We note that among the ‘big 3’ GSM cellular players Indosat delivered 7.7% QoQ growth into 2Q10, Telkomsel (Not listed) delivered 5.7% QoQ growth and Excelcom delivered 4.2% QoQ growth. Bakrie Telecom has lost revenue market share both QoQ
and YoY.

● Bakrie Telecom’s net EBITDA margin improved slightly (0.4 p.p.) QoQ to 52.7% in 2Q10 from 52.3% in 1Q10. This was due to a 41.7% QoQ decline in sales and marketing expenses. However, the 2Q10 EBITDA margin was much lower than 57.1% reported in 2Q09 as operating, G&A, and personnel expenses increased. Lower EBITDA, together with a sharp increase in interest expenses resulted in a net loss of Rp31 bn for Bakrie in 2Q10.

● We remain RESTRICTED on Bakrie Telecom.