Asean Telco 20101110 JPM

This document is being provided for the exclusive use of KIAN GUNTUR at DBS VICKERS SECURITIES
INDONESIA
Asia Pacific Equity Research
10 November 2010
TIP Telcos: The 3Q10 Deep Dive

Upgrading ISAT / TLKM / TEL
• This is the second edition of our Deep Dive series, a detailed study of Thailand
all operating and financial trends in South East Asia post 3Q10 results. Indonesia
Philippines
• We are upgrading ISAT to OW with a TP of Rp6,600 and estimated Wireless Services
total return of 18%. Our 2Q10 Deep Dive report highlighted a potential James R. Sullivan, CFA
AC
turnaround in core operating statistics; all of these trends showed (65) 6882-2374
continued improvement in 3Q10, driving our upgrade. We are also james.r.sullivan@jpmorgan.com
upgrading TLKM and TEL PM to OW (TP of Rp9,800 and Php2,600 Vishesh Gupta
respectively) after recent underperformance. (65) 6882 2367
vishesh.x.gupta@jpmorgan.com
• Indonesia wireless growing faster then forecast: All three wireless J.P. Morgan Securities Singapore Private
operators beat our 3Q10 net addition numbers by 24-46%. This Limited
provides evidence supporting our contention that rising rural wage

TIP telco price performance
growth will start to positively impact telecom industry revenue growth in Absolute Performance (%)
developing Asia, particularly once penetration hits 100% and lower 1 mth 3 mth 12 mth
incremental ARPU no longer drags down the average. We now have an PT Telkom -10.4% -4.1% -5.8%
Indosat -0.9% 25.0% 13.9%
OW recommendation on all three larger Indonesian telco operators. Excelcomindo 9.3% 25.5% 217.2%
PLDT -11.8% -1.2% -0.6%
• Thai voice pricing stable: Pricing stabilized post 3G delay, supported Globe -4.7% -0.7% -11.5%
by both falling CAPEX (encouraging network supply/demand balance) AIS 5.4% 4.6% 15.4%
TAC 4.4% 2.2% 25.7%
and stable to rising network OpEx per minute (reduces ability to cut Average -1.2% 7.3% 36.3%
pricing without negatively impacting margins). We are OW both AIS
and DTAC. Relative Performance (%)
1 mth 3 mth 12 mth
• #2 operators are becoming more competitive (ISAT/DTAC): Smaller PT Telkom -15.0% -20.9% -39.3%
#3 operators around the region outperformed in 2010 due to reasonable Indosat -5.9% 3.1% -26.7%
Excelcomindo 3.7% 3.5% 104.2%
operating improvements as well as significant beta performance in rising PLDT -12.4% -18.4% -32.1%
markets (EXCL, IDEA). Second place operators could take over the Globe -5.3% -18.0% -39.5%
mantle in 2011 as we are seeing solid signs of operational turnaround. AIS -3.1% -12.6% -21.4%
TAC -4.0% -6.1% 15.5%
Number two players have also been relative laggards, and could see Average -6.0% -9.9% -5.6%
rotational buying within the sector. Source: Bloomberg.
Note: Based on closing prices on 09-Nov-2010.
Equity Ratings and Price Targets

Mkt Cap Price Rating Price Target
Company Symbol ($ mn) Currency Price Cur Prev Cur Prev
Advanced Info Services ADVA.BK 9,736 THB 96.75 OW n/c 110.00 100.00
Total Access Communication DTAC.BK 3,470 THB 43.25 OW n/c 60.00 49.00
PT Telekomunikasi Indonesia Tb TLKM.JK 19,123 IDR 8,450 OW N 9,800 n/c
PT Indosat Tbk ISAT.JK 3,477 IDR 5,700 OW N 6,600 4,600
PT XL Axiata Tbk EXCL.JK 5,635 IDR 5,900 OW n/c 8,000 7,300
Philippine Long Distance Telep TEL.PS 10,407 PHP 2,418.00 OW N 2,600.00 2,800.00
Globe Telecom GLO.PS 2,577 PHP 845.00 N n/c 680.00 780.00
Source: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. All prices as of 10 Nov 10.
See page 92 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision.
INDONESIA
James R. Sullivan, CFA Asia Pacific Equity Research

(65) 6882-2374 10 November 2010
james.r.sullivan@jpmorgan.com
Table of Contents
Investment Conclusion ............................................................5
3Q10 Key Takeaways ..................................................................................................5
It wasn’t too early for Indosat… ..................................................................................6
Upgrading TLKM and TEL on recent underperformance ...........................................7
Investment Summary ...............................................................9
Where we’ve been – 3Q Actuals vs. Forecast..............................................................9
Where we are - Operating / Financial trends .............................................................10
Where we are - Street View .......................................................................................19
Where we’re going - Our revisions............................................................................19
Revenue Build ........................................................................25
EBITDA Build ..........................................................................34
Net profit build ........................................................................39
Network Scope / Quality ........................................................41
Thailand operating assumption changes.............................45
Advanced Info Services – Detailed Model Revisions ..........46
DTAC – Detailed Model Revisions ........................................50
Indonesia Operating Assumption Changes .........................54
PT Telkom – Detailed Model Revisions ................................57
PT Indosat – Detailed Model Revisions ................................63
PT Excelcom – Detailed Model Revisions ............................67
Philippines Operating Assumption Changes.......................71
PLDT – Detailed Model Revisions .........................................74
Globe – Detailed Model Revisions ........................................80
Advanced Info Services-Earnings Strip ...............................85
Total Access Communication Earnings Strip ......................86
PT Telekomunikasi Indonesia Tbk -Earnings Strip .............87
PT Indosat Tbk Earnings Strip ..............................................88
PT XL Axiata Tbk Earnings Strip...........................................89
PLDT Earnings Strip...............................................................90
Globe Telecom Earnings Strip ..............................................91
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Figures
Figure 1: TLKM one year forward consensus P/E.......................................................7
Figure 2: PLDT one year forward consensus P/E ........................................................8
Figure 3: Daily Long-short performance of selected factors in Asian Telcos 8
Figure 4: TIP Telcos 3Q10 JPMe vs. actual (Rev, EBITDA & EBITDA margin) ......9
Figure 5: TIP Telcos 3Q10 JPMe vs. actual (reported EPS)......................................10
Figure 6: TIP Telcos wireless monthly net adds (000) ..............................................11
Figure 7: TIP Telcos MOU growth-trailing 12 months .............................................11
Figure 8: TIP Telcos wireless voice ARPM growth ..................................................12
Figure 9: TIP Telcos wireless data as % of total revenue ..........................................13
Figure 10: TIP Telcos broadband monthly net adds (000).........................................13
Figure 11: TIP Telcos broadband ARPU (US$) ........................................................14
Figure 12: TIP Telcos revenue growth.......................................................................15
Figure 13: TIP Telcos OpEx/min YoY change..........................................................16
Figure 14: TIP Telcos wireless EBITDA margin YoY BP change............................17
Figure 15: TIP Telcos EBITDA growth.....................................................................18
Figure 16: TIP Telcos % rev to cons 2010E EPS and P/E since initiation (27-Jul) ...19
Figure 17: TIP Telcos 2010E revisions (Revenue, EBITDA & EBITDA margin)....20
Figure 18: TIP Telcos 2011E revisions (Revenue, EBITDA & EBITDA margin)....20
Figure 19: TIP Telcos 2010E revisions (reported EPS) .............................................21
Figure 20: TIP Telcos 2011E revisions (reported EPS) .............................................22
Figure 21: TIPs Telcos 2010E JPM vs. consensus.....................................................24
Figure 22: TIPs Telcos 2011E JPM vs. consensus.....................................................24
Figure 23: TIP Telcos wireless monthly net adds (000) ............................................25
Figure 24: TIP Telcos wireless monthly churn ..........................................................25
Figure 25: TIP Telcos wireless monthly gross adds (000).........................................26
Figure 26: TIP Telcos wireless MOU ........................................................................26
Figure 27: TIP Telcos MOU growth..........................................................................27
Figure 28: TIP Telcos wireless voice ARPM (US cents/min)-long history ...............27
Figure 29: TIP Telcos wireless voice ARPM (US cents/min) ...................................28
Figure 30: TIP Telcos wireless voice ARPU (US$) ..................................................29
Figure 31: TIP Telcos wireless data ARPU (US$) ....................................................29
Figure 32: TIP Telcos wireless data as % of total revenue ........................................30
Figure 33: TIP Telcos wireless total ARPU (US$) ....................................................30
Figure 34: TIP Telcos fixed line monthly net adds (000) ..........................................31
Figure 35: TIP Telcos fixed line ARPU (US$)..........................................................31
Figure 36: TIP Telcos broadband monthly net adds (000).........................................31
Figure 37: TIP Telcos broadband ARPU (US$) ........................................................32
Figure 38: TIP Telcos total revenue (US$ mn) ..........................................................33
Figure 39: TIP Telcos wireless OpEx/min (US cents) ...............................................35
Figure 40: TIP Telcos wireless OpEx ex. marketing/min (US cents) ........................35
Figure 41: TIP Telcos wireless EBITDA margin.......................................................36
Figure 42: TIP Telcos total EBITDA (US$ mn) ........................................................37
Figure 43: TIP Telcos EBITDA margin.....................................................................37
Figure 44: TIP Telcos EBITDA margin BP change YoY..........................................38
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(65) 6882-2374 10 November 2010
Figure 45: TIP Telcos D&A as % of revenue ............................................................39

Figure 46: TIP Telcos finance cost as % of revenue..................................................39
Figure 47: TIP Telcos interest income as % of revenue ............................................39
Figure 48: TIP Telcos recurring income (US$ mn) ...................................................40
Figure 49: TIP Telcos total wireless BTS ..................................................................41
Figure 50: TIP Telcos total wireless subs/BTS..........................................................41
Figure 51: TIP Telcos outgoing monthly minutes/BTS (000) ...................................42
Figure 52: TIP Telcos wireless capex/incremental sub (US$) ...................................42
Figure 53: TIP Telcos gross PP&E to outgoing MOU (US cents/min) .....................43
Figure 54: TIP Telcos gross PP&E to outgoing MOU (USc/min)-2008 onwards .....43
Figure 55: TIP Telcos gross PP&E/sub (US$)...........................................................44
Figure 56: TIP Telcos fixed line capex/incremental line (US$) ................................44
Tables
Table 1: TIP Telcos current issues and best/worst placed stocks.................................5
Table 2: TIP Telcos 3Q10 Actual vs. JPMe.................................................................9
Table 3: TIP Telcos JPM vs. consensus.....................................................................23
Table 4: TIP Telcos wireless voice ARPM growth....................................................28
Table 5: TIP Telcos wireless voice elasticity.............................................................28
Table 6: TIP Telcos total revenue (US$ mn) .............................................................32
Table 7: TIP Telcos total revenue growth YoY .........................................................32
Table 8: TIP Telcos OpEx/min (US cents) ................................................................34
Table 9: TIP Telcos OpEx/min growth YoY .............................................................34
Table 10: TIP Telcos OpEx ex. marketing/min (US cents) .......................................34
Table 11: TIP Telcos OpEx ex. marketing/min growth YoY ....................................34
Table 12: TIP Telcos total EBITDA (US$ mn) .........................................................36
Table 13: TIP Telcos total EBITDA growth YoY .....................................................36
Table 14: TIP Telcos recurring profit (US$ mn)........................................................40
Table 15: TIP Telcos recurring income growth YoY ................................................40
Table 16: Thai Telcos country model revisions .........................................................45
Table 17: AIS model revisions...................................................................................46
Table 18: DTAC model revisions ..............................................................................50
Table 19: Indonesian Telcos wireless country model revisions.................................54
Table 20: Indonesian Telcos fixed line country model revisions...............................55
Table 21: Indonesian Telcos broadband country model revisions .............................56
Table 22: Telkomsel model revisions ........................................................................57
Table 23: PT Telkom fixed model revisions..............................................................58
Table 24: PT Telkom model revisions .......................................................................59
Table 25: ISAT model revisions ................................................................................63
Table 26: Excelcom model revisions .........................................................................67
Table 27: Philippines Telcos wireless country model revisions ................................71
Table 28: Philippines Telcos fixed line country model revisions ..............................72
Table 29: Philippines Telcos broadband country model revisions.............................73
Table 30: PLDT model revisions ...............................................................................74
Table 31: Globe model revisions ...............................................................................80
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(65) 6882-2374 10 November 2010
Investment Conclusion
Below please find a summary of all important operational trends coming out of the
3Q10 results, as we see them.
Table 1: TIP Telcos current issues and best/worst placed stocks

Issue Best Worst Comments
Revenue Build
Wireless net subscriber addition growth ISAT / EXCL TEL / TLKM Indo as a market growing faster then expected
MOU growth ADVANC / TLKM EXCL EXCL bundles change reporting of MOU
Voice ARPM growth ADVANC / DTAC / EXCL TLKM / ISAT Thai pricing stabilized
Wireless data as a % of revenue growth TLKM / ISAT Thais still far below regional average, potential opportunity
Fixed line net additions GLO TEL / TLKM Globe rebounding off a poor 2Q10
Fixed line ARPL GLO Stable across the board
Broadband Net adds TLKM 3G ISAT 3G / TEL Stable DSL net additions across the board
Broadband ARPU TLKM DSL TLKM 3G / TEL ISAT seen as more aggressive, numbers show TLKM more…
Overall Revenue growth ISAT / ADVANC / DTAC TEL / Tsel Phils still repricing data in particular
EBITDA Build
Network OpEx per MOU reductions DTAC / Tsel ADVANC / EXCL DTAC could become more competitive
Network OpEx per MOU ex marketing ISAT / DTAC EXCL
EBITDA margin bps change YoY DTAC / ISAT / GLO EXCL / TLKM
Overall EBITDA growth DTAC / ISAT EXCL EXCL still fastest absolute but rate of change falling
Overall Net Profit growth ISAT / TEL TLKM
Street View
Street 2010 EPS Upgrades EXCL / ADVANC ISAT / GLO
One year forward consensus P/E multiple re-ratings DTAC / TLKM EXCL / GLO EXCL and ISAT most inconsistent in terms of EPS rev / PE change
Network scope / quality

Total BTS TLKM
Subscribers per BTS TEL Generally quite stable across the geography
ISAT / TLKM /
Monthly minutes per BTS EXCL ADVANC EXCL now the lowest in the region
Source: J.P. Morgan estimates.
3Q10 Key Takeaways

Indonesia growing faster than expected
Indonesian wireless net additions in 3Q10 beat our forecasts by 24%/27%/46%
for Telkomsel / Indosat / XL Axiata respectively, with the market on pace to add
2080ppts in wireless penetration this year (vs. 680 in Thailand and 900 in the
Philippines). Indonesia should continue to see the best subscriber growth in the
region despite hitting 100% penetration in 3Q10 as:
• Pricing levels in Indonesia already reflect dual SIM and relatively

aggressive bundles;
• Thai penetration is structurally held back by the high regulatory fees

paid by operators. These fees serve as a hefty tax on the industry,
which keeps pricing higher than necessary (we note that the Thai
operators are remarkably efficient, with network OpEx per minute on
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(65) 6882-2374 10 November 2010
par with Indian operators, which theoretically should enable them to

profitably serve large segments of the population at low price points),
which structurally limits penetration rates.
Thai wireless voice pricing stabilized

We noted in our 2Q10 Deep Dive report that we were starting to see some
evidence of ARPM reductions and pricing pressure in Thailand in advance of the
scheduled 3G auctions. 3Q10 data points show renewed price stability post the
delay of 3G auctions, as well as stable to slightly rising Network OpEx per
minute and falling CAPEX levels. The latter two trends should contribute to
structural price stability over the next 12-18 months given the lack of spare
network capacity (network level supply and demand seem relatively well
balanced) and lack of pricing power (without impacting margins).
#2 operators becoming more competitive (ISAT/DTAC)

Investors generally outperformed in 2010 by holding smaller #3 operators
around the region, due to reasonable operating improvements as well as
significant beta performance in rising markets (EXCL, IDEA). 2011 could well
be the year of the second place operator in many of our markets. We are seeing
solid signs of operational turnaround, particularly at ISAT but also within
DTAC. Number two players in many of our markets have also been relative
laggards, and could see rotational buying both within the sector and from
investors looking for turn-around stories that have underperformed.
Wireless broadband beginning to factor in Indonesia

Indosat management has been more aggressive in telling the wireless broadband
story in Indonesia. That said, the numbers clearly show Telkomsel ramping
wireless broadband net additions over the past few quarters. We hold mixed
views on wireless broadband in Indonesia. Positive factors include its ability to
drive incremental revenue growth and less SMS cannibalization then in markets
like the Philippines. Negative factors include potential CAPEX risk as voice
network quality is already quite low. Indonesia could begin to serve as a test
case for revenue, margin, and CAPEX impacts of wireless data in Developing
Asia.
It wasn’t too early for Indosat…

