Making a turnaround in Telco and Media business

Making a turnaround in Telco and Media business StudentsxCEOs, InstitutTeknologi Bandung, Bandung – 9 Desember 2012

Agenda From Ratelindo to Bakrie Telecom Reinvigorating antv and establishing VIVA Increasing Indonesia global competitiveness Summary

Bakrie Group entered into Telco business with the establishment of Ratelindo, which then transformed into Bakrie Telecom Bakrie Telecom era Issued US$130 million Senior Notes, rated “B” by S&P and Fitch Awarded full mobility license Ratelindo era Issued US$250 million Senior Notes, rated “B” by S&P and Fitch Launched BWA service under the “AHA” brand Entered into an MOU with respect to RMB 2 billion (approx. US$300 million) export credit facility with ICBC Launched new Rp.1 per second / 2KB tariff scheme • Transformation from a niche player with 130,000 subscribers in 2003 to 14.6 million subscribers as at December 31, 2011 • Awarded full mobility license (principal license) on November 2011 Launched SLI Hemat 009 service Obtained additional frequency for JBJB region Finalized sale and leaseback transaction for 543 towers Won third place in the "2009 Investment Award 3,447 3,436 Raised Rp.3.0 trillion via rights issue Arranged USD 150 million in vendor financing Innovation- Rp.1 per character SMS charging Launched new product / service -“Wimode” Awarded “Best CDMA Operator 2007” Issued Rp.650 billion domestic bonds 2,805 Conferred nationwide FWA license Launched new product / service -“Wifone” Launched Rp.605 billion initial public offering on IDX Introduced‘Talk Time’ Campaign Rapid commercial ramp up Launched “Esia” (soft launch) in the JBJB Provinces(1) based on CDMA technology 1,672 Roll out of ‘Esia’ brand with series of marketing campaigns Commenced FWA services in the JBJB Provinces(1) based on E-TDMA technology 920 404 Gross revenue in IDR billions at end of period 290 Total subscribers in thousands at end of period 267 Figures refer to: (1) JBJB Provinces comprise of Greater Jakarta, Banten and West Java area. .

Bakrie Telecom has gone through major transformation to get to where it is now Into this? How to transform this? Ratelindo Bakrie Telecom Substitute to PT Telkom, sole player in fixed line telephony business Focus only in Jakarta area where Telkom has difficulty accessing 130K subscribers within 10 years of its inception (1993 – 2003) #4 largest mobile operator in Indonesia in terms of subscribers, revenue, EBITDA, and EBITDA margin Coverage area within 82 cities in Indonesia which contribute to more than 50% of Indonesia GDP 14.6Mn subscribers within 8 years of its inception (2003 – 2011) #1 player with 39.1% brand share in West Java – Jakarta – Banten area, which contributes for ~35% of Indonesia GDP and ~27% of Indonesia total population

Bakrie Telecom implement a “budget telecom” business model… BTEL’s “no frills” business model, combined with its simple tariffs and ultra low costs is a key differentiator vs. competitors

… while driving growth through “disruptive innovation” strategy 2005 / 2006: Flat plan, rock bottom on-net pricing 2007: Breaking the price barrier of $25 for CDMA handsets • On-net tariff of Rp.50 per minute • One simple plan valid for any day any time • Strong customer education campaign to communicate the concept of Talktime Minutes as against market practice of Prepaid Voucher amount • Introduced affordable and high-quality new handset package priced at Rp.199,000 2008: SMS pricing innovation 2010: Rp.1 tariff scheme • The Rp.1 / character SMS is a global first innovation • Per character charging is like per second voice call charging - pay per use • Offers subscribers to enjoy on net at Rp.1 per second (with a minimum of one minute), SMS at Rp.1 per character and data at Rp.1 per 2kb • Simple, transparent and fair method of calculation for subscribers

Result: in 2009 become the #1 player in JBJB1, the most important region in Indonesia BTEL is the No.1 player and has a brand share of over 39.1% in the JBJB area, which accounts for ~35% of Indonesia’s GDP and ~27% of total population in the country “Esia” brand is the most recognized brand among users, is the most recommended brand by existing subscribers to their friends / family, and has the lowest tariff. Its brand share has long overtaken the “Big 3” players by significant margin Subscriber brand share trends: JBJB Source: Single Source, Roy Morgan. Spontaneous brand awareness among potential users BTEL offers the cheapest tariffs in JBJB Most recommended brand for friends and relatives Source: Brand Health Tracking, TNS. Notes: Jakarta, Banten, Jawa Barat

The strong results encourage BTEL to expand its footprint during 2007 – 2011 • Network supported by 4k BTS. • In line with the implementation of the asset light strategy, 94% of the BTS are collocated BTS deployment trend • Esia city coverage: 82 cities • We heavily invested in BWA business with EVDO technology 2010-2011. Current EVDO services city coverage: 22 cities • We also expand our organization since 2007, from 743 employees in 2006 to 1900 in 2011.