We noted in detail in our 2Q10 Deep Dive report that there were clear signs of
operational improvement for Indosat, but felt that it was too early to buy the stock as
we still saw significant scope for downgrades to street 2010 forecasts.
The stock price (up 25% since the 2Q10 print) has clearly begun to reflect two
things, in our view. First, the data points in the 3Q10 print continued to show that
the operational improvements we noted last quarter have accelerated. Network OpEx
per minute declines have moved from 11% in 1Q10 to 21% in 2Q10, now to 35% in
3Q10. This creates significant scope for upside margin surprise in 2011 on our
analysis. Secondly, the street has now downgraded 2010 expectations by 29% since
the 2Q10 print. The lower downside to 2010 street numbers and the larger upside to
2011 estimates combine to create a more attractive risk / reward.
The key question then becomes one of valuation. Indosat is currently trading at
19.7x 2011 street forecasts, and 15.8x JPM 2011 estimates. The latter puts it in line
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(65) 6882-2374 10 November 2010
with the rest of the Indonesian telecom stocks, but not at a significant discount. We
feel that Indosat will continue to trade at a multiple premium due to the large
estimate revision potential, as it has done for the past several months. We therefore
upgrade ISAT to an OW with a target price of Rp6,600, and a Total Return
expectation of 18%.
Upgrading TLKM and TEL on recent underperformance

We are also upgrading TLKM and TEL, both of which we downgraded on 13th
October 2010. Our downgrade was predicated on the fact that the stocks were
trading above their normal P/E trading range (although still in line with their
historical relationship with their underlying country index). As such, we felt that
upside was capped – they could continue to go up if their home index kept rising (but
would likely underperform); and would likely fall if markets began to stall out given
their high valuation multiples. The stocks' correlation to EPS revisions had also
fundamentally broken down, while correlation to home index risen significantly.
TLKM and TEL’s valuation multiples have now moved back into their normal
trading ranges. We feel that the recent sell offs have been unwarranted by operating
fundamentals, and now see 20% and 18% total return potential for TLKM and TEL
respectively. We therefore upgrade both to an OW recommendation. Per the Figures
below, they are now trading within normal valuation ranges, and have begun to see
correlation move back to EPS revisions.
Figure 1: TLKM one year forward consensus P/E
Source: Bloomberg.
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(65) 6882-2374 10 November 2010
Figure 2: PLDT one year forward consensus P/E
Source: Bloomberg.
It is interesting to note that valuation has been a primary driver of Asia Telco stock
price performance over the past month (this is supported by the poor share price
performance of the telcos with high P/Es relative to their trading range). The figure
below shows Factor performance over the past month within the sector…Most
momentum factors returned negative performance, while most headline valuation
statistics were positive. This supports, in our view, our approach of targeting
earnings revision stories trading at mid cycle valuation multiples.
Figure 3: Daily Long-short performance of selected factors in Asian Telcos
Source: MSCI, Barra, Thomson Reuters, Bloomberg, J.P. Morgan.
Please note that detailed analysis of all operational and financial drivers is available
later in this report.
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(65) 6882-2374 10 November 2010
Investment Summary
This report forms part of an ongoing series of Deep Dive reports, designed to give a
comprehensive quarterly review of all operating and financial trends around South
East Asia. We will use this series to track ongoing structural shifts in the industry, as
well as relative execution within each of the operators in the space.
3Q10 saw our average margin of forecast error for revenue compress to 0.2% from
-2.9%, and EBITA forecast error compress from -1.25% to 0.9%. This is a trend we
obviously hope to continue as we try to further dial in our forecasting models and
attempt to derive more accurate forecasting methodologies.
Where we’ve been – 3Q Actuals vs. Forecast

Table 2: TIP Telcos 3Q10 Actual vs. JPMe
Revenue EBITDA EBITDA margin Reported EPS
AIS 3.5% -1.0% -2.1% -2.1%
DTAC 4.5% 17.9% 4.4% 21.9%
Telkom 0.6% 0.8% 0.1% 7.2%
Telkomsel -0.5% -4.6% -2.6% -4.5%
ISAT -0.2% -1.6% -0.7% -33.9%
Excelcom -2.6% -3.0% -0.3% 0.3%
PLDT -4.5% -5.4% -0.6% -7.0%
Globe -0.1% -1.6% -0.8% 7.6%
Source: Company reports and J.P. Morgan estimates.
Figure 4: TIP Telcos 3Q10 JPMe vs. actual (Revenue, EBITDA & EBITDA margin)
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
AIS DTAC Telkom Telkomsel ISAT Ex celcom PLDT Globe
Rev enue EBITDA EBITDA margin
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(65) 6882-2374 10 November 2010
Figure 5: TIP Telcos 3Q10 JPMe vs. actual (reported EPS)
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
Reported EPS
Where we are - Operating / Financial trends

Subscribers
The largest surprise from the 3Q10 filings was the higher than forecast rate of
wireless subscriber growth in Indonesia. All three operators beat our forecasts (24%
/ 27% / 46% for TLKM / ISAT / EXCL respectively), and both ISAT and EXCL
showed positive rate of change. We believe that this upside growth surprise provides
some early evidence that high levels of rural wage growth across Developing Asia
can drive upside surprise to overall Telecom industry revenue, particularly in markets
where penetration is closing on 100%, as it is in Indonesia. High levels of penetration
help to drive this upside surprise, as incremental ARPUs are likely already at trough
levels (vs. China, for example, where incremental rural ARPUs are still significantly
lower than current averages, holding back overall revenue upside).
The rest of the region saw relatively stable net addition levels save PLDT which
stated that it completed a subscriber base clean up in the quarter.
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Figure 6: TIP Telcos wireless monthly net adds (000)

2,500
2,000
1,500
1,000
500
-500
-1,000
2002A
2003A
2004A
2005A
2006A
2007A
2008A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
AIS DTAC Total Thailand Telkomsel ISAT Ex celcomindo PLDT Globe
Minutes of Use
Excelcom continues to show the largest decline, although similar to 2Q10 we believe
this is largely the result of recategorization of free minutes. Telkomsel and Telkom
Flexi showed good usage momentum in 3Q10.
Figure 7: TIP Telcos MOU growth-trailing 12 months

30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
-50.0%
3Q09A
4Q09A
1Q10A
2Q10A
3Q10A
AIS DTAC Telkomsel ISAT Ex celcomindo Telkom-Flex i
Source: Company reports.
Average Revenue Per Minute

Thai operators continue to show a stable low percentage point level of price declines.
Telkom and XL Axiata showed similar trends to 2Q10, with positive improvements
in pricing but falling rates of change. Indosat was the only Indonesian operator to
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(65) 6882-2374 10 November 2010
show negative ARPM growth. We will be closely watching 4Q10 trends to get a
better sense of any impending absolute price declines across Indonesia as a whole.
Figure 8: TIP Telcos wireless voice ARPM growth

100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
-20.0%
-40.0%
-60.0%
-80.0%
-100.0%
1Q09A 2Q09A 3Q09A 4Q09A 1Q10A 2Q10A 3Q10A
Source: Company data.
Wireless data
The data clearly shows the impact of several regional strategies:
1) It appears as though the cannibalization of unlimited SMS packages in the

Philippines is beginning to mitigate, with data as a percentage of revenue
stabilizing after falling over the past few quarters;
2) Indosat continues to have a large lead in terms of data as a percentage of

revenue relative to the other Indonesian operators. We view this as a double
edged sword, as there is cannibalization risk similar to recent quarters in the
Philippines;
3) All three Thai operators continue to have regionally lagging data businesses
(as a percentage of revenue). This should represent a significant
opportunity for future revenue growth in Thailand relative to the rest of the
region. We note that the reported numbers for Thailand are like for like
with operators in the rest of the region (i.e. they include SMS).
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Figure 9: TIP Telcos wireless data as % of total revenue

60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
2002A
2003A
2004A
2005A
2006A
2007A
1Q08A
2Q08A
3Q08A
4Q08A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
AIS DTAC True Telkomsel ISAT Ex celcomindo PLDT Globe
Fixed / Broadband
Telkomsel 3G broadband additions continue to show both absolute as well as rate of
change improvements, while Indosat, despite telling a far more aggressive wireless
data story, lags significantly.
Figure 10: TIP Telcos broadband monthly net adds (000)

700
600
500
400
300
200
100
0
-100
2007A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
True-x DSL Telkom-3G Indosat-3G Ex celcom-3G Telkom-x DSL PLDT-Canopy /Wimax //3G Globe-x DSL
TLKM continues to drive this broadband subscriber growth through significant

ARPU reductions (3Q10 3G Broadband ARPU was USD9.0 vs. USD10.5 a quarter
prior and USD16.2 a year prior).
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Figure 11: TIP Telcos broadband ARPU (US$)

30.0
25.0
20.0
15.0
10.0
5.0
0.0
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
1Q11E
2Q11E
3Q11E
4Q11E
2011E
2012E
True-x DSL Telkom-3G Indosat-3G Ex celcom-3G Telkom-x DSL PLDT-Canopy /Wimax //3G
Revenue trends by market

Thailand: DTAC continues to outgrow ADVANC, as the smaller operator is more
leveraged into a period of pricing stability. Both are showing positive rates of
change which help to underpin our positive view on this market.
Indonesia: The revenue growth gap between XL Axiata and Indosat continues to
narrow, while TLKM continues to lag.
Philippines: Globe continues to show mildly positive top line growth while PLDT
remains in negative territory (with a falling rate of change).
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Figure 12: TIP Telcos revenue growth

50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
4Q09A 1Q10A 2Q10A 3Q10A
AIS DTAC PT Telkom Telkomsel ISAT Ex celcomindo PLDT Globe
Network OpEx per minute trends

The most important statistic here, in our view, is the accelerating reduction in
network OpEx per minute for Indosat. This supports the trend that we noted in our
2Q10 Deep Dive report, and forms the primary reason for our upgrade of
recommendation. We note that Telkomsel also saw good reductions…again this is a
trend we will be watching closely as it has clear implications for a potential end to
pricing stability in Indonesia.
AIS and DTAC are now seeing very stable trends in network OpEx per minute,
supporting our case for price stability in Thailand.
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Figure 13: TIP Telcos OpEx/min YoY change

80.0%
60.0%
40.0%
20.0%
0.0%
-20.0%
-40.0%
4Q09A
1Q10A
2Q10A
3Q10A
AIS DTAC Telkomsel ISAT Ex celcomindo
Source: Bloomberg and J.P. Morgan estimates.
EBITDA margins
PT Telkom and Globe are the only operators in the region to see continued margin
decline, with all other operators experiencing margin expansion. DTAC and Indosat
clearly saw the best improvements in rate of change, supporting our argument that
2011 could be the year of the #2 operators in South East Asia telco stocks.
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Figure 14: TIP Telcos wireless EBITDA margin YoY BP change

100%
80%
60%
40%
20%
0%
-20%
4Q09A 1Q10A 2Q10A 3Q10A
EBITDA growth
PT Telkom joins the Philippines in negative YoY EBITDA growth, hopefully it can
return to positive territory faster than PLDT and Globe, both showing negative trends
since 1Q10. DTAC and Indosat again showed the most positive rate of change
trends.
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Figure 15: TIP Telcos EBITDA growth

100%
80%
60%
40%
20%
0%
-20%
4Q09A 1Q10A 2Q10A 3Q10A
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Where we are - Street View
Figure 16: TIP Telcos % revision to consensus 2010E EPS and P/E since JPM initiation (27-Jul-2010)
80.0%
60.0%
40.0%
20.0%
0.0%
-20.0%
-40.0%
AIS DTAC Telkom ISAT Ex celcom PLDT Globe
EPS P/E
Source: Bloomberg.
Where we’re going - Our revisions

Operating / Revenue / EBITDA
We push through relatively minor forecast changes for most of our operators, with
DTAC / ISAT / EXCL seeing the most positive revisions to 2011 estimates.
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Figure 17: TIP Telcos 2010E revisions (Revenue, EBITDA & EBITDA margin)
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
Rev enue EBITDA Margin BP change
Figure 18: TIP Telcos 2011E revisions (Revenue, EBITDA & EBITDA margin)
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
Rev enue EBITDA Margin BP change
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Net profit revisions

2011 moves into focus at this stage of the calendar...DTAC / ISAT / EXCL continue
to see positive revisions while the Philippine operators in general see slight negative
revisions..
Figure 19: TIP Telcos 2010E revisions (reported EPS)
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
-20.0%
EPS
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Figure 20: TIP Telcos 2011E revisions (reported EPS)
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
EPS
JPM vs. Consensus post revisions

Our largest positive gaps to consensus are now at DTAC / ISAT / EXCL, while we
remain significantly below consensus for Globe..
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Table 3: TIP Telcos JPM vs. consensus

2010E 2011E
AIS
Revenue 2.1% 5.3%
EBITDA 1.0% 0.2%
EBITDA margin-BP diff (0.5) (2.2)
EPS -0.5% -1.5%
DTAC
Revenue 1.4% 5.1%
EBITDA 6.9% 10.3%
EBITDA margin-BP diff 1.9 1.7
EPS 10.5% 22.2%
Telkom
Revenue -3.1% -0.4%
EBITDA -1.2% -0.1%
EPS 0.4% 4.9%
Indosat
Revenue 1.0% 4.7%
EBITDA 2.6% 8.7%
EPS -9.5% 25.0%
Excelcom
Revenue 2.3% 15.2%
EBITDA 3.9% 20.8%
EPS 4.7% 34.6%
PLDT
Revenue -3.2% -1.8%
EBITDA -4.2% -1.6%
EBITDA margin-BP diff (0.6) 0.1
EPS 0.5% 4.0%
Globe
Revenue -1.2% -1.1%
EBITDA -7.2% -11.0%
EBITDA margin-BP diff (3.3) (5.4)
EPS -10.2% -16.5%
Source: Bloomberg, J.P. Morgan estimates.
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Figure 21: TIPs Telcos 2010E JPM vs. consensus
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
Rev enue EBITDA Margin BP change EPS
Figure 22: TIPs Telcos 2011E JPM vs. consensus
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
-20.0%
Rev enue EBITDA Margin BP change EPS
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Revenue Build
Figure 23: TIP Telcos wireless monthly net adds (000)
2,500
2,000
1,500
1,000
500
-500
-1,000
2002A
2003A
2004A
2005A
2006A
2007A
2008A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
AIS DTAC Total Thailand Telkomsel ISAT Ex celcomindo PLDT Globe
Figure 24: TIP Telcos wireless monthly churn

9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2002A
2003A
2004A
2005A
2006A
2007A
1Q08A
2Q08A
3Q08A
4Q08A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10E
4Q10E
2010E
1Q11E
2Q11E
3Q11E
4Q11E
2011E
2012E
AIS PLDT Globe
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Figure 25: TIP Telcos wireless monthly gross adds (000)

4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
-
2002A
2003A
2004A
2005A
2006A
2007A
1Q08A
2Q08A
3Q08A
4Q08A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
4Q10E
2010E
1Q11E
2Q11E
3Q11E
4Q11E
2011E
2012E
AIS PLDT Globe
Figure 26: TIP Telcos wireless MOU

400
350
300
250
200
150
100
50
0
2005A
2006A
1Q07A
2Q07A
3Q07A
4Q07A
2007A
1Q08A
2Q08A
3Q08A
4Q08A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
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Figure 27: TIP Telcos MOU growth
80.0%
TSEL 08: 164%, 2Q09 115%/ EXCL 08: 386%, 1Q09 141%
60.0%
40.0%
20.0%
0.0%
-20.0%
-40.0%
-60.0%
2006A
2007A
2008A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
AIS DTAC Telkomsel ISAT Excelcomindo Telkom-Flexi Bakrie Telecom
Figure 28: TIP Telcos wireless voice ARPM (US cents/min)-long history
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2005A
2006A
2007A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
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Figure 29: TIP Telcos wireless voice ARPM (US cents/min)

3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
Table 4: TIP Telcos wireless voice ARPM growth

2007A 2008A 1Q09A 2Q09A 3Q09A 4Q09A 2009A 1Q10A 2Q10A 3Q10A 2010E 2011E 2012E
Thailand
AIS -1.3% -22.3% -16.4% -7.9% -0.8% -0.8% -7.5% -3.9% -8.1% -8.4% -5.6% -4.8% -7.6%
DTAC 3.3% -9.8% -15.7% -5.7% 2.3% 3.5% -7.9% -3.2% -3.0% -3.9% 0.2% -10.1% -7.1%
Indonesia
Telkomsel -26.8% -69.2% -45.6% -67.5% -18.7% 29.9% -29.9% 56.4% 33.0% 4.4% 14.6% -10.1% -1.9%
ISAT -36.4% -50.6% -57.3% -24.4% -16.0% 3.4% -35.0% 21.8% 3.8% -10.1% 12.2% -9.5% 0.7%
Excelcomindo -39.8% -79.9% -76.1% -45.1% -24.2% 2.1% -37.9% 47.7% 66.7% 64.1% 51.6% 17.8% -2.3%
Telkom-Flexi -22.8% -31.9% -43.8% -36.9% -21.5% 42.5% -20.2% 78.6% 54.1% 42.8% 42.9% -3.2% 1.3%
Table 5: TIP Telcos wireless voice elasticity

2007A 2008A 1Q09A 2Q09A 3Q09A 4Q09A 2009A 1Q10A 2Q10A 3Q10A 2010E 2011E 2012E
Thailand
AIS -0.2 0.4 -1.4 -11.4 -13.3 0.9 -1.2 0.6 0.8 0.9 0.9 0.7 0.7
DTAC -0.9 -1.8 -3.1 5.1 2.0 7.2 -1.1 1.0 0.7 0.5 1.0 0.6 0.7
Indonesia
Telkomsel 0.0 2.4 0.5 1.8 -0.9 2.1 0.5 1.2 1.6 -1.7 -289.6 0.7 0.8
ISAT 1.3 0.8 0.5 -1.3 0.6 2.1 0.2 4.6 2.2 1.1 9.2 0.7 0.8
Excelcomindo 1.4 4.9 2.0 0.7 0.7 2.3 0.5 0.4 0.9 0.9 0.8 0.6 0.8
Telkom-Flexi 1.3 -0.7 -1.0 -0.9 -2.4 1.5 -1.4 0.9 1.2 1.1 1.4 0.2 0.6
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Figure 30: TIP Telcos wireless voice ARPU (US$)