BTEL expanded high quality Network able to accommodate the 30% CAGR subscribers growth Aggressive Network expansion but still maintain superior Network quality BTEL subscribers has grown at 30% CAGR since 2006 * In million CAGR: 30% 2012 Financial highlight

BTEL launched esia max-d for BWA EVDO service in June 2012 • In 2011, Marketing cost spent for Aha is Rp47bn. • We integrated our brand, in order to make the Marketing cost more efficient. • After the relaunch, subscribers and revenues have grown steadily.

1999 2003 2005 2007 2008 2009 Bakrie Group focus to grow media business since the company repositioned ANTV and acquired Lativiback in 2007 – 2008 • tvOne, previously known as Lativi and owned by the Latief family, obtained free-to-air (FTA) TV broadcasting license • Lativi focused on general entertainment for CDE segments mainly with acquired programs • Star TV bought a 20% stake in ANTV • ANTV shifted focus to general entertainment for a wider audience target (male, female and children), relying on acquired programs • Anindya Bakrie was appointed as President Director and CEO of VIVA • Rebranded and launched tvOne as a news and sports channel for ABC1 15+ segment • Repositioned ANTV as a family lifestyle channel with in-house programs and sports programs for ABCD segment • ANTV, which had been in operations since 1993 and initially focused on youth programs, re-launched a new logo and focused on women’s and children’s programs • Bakrie family bought Lativi, which had poor network management and debt problems • Lativi was subsequently renamed to tvOne • Restructured so that Star TV owns 7.5% of VIVA and VIVA owns 100% of tvOne and ANTV Before 2008 Since 2008 • ANTV • General entertainment with no distinctive positioning • Relied on expensive acquired programs • ANTV • Family lifestyle and sports for ABCD 5+ segment • Low cost in-house production • tvOne • Focused news and sports channel for ABC1 15+ segment with independent news content • Successfully displaced Metro TV, which had been the #1 news channel for 9 years, within a year • Lativi • General entertainment for CDE segment • Mainly acquired programs Source: Company information 13

VIVA group with its subsidiary has undergone major business turnaround to achieve where it is now Condition Before 2008 Condition After 2008 Non-integrated two FTA terrestrial TV stations: ANTV and Lativi, with no clear differentiation between the two Highly leveraged company with lower ratings General entertainment, no focus on segmental targeting content High operational cost Two FTA terrestrial TV stations with clear differentiation: distinct segment as target market; plus an on-line news portal ANTV by focusing on in-house production of local content (e.g. quiz shows, variety shows, and reality shows) which has proved to be more popular amongst Indonesian viewers has gained audience share from 4.9% in 2008 to 8.5% in 2010 TVOneemerged as the leader of news-focused channels by audience share (4.6% in 2008, 6.6% in 2009 and 5.9% in 2010) Viva.co.id based on ALEXA is the #1 ranked Indonesian news portal based on page-views in September 2011; while based on Effective is the #1 ranked Indonesian news portal and #2 ranked South East Asia news portal

VIVA’s management team has successfully demonstrated its ability to turn the Company around and achieve improved results Since the entry of VIVA’s new management team, the Company has achieved success in each of its three main businesses 1 2 3 Audience share of ANTV Audience share of tvOne vs Metro Source: Media Partners Asia. Source: Media Partners Asia. Source: Alexa

Content: Segmented program Capitalizing on Bakrie Group’s existing resources Synergies across business units Well thought initiative and robust execution are key success factors of Bakrie Group in managing its media businesses Key initiatives Business execution • Utilize strategic property assets available as production facilities • Utilize infrastructure of affiliates as an alternative delivery platform for video content as well as data content • Our success is driven by segment-focused program composition • Tailored programming for the special characterized viewer based on its demographic condition • Segmental targeting for viewership to maximize audience share and program ratings • Content predominantly in-house programs • Centralized sales and marketing team • Program content sharing: Coordinated programming between ANTV and tvOne minimizes viewership competition for any given time slot • Broadcast and IT Infrastructure sharing: • Coordinated procurement activities between ANTV, tvOne and Vivanews provides knowledge sharing on available products and new technology • Sharing of studio and broadcast equipment reduces rental costs • Sharing of transmission tower enables lower rental and labor costs

ANTV is featuring lifestyle and sports contents... • The “Super Family” game show ranked # 5 for the time slot between 6.30 PM to 7.30 PM, with TV rating of 3.1 • Best Quiz & Game Show - Panasonic Gobel award 2011 • “Super Deal 2 Milyar” ranked #2 amongst quiz shows for the Jan – Nov 2010 period with TVR and TVS of 2.7 and 10.0, respectively In percentage (%) • 10 year contract until 2017 • Accounted for 15 of 20 most popular football matches among male aged 10 to 44 • Exclusive rights to Liga Indonesia • Best Sport Program – Panasonic Gobel Award 2010 Source: Company. Source: AGB Nielsen.