14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2002A
2003A
2004A
2005A
2006A
2007A
1Q08A
2Q08A
3Q08A
4Q08A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
Figure 31: TIP Telcos wireless data ARPU (US$)

4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2002A
2003A
2004A
2005A
2006A
2007A
1Q08A
2Q08A
3Q08A
4Q08A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
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Figure 32: TIP Telcos wireless data as % of total revenue

60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
2002A
2003A
2004A
2005A
2006A
2007A
1Q08A
2Q08A
3Q08A
4Q08A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
Figure 33: TIP Telcos wireless total ARPU (US$)

16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2004A
2005A
2006A
2007A
1Q08A
2Q08A
3Q08A
4Q08A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
AIS DTAC True Telkomsel ISAT Ex celcomindo
Telkom-Flex i Indosat-StarOne Bakrie Telecom PLDT Globe Digitel
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Figure 34: TIP Telcos fixed line monthly net adds (000)
50
40
30
20
10
-10
-20
-30
2002A
2003A
2004A
2005A
2006A
2007A
2008A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
True PT Telkom PLDT Globe
Figure 35: TIP Telcos fixed line ARPU (US$)

50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2002A
2003A
2004A
2005A
2006A
2007A
2008A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
Figure 36: TIP Telcos broadband monthly net adds (000)

700
600
500
400
300
200
100
0
-100
2007A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
True-x DSL Telkom-3G Indosat-3G Ex celcom-3G Telkom-x DSL PLDT-Canopy /Wimax //3G Globe-x DSL
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Figure 37: TIP Telcos broadband ARPU (US$)

30.0
25.0
20.0
15.0
10.0
5.0
0.0
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
1Q11E
2Q11E
3Q11E
4Q11E
2011E
2012E
True-x DSL Telkom-3G Indosat-3G Ex celcom-3G Telkom-x DSL PLDT-Canopy /Wimax //3G
Table 6: TIP Telcos total revenue (US$ mn)

2002A 2003A 2004A 2005A 2006A 2007A 2008A 1Q09A 2Q09A 3Q09A 4Q09A 2009A 1Q10A 2Q10A 3Q10A 2010E 2011E 2012E
Thailand
AIS 1,866 2,158 2,396 2,298 2,412 3,359 3,357 744 725 735 780 2,983 820 818 874 3,439 3,847 4,247
DTAC 744 765 968 1,071 1,279 2,030 2,051 467 461 477 509 1,913 536 539 580 2,265 2,554 2,880
Indonesia
PT Telkom 2,231 3,162 3,798 4,305 5,597 6,503 6,289 1,268 1,517 1,649 1,848 6,219 1,721 1,847 1,901 7,548 8,705 9,918
Telkomsel 812 1,300 1,652 2,176 3,180 4,012 3,855 798 964 1,098 1,188 4,003 1,096 1,171 1,247 4,845 5,785 6,802
ISAT 716 960 1,167 1,193 1,336 1,804 1,934 394 414 450 527 1,771 512 541 576 2,256 2,688 3,190
Excelcom 266 306 351 390 630 874 1,250 250 314 356 417 1,320 444 468 494 1,931 2,606 3,108
Philippines
PLDT 1,826 2,054 2,167 2,261 2,497 2,995 3,277 772 778 751 811 3,112 794 806 775 3,213 3,488 3,779
Globe 888 913 992 1,067 1,170 1,422 1,459 343 336 323 342 1,343 344 358 349 1,412 1,525 1,662
Table 7: TIP Telcos total revenue growth YoY

2003A 2004A 2005A 2006A 2007A 2008A 1Q09A 2Q09A 3Q09A 4Q09A 2009A 1Q10A 2Q10A 3Q10A 2010E 2011E 2012E
Thailand
AIS 11.7% 7.6% -4.1% -1.2% 18.6% 2.2% -8.2% -11.1% -9.3% -1.1% -7.5% 2.5% 5.3% 10.7% 6.9% 5.9% 8.4%
DTAC -0.7% 22.5% 10.7% 12.4% 35.2% 3.3% -6.8% -5.1% -3.1% 3.4% -3.0% 6.7% 8.9% 13.2% 9.8% 6.8% 10.7%
Indonesia
PT Telkom 30.3% 25.2% 23.2% 22.7% 15.9% 2.1% -2.2% 5.2% 13.9% 9.0% 6.4% 8.3% 5.4% 4.0% 5.8% 10.5% 11.6%
Telkomsel 47.2% 32.5% 43.1% 37.9% 25.8% 1.4% -3.6% 12.2% 24.8% 14.9% 11.8% 9.6% 5.0% 2.6% 5.5% 14.4% 15.2%
ISAT 23.3% 26.7% 11.1% 5.6% 34.7% 13.2% 6.8% -6.2% -7.9% 2.4% -1.4% 3.8% 13.0% 15.4% 11.1% 14.1% 16.2%
Excelcom 5.7% 19.4% 21.0% 52.4% 38.3% 51.0% 10.6% 4.6% 6.9% 33.6% 13.6% 41.5% 28.8% 25.2% 27.6% 29.3% 16.8%
Philippines
PLDT 18.1% 9.1% 2.4% 2.8% 7.8% 5.5% 4.0% 2.6% 0.6% -0.5% 1.7% -0.8% -1.2% -2.9% -1.8% 4.2% 6.5%
Globe 8.0% 12.4% 5.6% 2.0% 9.3% -1.1% 3.0% -0.3% -3.2% -5.2% -1.5% -3.0% 1.6% 1.7% 0.1% 3.7% 7.2%
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Figure 38: TIP Telcos total revenue (US$ mn)

12,000
10,000
8,000
6,000
4,000
2,000
0
2002A
2003A
2004A
2005A
2006A
2007A
2008A
2009A
2010E
2011E
2012E
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EBITDA Build
Table 8: TIP Telcos OpEx/min (US cents)
2004A 2005A 2006A 2007A 2008A 1Q09A 2Q09A 3Q09A 4Q09A 2009A 1Q10A 2Q10A 3Q10A 2010E 2011E 2012E
Thailand
AIS NA NA 2.25 2.35 1.63 1.44 1.45 1.29 1.32 1.39 1.26 1.16 1.27 1.30 1.30 1.31
DTAC NA NA 2.03 2.73 2.52 2.36 2.42 2.42 2.18 2.39 2.19 2.26 2.45 2.32 2.15 2.12
Indonesia
Telkomsel 7.63 5.61 5.04 4.80 1.51 0.87 0.88 1.10 1.45 1.05 1.45 1.46 1.42 1.41 1.34 1.31
ISAT NA NA 5.51 4.40 2.52 2.00 2.11 2.54 2.49 2.05 2.26 1.97 1.87 1.94 1.66 1.58
Excelcom NA 12.59 12.13 7.21 1.31 0.78 0.83 0.84 0.87 0.82 0.91 1.20 1.30 1.16 1.28 1.27
Bakrie NA NA 1.62 1.56 1.14 0.89 0.60 0.77 0.84 0.77 0.68 NA NA NA NA NA
Table 9: TIP Telcos OpEx/min growth YoY

Thailand
AIS NA NA NA 4.4% -30.4% -21.6% -13.9% -26.1% -23.3% -15.2% -12.8% -20.1% -1.2% -6.4% 0.4% 0.3%
DTAC NA NA NA 34.7% -7.9% -14.6% -6.3% -4.8% -12.7% -5.1% -7.2% -6.6% 1.4% -2.7% -7.2% -1.4%
Indonesia
Telkomsel NA -26.4% -10.2% -4.7% -68.6% -40.4% -72.4% -22.8% 44.0% -30.2% 66.3% 65.1% 28.8% 33.8% -5.1% -2.0%
ISAT NA NA NA -20.2% -42.7% -41.2% -7.8% 4.4% 18.6% -18.7% 13.4% -6.4% -26.4% -5.4% -14.6% -4.8%
Excelcom NA NA -3.7% -40.6% -81.9% -73.5% -37.0% -20.5% -17.3% -37.0% 17.6% 44.1% 54.5% 41.0% 9.7% -0.2%
Bakrie NA NA NA -3.6% -26.7% -36.9% -49.5% -32.3% -11.7% -32.5% -23.4% NA NA NA NA NA
Table 10: TIP Telcos OpEx ex. marketing/min (US cents)

Thailand
AIS NA NA 2.09 2.18 1.53 1.37 1.36 1.21 1.21 1.30 1.22 1.09 1.21 1.23 1.22 1.21
DTAC NA NA 1.82 2.53 2.33 2.19 2.26 2.27 2.03 2.23 2.04 2.13 2.31 2.18 2.03 2.00
Indonesia
Telkomsel 6.97 5.14 4.62 4.40 1.37 0.82 0.81 1.00 1.31 0.96 1.36 1.35 1.30 1.29 1.22 1.19
ISAT NA NA 5.01 4.01 2.27 1.84 1.92 2.30 2.29 1.88 2.05 1.76 1.65 1.73 1.48 1.41
Excelcom NA 10.40 9.67 5.77 1.05 0.67 0.72 0.72 0.75 0.71 0.79 1.02 1.10 0.99 1.07 1.05
Bakrie NA NA 1.11 1.12 0.79 0.70 0.36 0.52 0.57 0.53 0.47 NA NA NA NA NA
Table 11: TIP Telcos OpEx ex. marketing/min growth YoY

Thailand
AIS NA NA NA 4.3% -30.1% -21.1% -15.3% -25.9% -21.3% -14.8% -11.1% -19.9% -0.1% -5.6% -0.8% -0.7%
DTAC NA NA NA 39.2% -8.2% -15.0% -4.8% -3.3% -11.5% -4.2% -6.7% -5.9% 2.1% -2.1% -7.1% -1.3%
Indonesia
Telkomsel NA -26.3% -10.1% -4.6% -68.9% -39.5% -72.3% -21.4% 43.3% -29.7% 66.0% 66.2% 29.8% 34.0% -5.5% -2.6%
ISAT NA NA NA -20.0% -43.3% -40.2% -6.5% 6.2% 19.6% -17.5% 11.5% -8.4% -28.4% -7.7% -14.4% -4.7%
Excelcom NA NA -7.0% -40.4% -81.8% -71.4% -31.2% -14.3% -13.7% -32.2% 17.5% 41.6% 52.4% 38.8% 8.6% -2.1%
Bakrie NA NA NA 0.8% -29.4% -25.8% -58.5% -34.8% -12.1% -32.7% -32.5% NA NA NA NA NA
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Figure 39: TIP Telcos wireless OpEx/min (US cents)

14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
2006A
2007A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
AIS DTAC Telkomsel ISAT Ex celcomindo Bakrie Telecom
Figure 40: TIP Telcos wireless OpEx ex. marketing/min (US cents)
12.00
10.00
8.00
6.00
4.00
2.00
0.00
2006A
2007A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
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(65) 6882-2374 10 November 2010
Figure 41: TIP Telcos wireless EBITDA margin

70.0%
65.0%
60.0%
55.0%
50.0%
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
2006A
2007A
1Q08A
2Q08A
3Q08A
4Q08A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
AIS DTAC Telkomsel ISAT Ex celcomindo PLDT Globe
Table 12: TIP Telcos total EBITDA (US$ mn)

Thailand
AIS 778 1,054 1,261 1,194 1,114 1,353 1,411 330 325 337 346 1,336 394 390 400 1,591 1,696 1,760
DTAC 244 295 375 410 470 585 702 136 137 149 167 589 184 186 221 812 892 982
Indonesia
PT Telkom 1,352 1,954 2,352 2,619 3,349 3,929 3,459 712 890 956 847 3,386 977 1,070 1,051 4,171 4,726 5,502
Telkomsel 548 936 1,194 1,586 2,263 2,801 2,494 509 656 737 759 2,631 692 724 760 2,995 3,495 4,187
ISAT 383 511 673 693 770 953 963 183 211 202 256 845 241 261 280 1,105 1,345 1,630
Excelcom 154 169 182 179 279 384 532 96 138 168 208 597 231 251 263 1,024 1,417 1,675
Philippines
PLDT 534 919 1,230 1,398 1,515 1,788 1,908 456 464 412 423 1,760 458 481 450 1,852 2,023 2,175
Globe 518 514 587 607 726 873 842 205 196 176 190 767 188 183 173 723 744 813
Table 13: TIP Telcos total EBITDA growth YoY

2003A 2004A 2005A 2006A 2007A 2008A 1Q09A 2Q09A 3Q09A 4Q09A 2009A 1Q10A 2Q10A 3Q10A 2010E 2011E 2012E
Thailand
AIS 30.7% 16.0% -5.3% -12.2% 3.5% 6.6% -5.1% -6.3% -0.5% 8.3% -1.4% 11.2% 12.0% 10.6% 10.4% 0.9% 1.9%
DTAC 16.5% 23.1% 9.6% 7.8% 6.0% 22.5% -15.6% -39.6% -1.3% 24.4% -12.7% 26.0% 26.6% 38.2% 27.9% 4.0% 8.1%
Indonesia
PT Telkom 32.9% 25.5% 21.0% 20.6% 17.0% -7.1% -8.7% 9.3% 25.4% -1.8% 5.4% 9.5% 4.0% -0.8% 7.4% 8.6% 14.0%
Telkomsel 57.1% 33.0% 44.4% 34.6% 23.5% -6.0% -13.2% 21.5% 39.8% 13.4% 13.6% 8.6% -4.5% -6.9% -0.7% 11.8% 17.3%
ISAT 22.9% 37.2% 11.9% 4.8% 23.6% 6.6% -4.0% -3.2% -14.6% -0.3% -5.5% 5.2% 7.3% 24.9% 14.1% 16.6% 18.7%
Excelcom 0.6% 12.2% 6.8% 47.2% 37.4% 46.2% -1.8% -1.2% 11.1% 92.8% 20.9% 92.2% 57.4% 41.3% 49.5% 32.6% 15.7%
Philippines
PLDT 81.0% 38.4% 11.6% 0.9% 6.1% 2.9% 0.7% 1.4% -8.7% 2.2% -1.2% -3.1% -1.1% 2.6% 0.1% 4.9% 5.7%
Globe 4.3% 18.1% 1.6% 11.3% 8.1% -7.0% -1.5% -0.4% -8.3% 0.1% -2.5% -11.3% -10.9% -7.8% -10.2% -1.2% 7.4%
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(65) 6882-2374 10 November 2010
Figure 42: TIP Telcos total EBITDA (US$ mn)

6,000
5,000
4,000
3,000
2,000
1,000
0
2001A
2002A
2003A
2004A
2005A
2006A
2007A
2008A
2009A
2010E
2011E
2012E
Figure 43: TIP Telcos EBITDA margin

80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
2002A
2003A
2004A
2005A
2006A
2007A
2008A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
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(65) 6882-2374 10 November 2010
Figure 44: TIP Telcos EBITDA margin BP change YoY

15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
2004A
2005A
2006A
2007A
2008A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
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INDONESIA

(65) 6882-2374 10 November 2010
Net profit build

Figure 45: TIP Telcos D&A as % of revenue
39.0%
34.0%
29.0%
24.0%
19.0%
14.0%
4Q09A 1Q10A 2Q10A 3Q10A
Figure 46: TIP Telcos finance cost as % of revenue

14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
4Q09A 1Q10A 2Q10A 3Q10A
Figure 47: TIP Telcos interest income as % of revenue

1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
4Q09A 1Q10A 2Q10A 3Q10A
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INDONESIA

(65) 6882-2374 10 November 2010
Table 14: TIP Telcos recurring profit (US$ mn)

Thailand
AIS 272 445 502 464 428 506 570 129 120 123 135 506 161 158 163 649 686 677
DTAC 49 60 110 116 129 181 229 42 39 48 64 193 75 75 76 324 367 392
Indonesia
PT Telkom 817 700 832 859 1,139 1,429 1,221 225 288 310 200 1,024 287 359 324 1,301 1,587 2,009
Telkomsel 299 500 617 897 1,211 1,495 1,219 228 320 363 348 1,244 302 340 359 1,394 1,713 2,193
ISAT 32 161 201 176 164 230 258 23 27 10 -3 68 10 8 19 91 226 377
Excelcom NA NA NA -23 37 79 36 9 10 26 95 131 62 83 87 324 556 753
Philippines
PLDT -317 25 565 571 684 753 814 218 225 190 206 838 228 231 223 903 997 1,112
Globe 169 205 207 159 212 279 265 85 68 52 56 261 61 53 44 205 196 243
Table 15: TIP Telcos recurring income growth YoY

Thailand
AIS 9.2% -7.5% -13.2% 0.6% 15.2% -12.8% -33.9% -8.1% 63.2% -7.5% 16.1% 23.0% 23.3% 18.9% 0.0% -3.1%
DTAC 78.7% 5.1% 4.8% 19.6% 29.0% -37.3% -36.3% -10.9% 75.0% -12.3% 66.3% 78.2% 48.0% 55.8% 7.4% 4.7%
Indonesia
PT Telkom 23.8% 12.2% 25.1% 25.1% -9.8% -19.5% 0.1% 12.4% -32.8% -9.7% 1.9% 7.6% -5.8% 10.8% 16.9% 23.9%
Telkomsel 28.7% 57.9% 27.4% 23.1% -13.9% -26.8% 23.5% 34.1% 21.3% 9.8% 5.8% -8.1% -10.7% -2.2% 17.7% 25.4%
ISAT 30.3% -4.8% -12.0% 39.7% 18.5% -43.3% -48.5% -84.8% -103.2% -71.7% -64.3% -74.4% 69.9% 16.8% 138.0% 63.3%
Excelcom NA NA NA 115.4% -51.9% -38.5% -65.7% -9.7% -320.8% 292.4% 454.5% 639.5% 202.4% 114.9% 64.7% 32.6%
Philippines
PLDT 2218.4% -0.9% 11.5% -1.0% 4.2% 9.7% 13.2% -0.2% 20.9% 10.2% 1.0% -2.3% 10.3% 2.6% 6.0% 9.7%
Globe 4.3% -24.7% 24.2% 18.6% -8.6% 15.9% 2.4% -8.4% 10.2% 5.5% -31.3% -25.4% -21.1% -25.3% -8.1% 21.8%
Figure 48: TIP Telcos recurring income (US$ mn)
2,500
2,000
1,500
1,000
500
0
2004A
2005A
2006A
2007A
2008A
2009A
2010E
2011E
2012E
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(65) 6882-2374 10 November 2010
Network Scope / Quality

Figure 49: TIP Telcos total wireless BTS
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2001A
2002A
2003A
2004A
2005A
2006A
2007A
1Q08A
2Q08A
3Q08A
4Q08A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
AIS Telkomsel ISAT Ex celcomindo PLDT
Figure 50: TIP Telcos total wireless subs/BTS

5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
2006A
2007A
1Q08A
2Q08A
3Q08A
4Q08A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
AIS Telkomsel ISAT Ex celcomindo PLDT
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INDONESIA

(65) 6882-2374 10 November 2010
Figure 51: TIP Telcos outgoing monthly minutes/BTS (000)

800
700
600
500
400
300
200
100
0
2006A
2007A
1Q08A
2Q08A
3Q08A
4Q08A
2008A
1Q09A
2Q09A
3Q09A
4Q09A
2009A
1Q10A
2Q10A
3Q10A
2010E
2011E
2012E
AIS Telkomsel ISAT Ex celcomindo
Figure 52: TIP Telcos wireless capex/incremental sub (US$)

450
400
350
300
250
200
150
100
50
0
2002A
2003A
2004A
2005A
2006A
2007A
2008A
2009A
2010E
2011E
2012E
AIS DTAC True Telkomsel ISAT Ex celcomindo Bakrie Telecom PLDT Globe Digitel
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INDONESIA

(65) 6882-2374 10 November 2010
Figure 53: TIP Telcos gross PP&E to outgoing MOU (US cents/min)
84.0
74.0
64.0
54.0
44.0
34.0
24.0
14.0
4.0
2002A
2003A
2004A
2005A
2006A
2007A
2008A
2009A
2010E
2011E
2012E
Figure 54: TIP Telcos gross PP&E to outgoing MOU (USc/min)-2008 onwards
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2008A
2009A
2010E
2011E
2012E
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(65) 6882-2374 10 November 2010
Figure 55: TIP Telcos gross PP&E/sub (US$)

1,200
1,000
800
600
400
200
0
2002A
2003A
2004A
2005A
2006A
2007A
2008A
2009A
2010E
2011E
2012E
AIS DTAC True Telkomsel ISAT Ex celcomindo
Bakrie Telecom PT Telkom PLDT Globe Digitel
Figure 56: TIP Telcos fixed line capex/incremental line (US$)

350
300
250
200
150
100
50
0
2003A
2004A
2005A
2006A
2007A
2008A
2009A
2010E
2011E
2012E
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Thailand operating assumption changes

Table 16: Thai Telcos country model revisions
2010E 2011E 2012E
Wireless subs (000) New 30,982 33,202 35,602
AIS Old 30,908 33,083 35,483
% change 0.2% 0.4% 0.3%
Abs change 74 119 119
DTAC New 21,295 23,215 25,315

Old 21,360 23,235 25,335
% change -0.3% -0.1% -0.1%
Abs change (65) (20) (20)
Voice ARPM (Bt) New 0.61 0.55 0.50

AIS Old 0.61 0.55 0.50
% change -0.3% 0.1% 0.0%
Abs change (0.0) 0.0 0.0
DTAC New 0.64 0.55 0.50

Old 0.64 0.55 0.50
% change 1.1% 0.1% 0.0%
Abs change 0.0 0.0 0.0
Voice MOU (Bt) New 302.2 322.0 342.9

AIS Old 301.6 321.8 342.6
% change 0.2% 0.1% 0.1%
DTAC New 267.4 292.9 311.0

Old 272.9 301.7 322.9
% change -2.0% -2.9% -3.7%
Abs change (5.5) (8.9) (11.9)
Voice ARPU (Bt) New 184.7 177.5 171.5

AIS Old 184.8 177.3 171.3
% change -0.1% 0.1% 0.1%
Abs change (0.2) 0.2 0.2
DTAC New 172.2 160.6 155.5

Old 173.8 165.3 161.4
% change -0.9% -2.9% -3.7%
Abs change (1.6) (4.7) (6.0)
Data ARPU (Bt) New 41.9 48.3 58.0

AIS Old 42.8 49.6 59.0
% change -2.1% -2.6% -1.6%
Abs change (0.9) (1.3) (1.0)
DTAC New 30.2 32.9 42.2

Old 30.5 35.6 44.4
% change -0.9% -7.4% -4.9%
Abs change (0.3) (2.6) (2.2)
Total ARPU (Bt) New 305.4 301.2 304.4

AIS Old 301.9 297.0 299.3
% change 1.2% 1.4% 1.7%
DTAC New 293.4 288.3 292.7

Old 287.6 277.9 280.8
% change 2.0% 3.8% 4.2%
Abs change 5.9 10.4 11.9
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(65) 6882-2374 10 November 2010
Advanced Info Services – Detailed Model

Revisions
Table 17: AIS model revisions
(Bt mn, YE Dec) 2010E 2011E 2012E
Revenue
New 109,487 115,978 125,684
Old 108,096 114,013 123,113
% change 1.3% 1.7% 2.1%
Abs change 1,391 1,966 2,571
EBITDA
New 50,653 51,129 52,086
Old 51,157 52,078 53,019
% change -1.0% -1.8% -1.8%
Abs change (504) (949) (933)
EBITDA margin
New 46.3% 44.1% 41.4%
Old 47.3% 45.7% 43.1%
PPS change -1.1% -1.6% -1.6%
EBIT
New 31,309 30,825 30,142
Old 31,435 31,892 31,305
% change -0.4% -3.3% -3.7%
Abs change (127) (1,067) (1,164)
Net income
New 19,679 20,320 20,036
Old 19,923 21,040 20,869
% change -1.2% -3.4% -4.0%
Abs change (244) (719) (833)
Recurring income
New 20,675 20,670 20,036
Old 20,871 21,390 20,869
% change -0.9% -3.4% -4.0%
Abs change (196) (719) (833)
Reported EPS (Bt)

New 6.64 6.85 6.76
Old 6.71 7.08 7.04
% change -1.1% -3.3% -4.0%
Abs change (0.07) (0.23) (0.28)
DPS (Bt)
New 12.30 6.80 6.70
Old 11.30 6.30 6.30
% change 8.8% 7.9% 6.3%
Abs change 1.00 0.50 0.40
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(65) 6882-2374 10 November 2010
Company Description P&L sensitivity metrics EBITDA EPS

2010E impact (%) impact (%)
AIS is the largest mobile operator in Blended Wireless ARPU (Bt) 243
Thailand with 46% of the mobile market Impact of each 5% 4.0% 6.7%
where more than 95% the population
Wireless subs (mn) 31.0
owns a mobile phone. The company is
considering an investment in 3G either Impact of each 5% 2.1% 3.5%
through new frequency allocation or EBITDA margin (%) 46.3%
utilizing its currently available frequency. Impact of each 1% 2.2% 3.7%
Capex (Bt mn) 6,184
Impact of each 5% NM 0.0%
Source: J.P. Morgan estimates
Price target methodology

Revenue distribution (2010E) Our PT is based on a sum of 1) potential upside/ (downside) to
consensus EPS vs. JPM EPS estimates and 2) our estimated multiple
expansion/(contraction) based on peak P/E multiple. Our peak P/E
multiple is based on the stock’s historical trading range and expected
future business changes.
Price target and valuation analysis 2010E 2011E

Current consensus P/E (a) 10.1 14.6
Peak P/E (b) 15.0 15.0

Upside/ (Downside) to peak multiple (b/a-1=e) 48.0% 2.9%
JPM vs. consensus EPS (d) -0.5% -1.5%
Cumulative upside to current price (e+d) 47.5% 1.4%
J.P. Morgan vs consensus JPM Dec-2011 price target (Bt/sh) 110
Bt mn J. P. Morgan Consensus
FY10E-Rev 109,487 107,190 If our price target were achieved, AIS would be trading at a 2010E/11E
FY11E-Rev 115,978 110,192 adjusted PER and EV/EBITDA of 15.8x/15.8x and 6.7x/6.9x. At its
FY10E- target price, AIS would be providing a FY10E/FY11E dividend yield of
EBITDA 50,653 50,144
FY11E-
11.2%/6.2% with a Bt6 special in 2010. A well-funded new entrant
EBITDA 51,129 51,012 taking one of the three 3G licenses on offer is the key risk to our target
FY10E-Net price.
inc. 19,679 19,819
FY11E-Net
inc. 20,320 20,644
Source: J.P. Morgan estimates, Bloomberg
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(65) 6882-2374 10 November 2010
All Data As Of 09-Nov-10
Q-Snapshot: Advanced Info Service PCL

Quant Return Drivers (a Score >50% indicates company ranks 'above average') J.P. Morgan Composite Q-Score
Score 0% (worst) to 100% (best) vs Country vs Industry Raw Value
100% HIGH/STRONGER
Value
P/E Vs Market (12mth fwd EPS) 44% 55% 1.1x C
75%
P/E Vs Sector (12mth fwd EPS) 37% 55% 1.1x O
EPS Growth (forecast) 33% 42% 9.3% U
50%
Value Score 26% 48% N
Price Momentum T
25%
12 Month Price Momentum 27% 70% 29.4% R
1 Month Price Reversion 49% 27% 5.2% Y 0% LOW/WEAKER
Momentum Score 25% 65%
0% 25% 50% 75% 100%
Quality
Return On Equity (forecast) 93% 85% 30.5% INDUSTRY
Earnings Risk (Variation in Consensus) 86% 75% 0.05 Quant Return Drivers Summary (vs Country)
Quality Score 94% 86%
100%
Earnings & Sentiment
Earnings Momentum 3mth (risk adjusted) 84% 89% 114.3 75%
1 Mth Change in Avg Recom. 7% 3% -0.44 50%
Net Revisions FY2 EPS 82% 99% 100% 25%
Earnings & Sentiment Score 63% 62%
0%
COMPOSITE Q-SCORE* (0% To 100%) 53% 67% VALUE PRICE QUALITY EARNINGS
Targets & Recommendations** EPS Revisions** EPS Momentum (%) Historical Total Return (%)
20 Targets Recoms 20 7.0 50 45
Consensus Changes (4wks)
6.0
(Local Currency %)
15 15 40
5.0 29
4.0 30
(%)
10 10
3.0 20
5 5 2.0 9
10 5
1.0
0 0 0.0 0
Up Dn Unchanged Up Dn Unchanged -1 Mth -3 Mth 1Mth 3Mth 1Yr 3Yr
FY1 FY2 FY1 FY2
Consensus Growth Outlook (%)
20.0
14.2
15.0
10.0 4.6
4.4 3.2
5.0
0.0
-5.0 -0.2
-10.0
-8.4
EPS Actual To FY1 EPS FY1 To FY2 EPS FY2 To FY3 Cash Flow FY1 To FY2 Dividends FY1 To FY2 Sales FY1ToFY2
Closest in Country by Size (Consensus. ADV = average daily value traded in US$m over the last 3 mths)
Code Name Industry USD MCAP ADV PE FY1 Q-Score*
PTTEP-TH PTT Exploration & Production PCL Oil & Gas Production 20,943 38.16 16.5 45%
SCC-TH Siam Cement PCL Construction Materials 14,144 27.38 15.7 67%
SCB-TH Siam Commercial Bank PCL Regional Banks 13,024 35.72 16.0 34%
KBANK-TH Kasikornbank PCL Major Banks 10,236 24.69 15.9 62%
BBL-TH Bangkok Bank PCL Regional Banks 10,124 26.74 12.2 47%
ADVANC-TH Advanced Info Service PCL Wireless Telecommunications 9,700 25.54 14.7 53%
PTTCH-TH PTT Chemical PCL Chemicals: Specialty 8,227 30.26 23.9 79%
BANPU-TH Banpu PCL Coal 7,376 44.04 15.9 68%
KTB-TH Krung Thai Bank PCL Regional Banks 6,701 33.29 13.7 89%
CPALL-TH CP ALL PCL Food Retail 6,469 11.98 28.9 88%
IVL-TH Indorama Ventures PCL Chemicals: Specialty 5,838 20.53 27.5 45%
Source: Factset, Thomson and J.P. Morgan Quantitative Research. For an explanation of the Q-Snapshot, please visit http://jpmorgan.hk.acrobat.com/qsnapshot/
Q-Snapshots are a product of J.P. Morgan’s Global Quantitative Analysis team and provide quantitative metrics summarized in an overall company 'Q-Score.'
Q-Snapshots are based on consensus data and should not be considered as having a direct relationship with the J.P. Morgan analysts’ recommendation.
* The Composite Q-Score is calculated by weighting and combining the 10 Quant return drivers shown. The higher the Q-Score the higher the one month
expected return. On a 14 Year back-test the stocks with the highest Q-Scores have been shown (on average) to significantly outperform those stocks with the
lowest Q-Scores in this universe. ** The number of up, down and unchanged target prices, recommendations or EPS forecasts that make up consensus.
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(65) 6882-2374 10 November 2010
JPM Q-Profile
Advanced Info Service PCL (THAILAND / Telecommunication Services)
As Of: 04-Nov-2010 Quant_Strategy@jpmorgan.com
Local Share Price Current: 92.00 12 Mth Forward EPS Current: 6.75
120.00 12.00
10.00
100.00
8.00
80.00
6.00
60.00 4.00
2.00
40.00
0.00
20.00
-2.00
0.00 -4.00
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Earnings Yield (& local bond Yield) Current: 7% Implied Value Of Growth* Current: 10.61%
16% 12Mth fwd EY Thailand BY Proxy 1.00
14% 0.80
12% 0.60
10% 0.40
8% 0.20
6% 0.00
4% -0.20
2% -0.40
0% -0.60
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
PE (1Yr Forward) Current: 13.6x Price/Book Value Current: 4.8x
35.0x 18.0x PBV hist PBV Forward
16.0x
30.0x
14.0x
25.0x
12.0x
20.0x 10.0x
15.0x 8.0x
6.0x
10.0x
4.0x
5.0x
2.0x
0.0x 0.0x
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
ROE (Trailing) Current: 28.03 Dividend Yield (Trailing) Current: 6.71
40.00 10.0
35.00 9.0
8.0
30.00
7.0
25.00 6.0
20.00 5.0
15.00 4.0
3.0
10.00
2.0
5.00 1.0
0.00 0.0
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Summary
Advanced Info Service PCL 9175.17 As Of: 4-Nov-10
THAILAND 23.51337 SEDOL 6412568 Local Price: 92.00
Telecommunication Services Wireless Telecommunication Ser EPS: 6.75
Latest Min Max Median Average 2 S.D.+ 2 S.D. - % to Min % to Max % to Med % to Avg
12mth Forward PE 13.63x 7.34 31.32 13.84 15.67 26.51 4.83 -46% 130% 2% 15%
P/BV (Trailing) 4.79x 1.87 13.89 3.83 4.48 8.87 0.09 -61% 190% -20% -7%
Dividend Yield (Trailing) 6.71 0.00 9.40 3.33 3.71 9.51 -2.08 -100% 40% -50% -45%
ROE (Trailing) 28.03 10.55 37.24 23.08 24.02 38.64 9.40 -62% 33% -18% -14%
Implied Value of Growth 10.6% -0.39 0.71 0.27 0.28 0.79 -0.22 -467% 572% 156% 169%
Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs * Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)
49
INDONESIA

(65) 6882-2374 10 November 2010
DTAC – Detailed Model Revisions

Table 18: DTAC model revisions
(Bt mn, YE Dec) 2010E 2011E 2012E
Revenue
New 72,093 77,004 85,227
Old 70,767 74,359 81,832
% change 1.9% 3.6% 4.1%
Abs change 1,326 2,644 3,395
EBITDA
New 25,853 26,885 29,067
Old 24,051 23,073 23,399
% change 7.5% 16.5% 24.2%
Abs change 1,802 3,812 5,668
EBITDA margin
New 35.9% 34.9% 34.1%
Old 34.0% 31.0% 28.6%
PPS change 1.9% 3.9% 5.5%
EBIT
New 15,009 16,022 16,723
Old 13,806 11,749 10,653
% change 8.7% 36.4% 57.0%
Abs change 1,203 4,273 6,070
Net income
New 10,949 11,077 11,596
Old 9,968 8,184 7,434
% change 9.8% 35.4% 56.0%
Abs change 980 2,894 4,163
Recurring income
New 10,314 11,077 11,596
Old 9,975 8,184 7,434
% change 3.4% 35.4% 56.0%
Abs change 339 2,894 4,163
Reported EPS (Bt)