...thus far the repositioning strategy hasproven to be successful Source: Nielsen. A stable base of popular content with consistent ratings is the most effective way to increase our share of advertising revenues

Within one year after launching, tvOne has becomethe leading news channel with profitable operation Death of Dulmatin, Representative Plenary Trial, Tax Broker Case Amrozi execution (Bali bombing terrorist) Election and Marriot bombing 2 Terrorist raid at Temanggung KPK vs POLRI Gaza Strip and presidential campaign Mentawal, Waslor, Merapi Disaster Bloody clashes in Tanjung Priok Source: AGB Nielsen Media Research, 10 cities, TV share 15+ ABC1. Note: (1) Metro TV has been known as the leading news station in Indonesia since 1999. 57.4% of TV Population Japan Tsunami Royal wedding

VIVA’s success is driven by segment-focused program composition Differentiated by delivering news and information in a lively and interactive manner • Tailored programming to appeal to ABC1 15+ demographic • Programs include news and current affairs, talk shows, documentaries and sports • Pre-dominantly in-house programs • Includes selectively licensed foreign news content from major international news providers Top Programs in 2011 Source: Company

(Sept 2011) #1 Ranked Indonesian news portal #2 ranked South East Asia news portal Our domination in the news segment has been secured in the online segment as well through VIVAnews and transformed to viva.co.id (Sept 2011) #1 Ranked Indonesian news portal based on pageviews

Challenges of Indonesia: education and healthcare Some facts on education in Indonesia • Government has proposed a spending on education of IDR 332Tn (~USD 35Bn) for 2013, equal to 1.5x of Indonesia FDI • However, between 2006 – 2010 Indonesia only spends 2.8% of its GDP for education, compared to India at 3.1%, Singapore (3.3%), and Malaysia (4.1%) • Currently only 17% of Indonesia students that are going into tertiary education • Indonesia graduates 80K engineers/year, compared to India at 120K and China (350K) • Indonesia sends 7K students per year to the US, compared to India and China which are more than 100K each • Indonesia still has a very low PhD compared to China and India, and 80% of Indonesia PhD is in the non-technological field (e.g. religion, philosophy, economy) Some facts on healthcare in Indonesia • Indonesia only have 3 medical doctors out of every 10K population, compared to Malaysia at 9:10K, Vietnam (12:10K), and Singapore (18:10K) • Every year, rich Indonesians spend far more than USD 1Bn for their medical expenses overseas (Singapore, Australia, Malaysia, and the US being the main destinations)  big potential loss for the domestic healthcare business

The real issue: culture • Indonesia has a culture that doesn’t accept failure (i.e. fear to fail culture) • As long as the view toward failure doesn’t change, Indonesia will not be able to compete globally • Example: fear to fail culture will make it difficult for Indonesia to drive up its number of entrepreneurs • Out of the 240Mn population, ideally Indonesia should have 4.8Mn entrepreneurs (2% of population) • Currently Indonesia only have 0.2% entrepreneurs (~480K out of the total population), very low compared to Singapore at 7%, USA (10%), and Japan (11%) • Without the required entrepreneurs, it will be difficult for Indonesia to compete globally and contribute more to the world development • To do this, academia, business community, and government should work together to develop “soft” infrastructure such as having culture change through coaching and mentorship

The few who dare to take the challenge SEHAT SUTARDJA CEO MARVELL TECHNOLOGY GROUP LTD KENDRO HENDRA (SETTING WIZARD & DATA MOVERS NOKIA)

Are you next?

Summary • Bakrie Group has long since engaged in the Telco and Media business • The current achievement of Bakrie Group Telco and Media business is a result of carefully planned and executed turnaround • To increase its global competitiveness, Indonesia must change its perception toward failure • “Dare to fail” is a fundamental entrepreneurial mindset  there is a lesson in every “failure”, do not forget to apply it in every future business endeavors • Indonesia will need more entrepreneurs in the future to be able to compete globally and contribute more to the world development

Making a turnaround in Telco and Media business