New 4.62 4.68 4.90
Old 4.22 3.47 3.15
% change 9.5% 35.0% 55.5%
Abs change 0.40 1.21 1.75
DPS (Bt)
New 2.87 2.34 2.45
Old 2.11 1.73 1.57
% change 36.0% 35.0% 55.5%
Abs change 0.76 0.61 0.87
50
INDONESIA

(65) 6882-2374 10 November 2010

DTAC is the second largest GSM mobile Blended Wireless ARPU (Bt/mo) 211
phone provider in Thailand after AIS. It Impact of each 5% 3.6% 6.7%
was founded in 1989 to provide wireless
telecommunication service in 800 MHz
and 1800 MHz frequency bands under a Impact of each 5% 1.9% 3.5%
27-year "Build-Transfer-Operate" EBITDA margin (%) 35.9%
concession granted by CAT Telecom. Impact of each 1% 2.8% 5.2%
Capex (Bt mn) 4,957
Impact of each 5% NA 0.1%

Our PT is based on a sum of 1) potential upside/ (downside) to
Revenue customer chart consensus EPS vs. JPM EPS estimates and 2) our estimated multiple

Peak P/E (b) 14.00 14.00

Upside/ (Downside) to peak multiple (b/a-1=e) 37.1% 25.4%
JPM vs. consensus EPS (d) 10.5% 22.2%
Cumulative upside to current price (e+d) 47.5% 47.6%
J.P. Morgan vs consensus JPM Dec 2011 price target (Bt/sh) 60
Bt mn J. P. Morgan Consensus
FY10E-Rev 72,093 71,120 If our price target were achieved, DTAC would be trading at a
FY11E-Rev 77,004 73,280 2010E/11E adjusted PER and EV/EBITDA of 13.8x/12.8x and
FY10E- 5.5x/5.3x. It would be providing a dividend yield of 4.8%/3.9%
EBITDA 25,853 24,176
FY11E-
assuming the 50% historical payout of core profits is continued. A well
EBITDA 26,885 24,373 funded new entrant taking one of the three 3G licenses on offer is the
FY10E-Net key risk to our target price.
inc. 10,949 9,837
FY11E-Net
inc. 11,077 9,108
51
INDONESIA

(65) 6882-2374 10 November 2010
Q-Snapshot: Total Access Communication PCL

100% HIGH/STRONGER
Value
75%
50%
Price Momentum T
25%
0% 25% 50% 75% 100%
Quality
100%
0%
19
10 20
(Local Currency %)
15 15.0
8 15
10 7
(%)
10 6 10.0
5
4
5 5.0 0
2 -5
0 0 0.0 -10 -6
FY1 FY2 FY1 FY2
60.0 47.9
50.0
40.0
30.0
20.0
10.0 0.7 3.6
0.0
-10.0 -1.0
-20.0 -7.4
-14.1
BAY-TH Bank of Ayudhya PCL Regional Banks 5,165 18.82 17.3 48%
TOP-TH Thai Oil PCL Oil Refining/Marketing 4,053 17.23 15.9 14%
SHIN-TH Shin Corp. PCL Telecommunications Equipment 3,557 0.61 13.0 49%
TMB-TH TMB Bank PCL Regional Banks 3,518 42.34 31.9 37%
PTTAR-TH PTT Aromatics & Refining PCL Oil Refining/Marketing 3,469 29.65 14.9 14%
DTAC-TH Total Access Communication PCL Wireless Telecommunications 3,329 16.75 10.1 67%
IRPC-TH IRPC PCL Chemicals: Specialty 3,185 13.21 14.8 39%
GLOW-TH Glow Energy PCL Electric Utilities 2,685 2.10 16.4 33%
THAI-TH Thai Airways International PCL Airlines 2,589 9.32 8.9 65%
LH-TH Land & Houses PCL Homebuilding 2,296 7.54 17.1 28%
SCIB-TH Siam City Bank PCL Regional Banks 2,295 0.09 15.4
52
INDONESIA

(65) 6882-2374 10 November 2010
JPM Q-Profile
Total Access Communication PCL (THAILAND / Telecommunication Services)
60.00 5.00
4.50
50.00
4.00
3.50
40.00
3.00
30.00 2.50
2.00
20.00
1.50
1.00
10.00
0.50
0.00 0.00
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Earnings Yield (& local bond Yield) Current: 9% Implied Value Of Growth* Current: -11.37%
18% 12Mth fwd EY Thailand BY Proxy 0.60
16% 0.40
14%
0.20
12%
0.00
10%
-0.20
8%
-0.40
6%
4% -0.60
2% -0.80
0% -1.00
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
14.0x
2.0x
12.0x
10.0x 1.5x
8.0x
6.0x 1.0x
4.0x
0.5x
2.0x
0.0x 0.0x
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
20.00 6.0
18.00
5.0
16.00
14.00
4.0
12.00
10.00 3.0
8.00
2.0
6.00
4.00
1.0
2.00
0.00 0.0
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Summary
Total Access Communication PCL 3323.45 As Of: 4-Nov-10
THAILAND 15.931093 SEDOL B1Z4V22 Local Price: 41.75
12mth Forward PE 10.94x 6.06 14.79 11.21 11.12 14.51 7.73 -45% 35% 2% 2%
P/BV (Trailing) 1.47x 1.00 2.34 1.48 1.57 2.31 0.83 -32% 59% 0% 7%
ROE (Trailing) 15.82 8.11 17.83 12.66 12.32 17.83 6.82 -49% 13% -20% -22%
Implied Value of Growth -11.4% -0.76 0.27 0.04 -0.03 0.39 -0.44 -565% 338% 131% 76%
53
INDONESIA

(65) 6882-2374 10 November 2010
Indonesia Operating Assumption Changes

Table 19: Indonesian Telcos wireless country model revisions
Wireless subs (000) 2010E 2011E 2012E
Telkomsel New 97,336 111,736 124,936
Old 95,816 107,816 119,816
% change 1.6% 3.6% 4.3%
Abs change 1,520 3,920 5,120
Indosat New 42,400 53,500 63,490

Old 42,000 50,400 57,960
% change 1.0% 6.2% 9.5%
Abs change 400 3,100 5,530
Excelcom New 41,197 49,297 56,587

Old 39,254 45,254 50,654
% change 4.9% 8.9% 11.7%
Abs change 1,943 4,043 5,933
Voice ARPM (Rp) New 218 187 180

Telkomsel Old 222 199 190
% change -1.9% -5.7% -5.3%
Abs change (4.3) (11.2) (10.0)
Indosat New 134 117 115

Old 140 130 128
% change -4.2% -10.0% -10.2%
Abs change (6) (13) (13)
Excelcom New 107 120 115

Old 106 109 105
% change 0.7% 10.6% 9.5%
Abs change 0.8 11.5 10.0
Voice MOU New 124 136 141

% change 0.4% 0.5% 0.2%

Old 119 126 127
% change 2.4% 6.4% 6.5%
Abs change 3 8 8

Old 195 187 192
% change -5.3% -8.3% -7.7%
Abs change (10.3) (15.6) (14.7)
Voice ARPU (Rp 000) New 27 26 25

% change -1.6% -5.2% -5.1%
Abs change (0.4) (1.4) (1.4)
Old 17 16 16
% change -1.9% -4.3% -4.3%
Abs change (0) (1) (1)
Old 21 20 20
% change -4.6% 1.4% 1.1%
Abs change (0.9) 0.3 0.2
Data ARPU (Rp 000) New 13 13 13

% change 0.2% -0.2% 2.3%
Abs change 0.0 (0.0) 0.3
Old 16 13 12
% change 7.2% 25.9% 40.1%
Abs change 1 3 5
54
INDONESIA

(65) 6882-2374 10 November 2010
Table 20: Indonesian Telcos fixed line country model revisions
2010E 2011E 2012E
Fixed subs (000) New 8,315 8,312 8,336
Telkom Old 8,409 8,433 8,457
% change -1.1% -1.4% -1.4%
Abs change (94) (121) (121)
Voice ARPU (Rp 000) New 49 47 49

Telkom Old 49 47 49
% change 0.2% -0.1% -0.1%
Abs change 0.1 (0.0) (0.0)
Total Revenue (Rp bn) New 24,485 25,340 26,475

Telkom Old 24,096 24,841 25,961
% change 1.6% 2.0% 2.0%
Abs change 388.6 499.0 513.8
Total capex (Rp bn) New 4,004 3,540 2,487

Telkom Old 4,160 3,928 4,220
% change -3.7% -9.9% -41.1%
Abs change (155.9) (387.8) (1,733.4)
55
INDONESIA

(65) 6882-2374 10 November 2010
Table 21: Indonesian Telcos broadband country model revisions
2010E 2011E 2012E
Broadband subs (000) New 1,680 2,175 2,535
Telkom fixed Old 1,810 2,560 3,460
% change -7.2% -15.0% -26.7%
Abs change (130) (385) (925)
Telkomsel New 5,478 11,178 18,378

Old 4,551 7,551 11,151
% change 20.4% 48.0% 64.8%
Abs change 927 3,627 7,227
Indosat New 909 3,759 7,359

Old 1,127 2,627 4,427
% change -19.3% 43.1% 66.2%
Abs change (218) 1,132 2,932

Old 50 260 860
% change 0.0% 0.0% 0.0%
Abs change 0 0 0
Total ARPU (Rp 000) New 212 163 123

Telkom fixed Old 205 157 117
% change 3.3% 4.2% 5.6%
Telkomsel New 78 55 55
Old 84 56 56
% change -7.2% -1.6% -1.6%
Abs change (6) (1) (1)
Old 47 35 35
% change 3.0% -3.3% -3.3%
Abs change 1 (1) (1)
Old 44 44 44
% change 0.0% 0.0% 0.0%
Total Revenue (Rp bn) New 3,588 3,779 3,487

Telkom fixed Old 3,635 4,111 4,219
% change -1.3% -8.1% -17.4%
Abs change (46.3) (332.5) (732.6)
Telkomsel New 3,343 5,485 9,733

Old 3,135 4,051 6,260
% change 6.6% 35.4% 55.5%
Abs change 207 1,434 3,474
Indosat New 442 939 2,236

Old 491 781 1,468
% change -10.0% 20.2% 52.3%
Abs change (49.0) 157.7 768.2

Old 17 82 295
% change 0.0% 0.0% 0.0%
56
INDONESIA

(65) 6882-2374 10 November 2010
PT Telkom – Detailed Model Revisions

Table 22: Telkomsel model revisions
(Rp bn, YE Dec) 2010E 2011E 2012E
Revenue
New 43,888 50,201 57,809
Old 43,965 50,624 57,033
% change -0.2% -0.8% 1.4%
Abs change (78) (424) 776
EBITDA
New 27,131 30,333 35,585
Old 27,551 31,714 36,171
% change -1.5% -4.4% -1.6%
Abs change (420) (1,381) (586)
EBITDA margin
New 61.8% 60.4% 61.6%
Old 62.7% 62.6% 63.4%
PPS change -0.8% -2.2% -1.9%
EBIT
New 17,720 20,422 25,069
Old 18,276 21,943 26,243
% change -3.0% -6.9% -4.5%
Abs change (555) (1,521) (1,174)
Net income
New 12,701 14,865 18,639
Old 12,920 15,892 19,590
% change -1.7% -6.5% -4.9%
Abs change (218) (1,028) (951)
Recurring income
New 12,630 14,865 18,639
Old 12,880 15,892 19,590
% change -1.9% -6.5% -4.9%
Abs change (250) (1,028) (951)
57
INDONESIA

(65) 6882-2374 10 November 2010
Table 23: PT Telkom fixed model revisions
(Rp bn, YE Dec) 2010E 2011E 2012E
Revenue
New 24,485 25,340 26,475
Old 24,096 24,841 25,961
% change 1.6% 2.0% 2.0%
EBITDA
New 10,651 10,680 11,170
Old 10,043 10,084 10,419
% change 6.1% 5.9% 7.2%
EBITDA margin
New 43.5% 42.1% 42.2%
Old 41.7% 40.6% 40.1%
PPS change 1.8% 1.6% 2.1%
EBIT
New 5,404 5,687 6,568
Old 4,454 4,806 5,434
% change 21.3% 18.3% 20.9%
Abs change 950 881 1,134
Net income
New 3,634 4,114 4,954
Old 3,045 3,442 4,102
% change 19.4% 19.6% 20.8%
Recurring income
New 3,609 4,114 4,954
Old 3,002 3,442 4,102
% change 20.2% 19.6% 20.8%
58
INDONESIA

(65) 6882-2374 10 November 2010
Table 24: PT Telkom model revisions

(Rp bn, YE Dec) 2010E 2011E 2012E
Revenue
New 68,372 75,541 84,284
Old 68,061 75,466 82,994
% change 0.5% 0.1% 1.6%
Abs change 311 75 1,290
EBITDA
New 37,782 41,013 46,755
Old 37,594 41,798 46,589
% change 0.5% -1.9% 0.4%
Abs change 187 (785) 166
EBITDA margin
New 55.3% 54.3% 55.5%
Old 55.2% 55.4% 56.1%
PPS change 0.0% -1.1% -0.7%
EBIT
New 23,125 26,109 31,637
Old 22,730 26,749 31,677
% change 1.7% -2.4% -0.1%
Abs change 395 (640) (40)
Net income
New 11,890 13,776 17,070
Old 11,443 13,772 16,835
% change 3.9% 0.0% 1.4%
Recurring income
New 11,788 13,776 17,070
Old 11,376 13,772 16,835
% change 3.6% 0.0% 1.4%
Reported EPS (Rp)

New 604 700 868
Old 582 700 856
% change 3.9% 0.0% 1.4%
Abs change 22.68 0.13 11.79
DPS (Rp)
New 332 385 477
Old 320 385 471
% change 3.9% 0.0% 1.4%
Abs change 12.47 0.07 6.48
59
INDONESIA

(65) 6882-2374 10 November 2010

Telkom is the largest telecom service Wireless revenue (Rp bn) 43,888
provider in Indonesia, providing fixed Impact of each 5% 3.2% 4.6%
wireline, fixed wireless, cellular, data and
Fixed revenue 24,485
Internet services. Its 65% owned mobile
subsidiary Telkomsel is the largest Impact of each 5% 1.8% 2.6%
operator in Indonesia with a 43% market EBITDA margin (%) 55%
share, providing network coverage to Impact of each 1% 1.8% 2.6%
over 90% of Indonesia’s population. Capex (Rp bn) 15,597

2010E revenue breakup consensus EPS vs. JPM EPS estimates and 2) our estimated multiple

Peak P/E (b) 14.0 14.0

Upside/ (Downside) to peak multiple (b/a-1=e) -14.0% -4.6%
Cumulative upside to current price (e+d) -13.6% 0.3%
J.P. Morgan vs. consensus JPM Dec 2011 price target (Rp/sh) 9,800
Rp bn J. P. Morgan Consensus
FY10E-Rev 68,372 70,576 If our price target were achieved, Telkom would be trading at a
FY11E-Rev 75,541 75,845 2010E/11E adjusted P/E and EV/EBITDA of 16.4x/14.0x and
EBITDA 37,782 38,232
FY11E-
assuming the 55% historical payout of core profits is continued.
EBITDA 41,013 41,063 Destructive price cutting by Indosat, significant consolidation
FY10E-Net increasing overall industry competition, and in the longer term
inc. 11,890 12,065 margin compression from wireless data are key risks to our PT.
FY11E-Net
inc. 13,776 13,384
60
INDONESIA

(65) 6882-2374 10 November 2010
Q-Snapshot: Telekomunikasi Indonesia

100% HIGH/STRONGER
Value
75%
50%
Price Momentum T
25%
12 Month Price Momentum 16% 24% -2.9% R
1 Month Price Reversion 95% 99% -10.4% Y 0% LOW/WEAKER
0% 25% 50% 75% 100%
Quality
100%
Earnings Momentum 3mth (risk adjusted) 18% 24% -57.3 75%
Net Revisions FY2 EPS 22% 21% -40% 25%
0%
20 Targets Recoms 10 0.0 0
(Local Currency %)
15 8 -1.0
-5 -3 -3
6 -2.0
(%)
10 -10
4 -3.0
-10
5 -15
2 -4.0
0 0 -5.0 -20 -18
FY1 FY2 FY1 FY2
14.0 13.1
12.0 10.8
9.9
10.0 7.5
8.0
6.0 4.8
4.0 2.7
2.0
0.0
ASII-ID Astra International Motor Vehicles 25,762 22.45 18.0 70%
BBCA-ID Bank Central Asia Regional Banks 19,416 6.43 21.4 31%
TLKM-ID Telekomunikasi Indonesia Major Telecommunications 17,329 23.65 13.5 32%
BMRI-ID Bank Mandiri (Persero) Regional Banks 16,955 13.91 17.3 70%
BBRI-ID Bank Rakyat Indonesia Regional Banks 16,744 14.99 16.3 71%
UNVR-ID Unilever Indonesia Household/Personal Care 13,916 3.70 34.1 37%
PGAS-ID Perusahaan Gas Negara Gas Distributors 11,902 17.42 15.9 45%
GGRM-ID Gudang Garam Tobacco 10,365 4.75 22.3 82%
UNTR-ID United Tractors Trucks/Construction/Farm Machinery 8,457 7.87 19.4 34%
ADRO-ID Adaro Energy Coal 8,167 16.07 23.4 13%
INTP-ID Indocement Tunggal Prakarsa Construction Materials 7,106 5.44 18.2 37%
61
INDONESIA

(65) 6882-2374 10 November 2010
JPM Q-Profile
Telekomunikasi Indonesia (INDONESIA / Telecommunication Services)
12,000.00 1,000.00
10,000.00 800.00
600.00
8,000.00
400.00
6,000.00
200.00
4,000.00
0.00
2,000.00 -200.00
0.00 -400.00
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
25% 12Mth fwd EY Indonesia BY Proxy 1.00
0.80
20%
0.60
15%
0.40
0.20
10%
0.00
5%
-0.20
0% -0.40
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
35.0x 8.0x
30.0x 7.0x
6.0x
25.0x
5.0x
20.0x
4.0x
15.0x
3.0x
10.0x 2.0x
5.0x 1.0x
0.0x 0.0x
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
90.00 12.0
80.00
10.0
70.00
60.00 8.0
50.00
6.0
40.00
30.00 4.0
20.00
2.0
10.00
0.00 0.0
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Summary
Telekomunikasi Indonesia 17747.02 As Of: 4-Nov-10
INDONESIA 20.19143 SEDOL B02ZK79 Local Price: 8,050.00
Telecommunication Services Diversified Telecommunication EPS: 669.42
12mth Forward PE 12.03x 4.99 38.07 11.98 12.57 23.42 1.72 -59% 217% 0% 5%
P/BV (Trailing) 3.97x 1.37 7.77 3.92 4.07 7.00 1.13 -66% 96% -1% 2%
ROE (Trailing) 30.52 11.60 84.01 35.59 36.37 67.08 5.66 -62% 175% 17% 19%
62
INDONESIA

(65) 6882-2374 10 November 2010
PT Indosat – Detailed Model Revisions

Table 25: ISAT model revisions
(Rp bn, YE Dec) 2010E 2011E 2012E
Revenue
New 20,432 23,323 27,109
Old 20,356 21,995 23,911
% change 0.4% 6.0% 13.4%
Abs change 76 1,328 3,198
EBITDA
New 10,009 11,672 13,855
Old 9,973 10,551 11,260
% change 0.4% 10.6% 23.0%
Abs change 36 1,120 2,595
EBITDA margin
New 49.0% 50.0% 51.1%
Old 49.0% 48.0% 47.1%
PPS change 0.0% 2.1% 4.0%
EBIT
New 3,687 5,318 7,160
Old 3,814 4,595 5,142
% change -3.3% 15.7% 39.2%
Abs change (127) 723 2,018
Net income
New 1,013 1,961 3,202
Old 1,203 1,835 2,374
% change -15.8% 6.8% 34.9%
Abs change (190) 125 828
Recurring income
New 824 1,961 3,202
Old 1,084 1,835 2,374
% change -24.1% 6.8% 34.9%
Abs change (261) 125 828
Reported EPS (Rp)

New 186 361 589
Old 221 337 437
% change -15.8% 6.9% 35.0%
Abs change (34.88) 23.34 152.66
DPS (Rp)
New 93 180 295
Old 111 169 218
% change -15.8% 6.9% 35.0%
Abs change (17.44) 11.67 76.33
63
INDONESIA

(65) 6882-2374 10 November 2010

PT Indosat Tbk is a Wireless ARPU (Rp000/mo) 36.7
telecommunications and information Impact of each 5% 4.1% 27.8%
service provider of cellular services,
fixed data services or MIDI (Multimedia,
Internet and Data Communications) Impact of each 5% 2.6% 10.6%
and fixed voice services. It is the EBITDA margin (%) 49.0%
second largest provider of wireless Impact of each 1% 2.3% 9.5%
services in Indonesia, accounting for Capex (Rp bn) 8,760
18% of the mobile market. Impact of each 5% NA 1.4%

2010E revenue distribution consensus EPS vs. JPM EPS estimates and 2) our estimated multiple

Peak P/E (b) 18.0 18.0

JPM vs. consensus EPS (d) -9.5% 25.0%
J.P. Morgan vs consensus JPM Dec 2011 price target (Rp/sh) 6,600
FY10E-Rev 20,432 20,231 If our price target were achieved, Indosat would be trading at a
EBITDA 10,009 9,751
FY11E-
assuming the 50% historical payout of core profits would be
EBITDA 11,672 10,738 maintained. Potential positive risks to our target would be better then
FY10E-Net expected cost savings by leveraging QTel relationships, an ability to
inc. 1,013 1,066 aggressively ramp subscriber additions without cutting pricing.
FY11E-Net
inc. 1,961 1,560
Multiple further strategy changes are a downside risk.
64
INDONESIA

(65) 6882-2374 10 November 2010
Q-Snapshot: Indosat
100% HIGH/STRONGER
Value
75%
50%
Price Momentum T
25%
0% 25% 50% 75% 100%
Quality
100%
1 Mth Change in Avg Recom. 88% 89% 0.11 50%
0%
-5.0 16
(Local Currency %)
20
15 6 -10.0
10
-15.0
(%)
10 4 0
-20.0
-25.0 -10 -2
5 2
-30.0 -20
0 0 -35.0 -30 -26
FY1 FY2 FY1 FY2
50.0 37.2
40.0 34.0
30.0
20.0 9.8
10.0 3.7
0.0
-10.0 -2.4
-20.0
-30.0
-25.0
PTBA-ID Tambang Batubara Bukit Asam Coal 5,263 6.80 20.8 38%
INDF-ID IndoFood Sukses Makmur Food: Specialty/Candy 5,026 14.30 17.1 74%
BUMI-ID Bumi Resources Coal 4,834 32.40 14.7 62%
AALI-ID Astra Agro Lestari Agricultural Commodities/Milling 4,586 4.69 21.3 35%
BYAN-ID Bayan Resources Coal 4,564 0.49 66.9 21%
ISAT-ID Indosat Wireless Telecommunications 3,537 2.19 27.6 7%
ICBP-ID Indofood CBP Sukses Makmur Food: Specialty/Candy 3,536 17.70 21.1
CPIN-ID Charoen Pokphand Indonesia Agricultural Commodities/Milling 3,207 3.72 15.4 100%
KLBF-ID Kalbe Farma Pharmaceuticals: Other 3,104 7.01 23.8 85%
PNBN-ID Bank Pan Indonesia Regional Banks 3,028 0.34 18.8 50%
ANTM-ID Aneka Tambang Precious Metals 2,779 7.80 16.8 59%
65
INDONESIA

(65) 6882-2374 10 November 2010
JPM Q-Profile
Indosat (INDONESIA / Telecommunication Services)
10,000.00 700.00
9,000.00
600.00
8,000.00
7,000.00 500.00
6,000.00
400.00
5,000.00
300.00
4,000.00
3,000.00 200.00
2,000.00
100.00
1,000.00
0.00 0.00
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
0.80
20%
0.60
15%
0.40
0.20
10%
0.00
5%
-0.20
0% -0.40
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
25.0x 6.0x
5.0x
20.0x
4.0x
15.0x
3.0x
10.0x
2.0x
5.0x 1.0x
0.0x 0.0x
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
45.00 14.0
40.00
12.0
35.00
10.0
30.00
25.00 8.0
20.00 6.0
15.00
4.0
10.00
2.0
5.00
0.00 0.0
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Summary
Indosat 3623.84 As Of: 4-Nov-10
INDONESIA 2.013673 SEDOL B00FYK2 Local Price: 5,950.00
12mth Forward PE 21.74x 4.48 26.09 12.09 11.87 20.01 3.73 -79% 20% -44% -45%
P/BV (Trailing) 1.82x 0.72 6.21 1.98 2.14 4.12 0.16 -61% 241% 9% 17%
Dividend Yield (Trailing) 2.50 0.70 11.81 2.90 3.43 7.82 -0.96 -72% 372% 16% 37%
ROE (Trailing) 3.25 1.98 40.46 13.09 17.16 38.85 -4.53 -39% 1145% 303% 428%
Implied Value of Growth 62.6% -0.24 0.79 0.51 0.43 0.87 -0.01 -139% 25% -19% -31%
66
INDONESIA

(65) 6882-2374 10 November 2010
PT Excelcom – Detailed Model Revisions

Table 26: Excelcom model revisions
(Rp bn, YE Dec) 2010E 2011E 2012E
Revenue
New 17,493 22,619 26,415
Old 17,892 21,434 24,421
% change -2.2% 5.5% 8.2%
Abs change (400) 1,185 1,994
EBITDA
New 9,274 12,300 14,232
Old 9,627 11,617 13,135
% change -3.7% 5.9% 8.4%
Abs change (353) 683 1,098
EBITDA margin
New 53.0% 54.4% 53.9%
Old 53.8% 54.2% 53.8%
PPS change -0.8% 0.2% 0.1%
EBIT
New 5,271 7,757 9,579
Old 5,555 7,260 8,865
% change -5.1% 6.8% 8.1%
Abs change (284) 497 714
Net income
New 2,915 4,900 6,473
Old 3,073 4,484 5,903
% change -5.2% 9.3% 9.7%
Abs change (159) 417 570
Recurring income
New 2,931 4,827 6,400
Old 3,045 4,411 5,830
% change -3.7% 9.4% 9.8%
Abs change (113) 417 570
Reported EPS (Rp)

New 343 576 761
Old 361 527 694
% change -5.2% 9.3% 9.7%
Abs change (18.65) 48.96 66.98
DPS (Rp)
New 0 113 150
Old 0 104 137
% change NM 9.4% 9.8%
Abs change 0.00 9.79 13.40
67
INDONESIA

(65) 6882-2374 10 November 2010

PT XL Axiata Tbk, also known as XL, is Blended cellular ARPU (Rp000/mo) 33
an Indonesia-based mobile Impact of each 5% 4.1% 9.8%
telecommunications services operator. XL
Total subs (mn) 41.2
offers data communication, broadband
Internet, mobile communication and 3G Impact of each 5% 2.3% 5.5%
services over GSM 900, GSM 1800 EBITDA margin (%) 53.0%
networks. Impact of each 1% 1.9% 4.5%
Capex (Rp bn) 4,916

Revenue contribution chart (2010E) Our PT is based on a sum of 1) potential upside/ (downside) to

Peak P/E (b) 14.0 14.0

J.P. Morgan vs. consensus J.P. Morgan Dec-11 target price (Rp/sh 8,000
FY10E-Rev 17,493 17,107 If our price target were achieved, Excel would be trading at a
FY11E-Rev 22,619 19,633 2010E/11E P/E of 23.2x/14.1x and EV/EBITDA of 5.6x/5.0x. At our
FY10E-EBITDA 9,274 8,927 price target Excelcom would provide a 2010E/11E dividend yield of
FY11E-EBITDA 12,300 10,182 1.6%/3.1%. Destructive price cutting by Indosat, significant
FY10E-Net inc. 2,915 2,789 consolidation increasing overall industry competition, and in the
FY11E-Net inc. 4,900 3,644 longer term, margin compression from wireless data are the key risks
Source: J.P. Morgan estimates, Bloomberg to our price target.
68
INDONESIA

(65) 6882-2374 10 November 2010
Q-Snapshot: XL Axiata
100% HIGH/STRONGER
Value
75%
50%
Price Momentum T
25%
0% 25% 50% 75% 100%
Quality
100%
1 Mth Change in Avg Recom. 92% 92% 0.17 50%
0%
20 Targets Recoms 12 40.0 300
243
10 215
(Local Currency %)
250
15 30.0
8 200
(%)
10 6 20.0 150
4 100
5 10.0 28
2 50 11
0 0 0.0 0
FY1 FY2 FY1 FY2
60.0 50.0 50.0
50.0
40.0 33.0
30.0 19.9
20.0 12.9 15.2
10.0
0.0
INTP-ID Indocement Tunggal Prakarsa Construction Materials 7,106 5.44 18.2 37%
BBNI-ID Bank Negara Indonesia Regional Banks 6,771 8.24 15.1 62%
BDMN-ID Bank Danamon Indonesia Regional Banks 6,518 3.53 20.1 47%
ITMG-ID Indo Tambangraya Megah Coal 6,404 6.12 19.9 52%
SMGR-ID Semen Gresik (Persero) Construction Materials 6,191 8.02 14.7 40%
EXCL-ID XL Axiata Major Telecommunications 5,777 1.06 18.2 99%
INCO-ID International Nickel Indonesia Other Metals/Minerals 5,297 8.86 14.3 36%
PTBA-ID Tambang Batubara Bukit Asam Coal 5,263 6.80 20.8 38%
INDF-ID IndoFood Sukses Makmur Food: Specialty/Candy 5,026 14.30 17.1 74%
BUMI-ID Bumi Resources Coal 4,834 32.40 14.7 62%
AALI-ID Astra Agro Lestari Agricultural Commodities/Milling 4,586 4.69 21.3 35%
69
INDONESIA

(65) 6882-2374 10 November 2010
JPM Q-Profile
XL Axiata (INDONESIA / Telecommunication Services)
7,000.00 500.00
6,000.00 400.00
5,000.00 300.00
4,000.00 200.00
3,000.00 100.00
2,000.00 0.00
1,000.00 -100.00
0.00 -200.00
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
1.20
25% 1.00
0.80
20%
0.60
0.40
15%
0.20
0.00
10%
-0.20
5% -0.40
-0.60
0% -0.80
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
70.0x
5.0x
60.0x
50.0x
4.0x
40.0x
30.0x 3.0x
20.0x
2.0x
10.0x
0.0x
1.0x
-10.0x
-20.0x 0.0x
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
50.00 3.0
40.00 2.5
30.00
2.0
20.00
1.5
10.00
1.0
0.00
-10.00 0.5
-20.00 0.0
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Summary
XL Axiata 5578.55 As Of: 4-Nov-10
INDONESIA 0.928845 SEDOL B0LD0W9 Local Price: 5,850.00
Telecommunication Services Diversified Telecommunication EPS: 426.87
12mth Forward PE 13.70x 3.57 75.00 16.65 24.42 63.17 -14.33 -74% 447% 21% 78%
P/BV (Trailing) 4.57x 1.14 5.60 3.37 3.28 5.30 1.26 -75% 23% -26% -28%
Dividend Yield (Trailing) 0.00 0.00 2.38 0.00 0.36 1.62 -0.90
ROE (Trailing) 31.57 -16.01 44.71 7.54 13.04 49.07 -22.99 -151% 42% -76% -59%
Implied Value of Growth 40.7% -0.54 0.96 0.60 0.59 1.13 0.05 -232% 136% 47% 45%
70
INDONESIA

(65) 6882-2374 10 November 2010
Philippines Operating Assumption

Changes
Table 27: Philippines Telcos wireless country model revisions
2010E 2011E 2012E
Wireless subs (000) New 45,912 52,630 58,630
PLDT Old 48,346 54,763 60,763
% change -5.0% -3.9% -3.5%
Abs change (2,434) (2,134) (2,134)
Globe New 26,153 29,153 32,153

Old 25,822 28,672 31,672
% change 1.3% 1.7% 1.5%
Voice ARPU (Php) New 81.4 77.1 75.1

PLDT Old 83.5 82.3 80.3
% change -2.5% -6.3% -6.4%
Abs change (2.1) (5.2) (5.2)
Globe New 86.3 81.5 79.5

Old 87.5 83.4 81.4
% change -1.5% -2.4% -2.4%
Abs change (1.3) (2.0) (2.0)
Data ARPU (Php) New 90.8 82.1 77.1

PLDT Old 90.6 84.6 79.6
% change 0.2% -2.9% -3.1%
Abs change 0.2 (2.5) (2.5)
Globe New 79.6 71.3 66.8

Old 80.1 71.9 67.4
% change -0.7% -0.8% -0.8%
Abs change (0.5) (0.6) (0.6)
Total ARPU (Php) New 182.0 167.3 158.9

PLDT Old 184.1 175.2 166.8
% change -1.2% -4.5% -4.7%
Abs change (2.1) (7.9) (7.9)
Globe New 173.7 158.6 151.2

Old 176.0 161.9 154.5
% change -1.3% -2.1% -2.2%
Abs change (2.3) (3.4) (3.4)
Total Revenue (Php mn) New 95,243 98,921 106,080

PLDT Old 99,042 108,374 115,603
% change -3.8% -8.7% -8.2%
Abs change (3,798.9) (9,453.1) (9,523.1)
Globe New 51,496 52,619 55,599

Old 51,815 52,947 55,945
% change -0.6% -0.6% -0.6%
Abs change (319.8) (327.8) (346.1)
Total capex (Php mn) New 17,948 17,804 16,627

PLDT Old 17,940 17,119 16,651
% change 0.0% 4.0% -0.1%
Abs change 8.3 684.6 (24.3)
Globe New 16,457 12,495 11,340

Old 14,908 11,970 11,340
% change 10.4% 4.4% 0.0%
71
INDONESIA

(65) 6882-2374 10 November 2010
Abs change 1,549.3 525.0 0.0

Table 28: Philippines Telcos fixed line country model revisions

2010E 2011E 2012E
Fixed subs (000) New 1,849 1,885 1,909
PLDT Old 1,884 1,920 1,944
% change -1.9% -1.8% -1.8%
Abs change (35) (35) (35)
Globe New 605 629 647

Old 585 609 627
% change 3.4% 3.2% 3.1%
Abs change 20 20 20
Total ARPU (Php) New 696.2 678.2 678.2

PLDT Old 692.6 674.5 674.5
% change 0.5% 0.5% 0.5%
Globe New 961.3 957.9 949.5

Old 958.1 952.7 944.4
% change 0.3% 0.5% 0.5%

PLDT Old 50,750 51,299 53,337
% change -2.0% -2.3% -2.3%
Abs change (1,001.7) (1,155.6) (1,202.0)
Globe New 6,889 7,093 7,271

Old 6,753 6,829 7,008
% change 2.0% 3.9% 3.7%
Abs change 136.2 263.8 262.8
Total capex (Php mn) New 8,238 8,053 8,692

PLDT Old 7,869 8,007 8,643
% change 4.7% 0.6% 0.6%
Abs change 368.5 45.4 49.0
Globe New 4,430 4,586 4,312

Old 3,487 4,586 4,312
% change 27.0% 0.0% 0.0%
Abs change 943.1 0.0 0.0
72
INDONESIA

(65) 6882-2374 10 November 2010
Table 29: Philippines Telcos broadband country model revisions

2010E 2011E 2012E
Broadband subs (000) New 2,215 3,178 4,318
PLDT Old 2,355 3,318 4,458
% change -5.9% -4.2% -3.1%
Abs change (140) (140) (140)
Globe New 1,141 1,788 2,464

Old 1,170 1,817 2,493
% change -2.5% -1.6% -1.2%
Abs change (29) (29) (29)
Blended ARPU (Php) New 638.1 531.4 455.8

PLDT Old 627.3 524.5 451.8
% change 1.7% 1.3% 0.9%
Abs change 10.7 6.9 4.0
Globe New 496.5 372.7 319.0

Old 479.4 367.9 316.2
% change 3.6% 1.3% 0.9%
Abs change 17.1 4.9 2.8

PLDT Old 14,940 17,854 21,078
% change -1.9% -3.7% -2.7%
Abs change (279.3) (655.8) (578.1)
Globe New 5,532 6,552 8,140

Old 5,424 6,592 8,178
% change 2.0% -0.6% -0.5%
Abs change 108.1 (40.6) (37.8)
73
INDONESIA

(65) 6882-2374 10 November 2010
PLDT – Detailed Model Revisions

Table 30: PLDT model revisions
(Php mn, YE Dec) 2010E 2011E 2012E
Revenue
New 145,401 151,578 161,443
Old 148,831 158,901 168,837
% change -2.3% -4.6% -4.4%
Abs change (3,430) (7,324) (7,393)
EBITDA
New 83,802 87,912 92,944
Old 85,877 92,314 96,801
% change -2.4% -4.8% -4.0%
Abs change (2,074) (4,403) (3,857)
EBITDA margin
New 57.6% 58.0% 57.6%
Old 57.7% 58.1% 57.3%
PPS change -0.1% -0.1% 0.2%
EBIT
New 56,926 61,029 66,201
Old 59,868 65,792 70,475
% change -4.9% -7.2% -6.1%
Abs change (2,941) (4,763) (4,274)
Net income
New 41,850 44,710 48,871
Old 43,222 47,621 51,479
% change -3.2% -6.1% -5.1%
Abs change (1,372) (2,911) (2,608)
Recurring income
New 40,388 42,855 47,051
Old 41,357 45,766 49,659
% change -2.3% -6.4% -5.3%
Abs change (969) (2,911) (2,608)
Reported EPS (Php)

New 224 239 262
Old 231 255 276
% change -3.2% -6.1% -5.1%
Abs change (7.35) (15.59) (13.97)
DPS (Php)
New 220 229 252
Old 224 245 266
% change -1.5% -6.4% -5.3%
Abs change (3.42) (15.59) (13.97)
74
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(65) 6882-2374 10 November 2010

PLDT is the largest integrated telco in the Wireless revenue (Php mn) 95,243
Philippines and as of 2009 had 46% and Impact of each 5% 3.5% 5.3%
55% market share for fixed line and mobile
Fixed revenue (Php mn) 49,749
divisions, respectively. The wireless
division contributes around 61% to group Impact of each 5% 1.4% 2.1%
revenues and is also the largest contributor EBITDA margin (%) 57.6%
to EBITDA given its ~60% margin. It is the Impact of each 1% 1.7% 2.6%
market leader in the growing fixed and Capex (Php mn) 26,915
wireless broadband service business with a Impact of each 5% NA 0.1%
combined sub base of close to 1.6MM in
end-2009.

Revenue breakdown (2010E) multiple is based on the stock’s historical trading range and expected

Peak P/E (b) 11.0 11.0

Cumulative upside to current price (e+d) -11.9% -5.6%
J.P. Morgan vs consensus JPM Dec-2011 price target (PHP/sh) 2,800
Php mn J. P. Morgan Consensus
FY10E-Rev 145,401 150,200 If our price target were achieved, PLDT would be trading at a
FY10E-EBITDA 83,802 87,449 7.0x/6.7x. It would be providing a dividend yield of 7.9%/8.2%,
FY11E-EBITDA 87,912 89,324 assuming the 100% historical payout of core profits is continued.
FY10E-Net inc. 41,850 41,906 PLDT’s innovative Red Network strategy, which gives them greater
FY11E-Net inc. 44,710 43,030 pricing flexibility, is a positive risk to our PT. Replacement of SMS
Source: J.P. Morgan estimates, Bloomberg revenues by lower margin voice/traditional data is a downside risk.
75
INDONESIA

(65) 6882-2374 10 November 2010
76
INDONESIA

(65) 6882-2374 10 November 2010
Q-Snapshot: Philippine Long Distance Telephone Co.

100% HIGH/STRONGER
Value
75%
50%
Price Momentum T
25%
0% 25% 50% 75% 100%
Quality
100%
0%
2
1
10
(Local Currency %)
6 -1.0
0
8
-2.0
(%)
6 4 -5
4 -3.0
2 -4.0 -10
2
0 0 -5.0 -15 -12
FY1 FY2 FY1 FY2
10.0 8.6
8.0
5.0
6.0 3.8 4.2
3.1
4.0
2.0
0.0
-2.0
-4.0 -1.8
TEL-PH Philippine Long Distance Telephone Co. Major Telecommunications 10,704 8.18 10.9 50%
SM-PH SM Investments Corp. Department Stores 8,337 4.78 19.8 26%
MER-PH Manila Electric Co. Electric Utilities 5,951 1.01 18.5 39%
ALI-PH Ayala Land Inc. Real Estate Development 5,331 3.77 43.8 37%
AP-PH Aboitiz Power Corp. Electric Utilities 5,184 4.16 10.9 88%
BPI-PH Bank of the Philippine Islands Regional Banks 5,089 2.24 21.2 14%
AC-PH Ayala Corp. Financial Conglomerates 4,697 2.50 22.5 9%
AEV-PH Aboitiz Equity Ventures Inc. Financial Conglomerates 4,507 1.11 10.9 85%
BDO-PH Banco De Oro Unibank Inc. Regional Banks 3,852 3.40 20.0 42%
MBT-PH Metropolitan Bank & Trust Co. Regional Banks 3,709 5.62 20.2 57%
SMPH-PH SM Prime Holdings Inc. Real Estate Development 3,656 2.56 20.5 21%
77
INDONESIA

(65) 6882-2374 10 November 2010
78
INDONESIA

(65) 6882-2374 10 November 2010
JPM Q-Profile
Philippine Long Distance Telephone Co. (PHILIPPINES / Telecommunication Services)
3,500.00 350.00
300.00
3,000.00
250.00
2,500.00
200.00
2,000.00 150.00
1,500.00 100.00
50.00
1,000.00
0.00
500.00
-50.00
0.00 -100.00
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
25% 12Mth fwd EY Philippines BY Proxy 1.00
0.90
20% 0.80
0.70
15% 0.60
0.50
10% 0.40
0.30
5% 0.20
0.10
0% 0.00
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
40.0x 14.0x
35.0x 12.0x
10.0x
30.0x
8.0x
25.0x
6.0x
20.0x
4.0x
15.0x
2.0x
10.0x 0.0x
5.0x -2.0x
0.0x -4.0x
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
100.00 10.0
9.0
80.00
8.0
60.00 7.0
6.0
40.00
5.0
20.00
4.0
0.00 3.0
2.0
-20.00
1.0
-40.00 0.0
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Summary
Philippine Long Distance Telephone Co. 11762.63 As Of: 4-Nov-10
PHILIPPINES 7.470064 SEDOL 6685661 Local Price: 2,680.00
12mth Forward PE 11.68x 6.73 40.62 12.19 14.39 28.67 0.11 -42% 248% 4% 23%
P/BV (Trailing) 5.59x 0.45 13.96 2.45 3.58 8.48 -1.31 -92% 150% -56% -36%
ROE (Trailing) 43.20 -18.73 83.66 13.43 20.95 59.57 -17.66 -143% 94% -69% -51%
Implied Value of Growth 21.7% 0.15 0.89 0.42 0.49 0.89 0.09 -32% 311% 92% 126%
79
INDONESIA

(65) 6882-2374 10 November 2010
Globe – Detailed Model Revisions

Table 31: Globe model revisions
(Php mn, YE Dec) 2010E 2011E 2012E
Revenue
New 63,917 66,264 71,009
Old 63,992 66,369 71,131
% change -0.1% -0.2% -0.2%
Abs change (75) (105) (121)
EBITDA
New 32,730 32,346 34,733
Old 33,240 33,366 35,480
% change -1.5% -3.1% -2.1%
Abs change (510) (1,020) (747)
EBITDA margin
New 51.2% 48.8% 48.9%
Old 51.9% 50.3% 49.9%
PPS change -0.7% -1.5% -1.0%
EBIT
New 14,944 14,018 16,620
Old 15,454 15,473 17,818
% change -3.3% -9.4% -6.7%
Abs change (510) (1,456) (1,199)
Net income
New 9,667 9,076 10,373
Old 9,776 10,185 11,311
% change -1.1% -10.9% -8.3%
Abs change (110) (1,109) (938)
Recurring income
New 9,265 8,517 10,373
Old 9,654 9,626 11,311
% change -4.0% -11.5% -8.3%
Abs change (389) (1,109) (938)
Reported EPS (Php)

New 73 68 78
Old 73 77 85
% change -1.1% -10.9% -8.3%
Abs change (0.82) (8.33) (7.05)
DPS (Php)
New 76 71 81
Old 76 80 88
% change -1.1% -10.9% -8.3%
Abs change (0.86) (8.67) (7.33)
80
INDONESIA

(65) 6882-2374 10 November 2010

Globe is the #2 mobile operator in the Wireless revenue (Php mn) 51,496
Philippines with almost 85% of its revenue Impact of each 5% 4.0% 10.0%
coming from its mobile division in 2009.
Fixed revenue(Php mn) 6,889
The company has 36% share of the mobile
market, where more than half of the Impact of each 5% 0.5% 1.3%
population owns a mobile phone. EBITDA margin (%) 51.2%
Impact of each 1% 2.0% 4.8%
Capex (Php mn) 20,888

Revenue breakdown (2010E) multiple is based on the stock’s historical trading range and expected

Peak P/E (b) 10.0 10.0

JPM vs. consensus EPS (d) -10.2% -16.5%
Cumulative upside to current price (e+d) -14.9% -20.3%
J.P. Morgan vs. consensus JPM Dec 2011 price target (PHP/sh) 680
Php MM J. P. Morgan Consensus
FY10E-Rev 63,917 64,677 If our price target were achieved, Globe would be trading at a
FY11E-Rev 66,264 66,982 2010E/11E adjusted P/E and EV/EBITDA of 9.8x/10.6x and 4.2x/4.2x.
FY10E-EBITDA 32,730 35,273 It would be providing a healthy dividend yield of 111.1%/10.4%
FY11E-EBITDA 32,346 36,341 assuming 100% payout of core profit is continued. Key upside risks to
FY10E-Net inc. 9,667 10,789 our price target are Globe’s postpaid subscriber base and aggressive
FY11E-Net inc. 9,076 10,878 focus on churn management. Moving to a higher mix of voice and
Source: J.P. Morgan estimates, Bloomberg "true" wireless data is a downside risk.
81
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(65) 6882-2374 10 November 2010
82
INDONESIA

(65) 6882-2374 10 November 2010
Q-Snapshot: Globe Telecom Inc.

100% HIGH/STRONGER
Value
75%
EPS Growth (forecast) 2% 14% -6.9% U
50%
Price Momentum T
25%
12 Month Price Momentum 14% 27% -1.0% R
0% 25% 50% 75% 100%
Quality
100%
0%
10 -2.0
(Local Currency %)
8 0
8 -4.0 -1
6 -10 -6
(%)
6 -6.0
4 4 -20
-8.0
2 2 -10.0 -30
0 -30
0 -12.0 -40
FY1 FY2 FY1 FY2
10.0 6.5
3.9 3.8
5.0 1.9
0.0
-5.0
-10.0
-8.4
-15.0
-20.0 -15.6
AEV-PH Aboitiz Equity Ventures Inc. Financial Conglomerates 4,507 1.11 10.9 85%
BDO-PH Banco De Oro Unibank Inc. Regional Banks 3,852 3.40 20.0 42%
MBT-PH Metropolitan Bank & Trust Co. Regional Banks 3,709 5.62 20.2 57%
SMPH-PH SM Prime Holdings Inc. Real Estate Development 3,656 2.56 20.5 21%
AGI-PH Alliance Global Group Inc. Containers/Packaging 2,817 3.72 18.9 27%
GLO-PH Globe Telecom Inc. Wireless Telecommunications 2,709 1.25 10.5 15%
EDC-PH Energy Development Corp. Alternative Power Generation 2,629 4.22 12.7 41%
DMC-PH DMCI Holdings Inc. Industrial Conglomerates 2,483 3.30 14.7 91%
JFC-PH Jollibee Foods Corp. Restaurants 2,314 1.15 30.0 49%
URC-PH Universal Robina Corp. Food: Specialty/Candy 2,218 2.52 14.0 77%
MPI-PH Metro Pacific Investments Corp. Real Estate Development 2,055 3.13 24.1 5%
83
INDONESIA

(65) 6882-2374 10 November 2010
JPM Q-Profile
Globe Telecom Inc. (PHILIPPINES / Telecommunication Services)
1,800.00 200.00
1,600.00
150.00
1,400.00
1,200.00 100.00
1,000.00
50.00
800.00
600.00 0.00
400.00
-50.00
200.00
0.00 -100.00
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
25% 12Mth fwd EY Philippines BY Proxy 1.80
20% 1.60
1.40
15%
1.20
10% 1.00
5% 0.80
0% 0.60
0.40
-5%
0.20
-10% 0.00
-15% -0.20
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
4.0x
80.0x
3.5x
60.0x
3.0x
40.0x 2.5x
20.0x 2.0x
1.5x
0.0x
1.0x
-20.0x
0.5x
-40.0x 0.0x
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
30.00 18.0
16.0
25.00
14.0
20.00 12.0
10.0
15.00
8.0
10.00 6.0
4.0
5.00
2.0
0.00 0.0
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-95
Oct-96
Oct-97
Oct-98
Oct-99
Oct-00
Oct-01
Oct-02
Oct-03
Oct-04
Oct-05
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Summary
Globe Telecom Inc. 2811.16 As Of: 4-Nov-10
PHILIPPINES 1.179077 SEDOL 6284864 Local Price: 904.00
12mth Forward PE 10.95x -20.00 75.00 10.74 18.95 67.06 -29.15 -283% 585% -2% 73%
P/BV (Trailing) 2.52x 0.56 3.86 2.23 2.17 3.59 0.75 -78% 53% -11% -14%
ROE (Trailing) 20.61 0.24 25.79 20.17 16.72 31.72 1.73 -99% 25% -2% -19%
84
INDONESIA

(65) 6882-2374 10 November 2010
Advanced Info Services-Earnings Strip
Advanced Info Services (Reuters: ADVA.BK, Bloomberg: ADVANC TB)

Bt in mn, year-end Dec FY09A FY10E FY11E FY12E
Revenue 102,451 109,487 115,978 125,684 52-wk range (Bt) 100.50 - 71.25
EBITDA 45,892 50,653 51,129 52,086 Mkt cap (Bt mn) 287,306
EBITDA growth (%) -1.4% 10.4% 0.9% 1.9% Mkt cap ($ mn) 9,736
Recurring profit 17,393 20,675 20,670 20,036 Shares O/S (mn) 2,970
Recurring EPS (Bt) 5.87 6.97 6.97 6.76 Free float (%) 54.7%
EPS growth (%) (7.6%) 18.8% 0.0% (3.0%) 3-mth avg trading volume: 9,269,673
DPS (Bt) 11.31 12.30 6.80 6.70 Average 3m Daily Turnover ($ mn) 30.97
EV/EBITDA (x) 6.5 5.9 6.2 6.1 SET 1,042
P/E 16.5 13.9 13.9 14.3 Exchange Rate 29.51
Dividend Yield 11.7% 12.7% 7.0% 6.9% Price (Bt) 96.75
FCF to mkt cap (%) 10.8% 11.8% 10.6% 9.0% Date Of Price 10 Nov 10
Source: Company data, Bloomberg, J.P. Morgan estimates.
85
INDONESIA

(65) 6882-2374 10 November 2010
Total Access Communication Earnings

Strip
Total Access Communication (Reuters: DTAC.BK, Bloomberg: DTAC TB)

Bt in mn, year-end Dec FY09A FY10E FY11E FY12E
Revenue 65,684 72,093 77,004 85,227 52-wk range (Bt) 51.75 - 30.00
EBITDA 20,213 25,853 26,885 29,067 Mkt cap (Bt mn) 102,408
EBITDA growth (%) -12.7% 27.9% 4.0% 8.1% Mkt cap ($ mn) 3,470
Recurring profit 6,620 10,314 11,077 11,596 Shares O/S (mn) 2,368
Recurring EPS (Bt) 2.80 4.36 4.68 4.90 Free float (%) 19.0%
EPS growth (%) (12.3%) 55.8% 7.4% 4.7% 3-mth avg trading volume: 11,691,150
DPS (Bt) 1.39 2.87 2.34 2.45 Average 3m Daily Turnover ($ mn) 17.47
EV/EBITDA (x) 5.6 3.9 3.8 3.6 SET 1,042
P/E 15.5 9.9 9.2 8.8 Exchange Rate 29.51
Dividend Yield 3.2% 6.6% 5.4% 5.7% Price (Bt) 43.25
86
INDONESIA

(65) 6882-2374 10 November 2010
PT Telekomunikasi Indonesia Tbk -

Earnings Strip
PT Telekomunikasi Indonesia Tbk (Reuters: TLKM.JK, Bloomberg: TLKM IJ)

Rp in mn, year-end ADR
FY09A FY10E FY11E FY12E
Dec 10,350 - Reuters TLK
52-wk range (Rp)
Revenue (Rp bn) 64,597 68,372 75,541 84,284 6,950 43.80 -
52-wk range ($)
EBITDA (Rp bn) 35,169 37,782 41,013 46,755 Mkt cap (Rp mn) 170,352,000 30.33
EBITDA growth (%) 5.4% 7.4% 8.6% 14.0% Mkt cap ($ mn) 19,123 Ratio 1.0 to 40
Recurring profit (Rp Shares O/S (mn) 20,160 ADR Premium -3.3%
10,637 11,788 13,776 17,070
bn) Free float (%) 48.8% Price ($) 36.68
Recurring EPS (Rp) 541 599 700 868 3-mth avg trading volume: 26,862,950 Date of Price 09 Nov 10
EPS growth (%) (9.4%) 10.8% 16.9% 23.9% Average 3m Daily Turnover ($ 3m Avg. Daily Value - ADR ($
26.28 10.3
DPS (Rp) 318 332 385 477 mn) mn)
EV/EBITDA (x) 5.0 4.5 3.9 3.1 JCI 3,757
P/E 15.6 14.1 12.1 9.7 Exchange Rate 8,908.00
Dividend Yield 3.8% 3.9% 4.6% 5.6% Price (Rp) 8,450
87
INDONESIA

(65) 6882-2374 10 November 2010
PT Indosat Tbk Earnings Strip
PT Indosat Tbk (Reuters: ISAT.JK, Bloomberg: ISAT IJ)

Rp in mn, year-end ADR
Dec 6,500 - Reuters IIT
52-wk range (Rp)
Revenue (Rp bn) 18,393 20,432 23,323 27,109 4,100 35.85 -
52-wk range ($)
EBITDA (Rp bn) 8,774 10,009 11,672 13,855 Mkt cap (Rp mn) 30,973,424 24.00
EBITDA growth (%) -5.5% 14.1% 16.6% 18.7% Mkt cap ($ mn) 3,477Ratio 1.0 to 50
Recurring profit (Rp Shares O/S (mn) 5,434ADR Premium 0.1%
705 824 1,961 3,202
bn) Free float (%) 29.9% Price ($) 32.04
Recurring EPS (Rp) 130 152 361 589 3-mth avg trading volume: 4,175,697Date of Price 09 Nov 10
EPS growth (%) (71.7%) 16.8% 138.0% 63.3% Average 3m Daily Turnover ($ 3m Avg. Daily Value - ADR ($
2.48 0.6
DPS (Rp) 138 93 180 295 mn) mn)
EV/EBITDA (x) 4.1 3.6 3.1 2.6 JCI 3,757
P/E 43.9 37.6 15.8 9.7 Exchange Rate 8,908.00
88
INDONESIA

(65) 6882-2374 10 November 2010
PT XL Axiata Tbk Earnings Strip
PT XL Axiata Tbk (Reuters: EXCL.JK, Bloomberg: EXCL IJ)

Rp in mn, year-end Dec FY09A FY10E FY11E FY12E
Revenue (Rp bn) 13,706 17,493 22,619 26,415 52-wk range (Rp) 6,250 - 1,800
EBITDA (Rp bn) 6,205 9,274 12,300 14,232 Mkt cap (Rp mn) 50,197,200
EBITDA growth (%) 20.9% 49.5% 32.6% 15.7% Mkt cap ($ mn) 5,635
Recurring profit (Rp bn) 1,364 2,931 4,827 6,400 Shares O/S (mn) 8,508
Recurring EPS (Rp) 189 345 567 752 Free float (%) 20.0%
EPS growth (%) 285.8% 82.1% 64.7% 32.6% 3-mth avg trading volume: 1,927,287
DPS (Rp) 0 0 113 150 Average 3m Daily Turnover ($ mn) 1.18
EV/EBITDA (x) 10.1 6.5 4.4 3.4 JCI 3,757
P/E 31.2 17.1 10.4 7.8 Exchange Rate 8,908.00
89
INDONESIA

(65) 6882-2374 10 November 2010
Philippine Long Distance Telephone

Company Earnings Strip
Philippine Long Distance Telephone Company (Reuters: TEL.PS, Bloomberg: TEL PM)
Php in mn, year-end ADR
Dec 2,764.00 - Reuters PHI
52-wk range (Php)
Revenue 147,993 145,401 151,578 161,443 2,320.00 64.54 -
52-wk range ($)
EBITDA 83,731 83,802 87,912 92,944 Mkt cap (Php mn) 451,678 50.04
EBITDA growth (%) -1.2% 0.1% 4.9% 5.7% Mkt cap ($ mn) 10,407 Ratio 1.0 to 1
Recurring profit 39,395 40,388 42,855 47,051 Shares O/S (mn) 187 ADR Premium 1.2%
Recurring EPS (Php) 211 216 229 252 Free float (%) 52.0% Price ($) 56.38
EPS growth (%) 11.1% 2.6% 6.1% 9.8% 3-mth avg trading volume: 157,791 Date of Price 09 Nov 10
DPS (Php) 217.95 220.49 229.44 251.90 Average 3m Daily Turnover ($ 3m Avg. Daily Value - ADR
9.16 6.2
EV/EBITDA (x) 6.1 6.1 5.8 5.5 mn) ($ mn)
P/E 11.5 11.2 10.5 9.6 PSE 4,198
Dividend Yield 9.0% 9.1% 9.5% 10.4% Exchange Rate 43.40
FCF to mkt cap (%) 10.4% 9.6% 10.6% 11.8% Price (Php) 2,418.00
Date Of Price 10 Nov 10
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Globe Telecom Earnings Strip
Globe Telecom (Reuters: GLO.PS, Bloomberg: GLO PM)

Php in mn, year-end Dec FY09A FY10E FY11E FY12E
Revenue 63,861 63,917 66,264 71,009 52-wk range (Php) 1,035.00 - 761.50
EBITDA 36,462 32,730 32,346 34,733 Mkt cap (Php mn) 111,835
EBITDA growth (%) -2.5% -10.2% -1.2% 7.4% Mkt cap ($ mn) 2,577
Recurring profit 12,401 9,265 8,517 10,373 Shares O/S (mn) 132
Recurring EPS (Php) 93.33 69.60 63.98 77.93 Free float (%) 22.1%
EPS growth (%) 5.6% (25.4%) (8.1%) 21.8% 3-mth avg trading volume: 70,149
DPS (Php) 98.76 75.53 70.91 81.04 Average 3m Daily Turnover ($ mn) 1.38
EV/EBITDA (x) 4.2 4.9 4.9 4.4 PSE 4,198
P/E 9.1 12.1 13.2 10.8 Exchange Rate 43.40
Dividend Yield 11.7% 8.9% 8.4% 9.6% Price (Php) 845.00
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Analyst Certification:
The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily
responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies, with
respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report
accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research
analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the
research analyst(s) in this report.
Important Disclosures
• Market Maker: JPMS makes a market in the stock of Philippine Long Distance Telephone Company, PT Indosat Tbk, PT
Telekomunikasi Indonesia Tbk.
• Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for PT XL
Axiata Tbk within the past 12 months.
• Client of the Firm: Globe Telecom is or was in the past 12 months a client of JPM; during the past 12 months, JPM provided to the
company non-investment banking securities-related service. Philippine Long Distance Telephone Company is or was in the past 12
months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-related service
and non-securities-related services. PT Indosat Tbk is or was in the past 12 months a client of JPM; during the past 12 months, JPM
provided to the company non-investment banking securities-related service. PT Telekomunikasi Indonesia Tbk is or was in the past
12 months a client of JPM. PT XL Axiata Tbk is or was in the past 12 months a client of JPM; during the past 12 months, JPM
provided to the company investment banking services and non-securities-related services. Total Access Communication is or was in
the past 12 months a client of JPM; during the past 12 months, JPM provided to the company non-investment banking securities-
related service.
• Investment Banking (past 12 months): J.P. Morgan received, in the past 12 months, compensation for investment banking services
from PT XL Axiata Tbk.
• Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking
services in the next three months from PT Indosat Tbk, PT Telekomunikasi Indonesia Tbk, PT XL Axiata Tbk.
• Non-Investment Banking Compensation: JPMS has received compensation in the past 12 months for products or services other
than investment banking from Globe Telecom, Philippine Long Distance Telephone Company, PT Indosat Tbk, Total Access
Communication. An affiliate of JPMS has received compensation in the past 12 months for products or services other than
investment banking from Globe Telecom, Philippine Long Distance Telephone Company, PT XL Axiata Tbk, Total Access
Communication.
Important Disclosures for Equity Research Compendium Reports: Important disclosures, including price charts for all companies
under coverage for at least one year, are available through the search function on J.P. Morgan’s website
https://mm.jpmorgan.com/disclosures/company or by calling this U.S. toll-free number (1-800-477-0406)
Philippine Long Distance Telephone Company (TEL.PS) Price Chart
Date Rating Share Price Price Target

4,968 N Php2,800 (Php) (Php)
27-Jul-10 N 2430.00 2800.00
4,347 OW Php2,800
29-Aug-10 OW 2442.00 2800.00
3,726 13-Oct-10 N 2698.00 2800.00
N Php2,800
3,105
Price(Php)
2,484
1,863
1,242
621
0
Jun Mar Dec Sep Jun
07 08 08 09 10
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Jul 26, 2010. This chart shows J.P. Morgan's continuing coverage of this stock; the current analyst
may or may not have covered it over the entire period.
J.P. Morgan ratings: OW = Overweight, N = Neutral, UW = Underweight.
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PT Indosat Tbk (ISAT.JK) Price Chart

15,288 (Rp) (Rp)
27-Jul-10 N 4925 4500
13,104 N Rp4,600
29-Aug-10 N 4400 4600
10,920 N Rp4,500
Price(Rp) 8,736
6,552
4,368
2,184
0
Jun Mar Dec Sep Jun
07 08 08 09 10
Initiated coverage Jul 26, 2010. This chart shows J.P. Morgan's continuing coverage of this stock; the current analyst
may or may not have covered it over the entire period.
PT Telekomunikasi Indonesia Tbk (TLKM.JK) Price Chart

19,593 N Rp12,000
OW Rp12,300
N Rp10,900
OW Rp10,300 N Rp7,150 OW Rp9,800 (Rp) (Rp)
03-Nov-06 N 8550 8400
16,794 N Rp9,500
OW Rp11,500
OW Rp13,500
N Rp10,400OW Rp7,200 N
15-Jan-07 N 9850 9500
13,995 N Rp8,400 25-Mar-07 N 9700 12000
OW Rp12,000OW Rp15,750
N Rp10,200
OW Rp9,500 N Rp7,000
N Rp8,500 N Rp9,300 N Rp9,800
26-Mar-07 OW 9700 12000
Price(Rp) 11,196 31-May-07 OW 9550 11500
03-Aug-07 OW 10900 12300
8,397
19-Oct-07 OW 11800 15750
5,598 05-Nov-07 OW 11400 13500
11-Dec-07 N 11000 10900
2,799 11-Apr-08 N 9150 10200
25-Apr-08 N 8650 10400
0
Sep Jun Mar Dec Sep Jun
27-May-08 OW 8050 10300
06 07 08 08 09 10 01-Aug-08 OW 7650 9500
03-Nov-08 OW 5400 7200
Break in coverage Apr 28, 2010 - Jul 26, 2010. This chart shows J.P. Morgan's continuing coverage of this stock; the 30-Jan-09 N 6300 7150
current analyst may or may not have covered it over the entire period.
07-Apr-09 N 7050 7000
31-Jul-09 N 9400 8500
03-Feb-10 N 9300 9300
28-Apr-10 N 7800 --
27-Jul-10 OW 8050 9800
13-Oct-10 N 9150 9800
Explanation of Equity Research Ratings and Analyst(s) Coverage Universe:

J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve
months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s)
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of
the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] J.P. Morgan Cazenove’s UK Small/Mid-Cap dedicated research
analysts use the same rating categories; however, each stock’s expected total return is compared to the expected total return of the FTSE
All Share Index, not to those analysts’ coverage universe. A list of these analysts is available on request. The analyst or analyst’s team’s
coverage universe is the sector and/or country shown on the cover of each publication. See below for the specific stocks in the certifying
analyst(s) coverage universe.
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(65) 6882-2374 10 November 2010
Coverage Universe: James R. Sullivan, CFA: Advanced Info Services (ADVA.BK), Globe Telecom (GLO.PS), Maxis
Berhad (MXSC.KL), PT Indosat Tbk (ISAT.JK), PT Telekomunikasi Indonesia Tbk (TLKM.JK), PT XL Axiata Tbk
(EXCL.JK), Philippine Long Distance Telephone Company (TEL.PS), Singapore Telecom (STEL.SI), Total Access
Communication (DTAC.BK)
J.P. Morgan Equity Research Ratings Distribution, as of September 30, 2010

Overweight Neutral Underweight
(buy) (hold) (sell)
J.P. Morgan Global Equity Research 46% 43% 12%
Coverage
IB clients* 49% 45% 33%
JPMS Equity Research Coverage 43% 48% 8%
IB clients* 69% 60% 50%
*Percentage of investment banking clients in each rating category.
For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold
rating category; and our Underweight rating falls into a sell rating category.
Valuation and Risks: Please see the most recent company-specific research report for an analysis of valuation methodology and risks on
any securities recommended herein. Research is available at http://www.morganmarkets.com , or you can contact the analyst named on
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TIP Telcos: The 3Q10 Deep Dive

provides evidence supporting our contention that rising rural wage

Equity Ratings and Price Targets

James R. Sullivan, CFA Asia Pacific Equity Research

James R. Sullivan, CFA Asia Pacific Equity Research

James R. Sullivan, CFA Asia Pacific Equity Research

Figure 45: TIP Telcos D&A as % of revenue ............................................................39

James R. Sullivan, CFA Asia Pacific Equity Research

Table 1: TIP Telcos current issues and best/worst placed stocks

Overall Net Profit growth ISAT / TEL TLKM

Network scope / quality

3Q10 Key Takeaways

• Pricing levels in Indonesia already reflect dual SIM and relatively

• Thai penetration is structurally held back by the high regulatory fees

James R. Sullivan, CFA Asia Pacific Equity Research

par with Indian operators, which theoretically should enable them to

Thai wireless voice pricing stabilized

#2 operators becoming more competitive (ISAT/DTAC)

Wireless broadband beginning to factor in Indonesia

It wasn’t too early for Indosat…

James R. Sullivan, CFA Asia Pacific Equity Research

Upgrading TLKM and TEL on recent underperformance

Figure 1: TLKM one year forward consensus P/E

James R. Sullivan, CFA Asia Pacific Equity Research

Figure 2: PLDT one year forward consensus P/E

Figure 3: Daily Long-short performance of selected factors in Asian Telcos

Source: MSCI, Barra, Thomson Reuters, Bloomberg, J.P. Morgan.

James R. Sullivan, CFA Asia Pacific Equity Research

Where we’ve been – 3Q Actuals vs. Forecast

Rev enue EBITDA EBITDA margin

Source: Company reports and J.P. Morgan estimates.

James R. Sullivan, CFA Asia Pacific Equity Research

Figure 5: TIP Telcos 3Q10 JPMe vs. actual (reported EPS)

Source: Company reports and J.P. Morgan estimates.

Where we are - Operating / Financial trends

James R. Sullivan, CFA Asia Pacific Equity Research

Figure 6: TIP Telcos wireless monthly net adds (000)

Source: Company reports and J.P. Morgan estimates.

Figure 7: TIP Telcos MOU growth-trailing 12 months

AIS DTAC Telkomsel ISAT Ex celcomindo Telkom-Flex i

Source: Company reports.

Average Revenue Per Minute

James R. Sullivan, CFA Asia Pacific Equity Research

Figure 8: TIP Telcos wireless voice ARPM growth

AIS DTAC Telkomsel ISAT Ex celcomindo Telkom-Flex i

Source: Company data.

1) It appears as though the cannibalization of unlimited SMS packages in the

2) Indosat continues to have a large lead in terms of data as a percentage of

James R. Sullivan, CFA Asia Pacific Equity Research

Figure 9: TIP Telcos wireless data as % of total revenue

Source: Company reports and J.P. Morgan estimates.

Figure 10: TIP Telcos broadband monthly net adds (000)

Source: Company reports and J.P. Morgan estimates.

TLKM continues to drive this broadband subscriber growth through significant

James R. Sullivan, CFA Asia Pacific Equity Research

Figure 11: TIP Telcos broadband ARPU (US$)

Source: Company reports and J.P. Morgan estimates.

Revenue trends by market

James R. Sullivan, CFA Asia Pacific Equity Research

Figure 12: TIP Telcos revenue growth

AIS DTAC PT Telkom Telkomsel ISAT Ex celcomindo PLDT Globe