Telkom Indonesia (Persero) Tbk PT (TLK) 2011 Q3 法說會逐字稿

Good day, everyone, and welcome to the Telkom nine months '11 earnings conference call. Today's call is being recorded.

At this time, for opening remarks, I would like to turn the conference over to your moderator today, Mr. Prakoso Santoso. Please go ahead.

Thank you, Stacey. Ladies and gentlemen, thank you for participating in today's conference call to discuss PT Telkom Indonesia nine months 2011 results.

On October 28, 2011 we released our financial results for the nine months ending September 30, 2011. Earnings press release and other materials may be accessed in the investor relations section of our site www.telkom.co.id.

Today's presentation is also [available] over the Internet and an audio recording will be provided on our website following the call. The recording will be available for the next 30 days.

With me on the call is Mr. Rinaldi Firmansyah, Telkom's Chief Executive Officer, along with the members of the Board of Directors and senior management of PT Telkom and our subsidiary, PT Telkomsel. Mr. Firmansyah will give you an overview of the results after my opening remarks.

Before beginning, let me remind you that the call and the responses to questions may contain forward-looking statements within the meaning of safe harbor. Actual results could differ materially from projection, estimations or expectations voiced during today's call. This may involve risk and uncertainty and may cause actual results and development to differ substantially from those expressed or implied in the statement. The Company does not guarantee that any action which may have been taken in reliance of this statement.

Ladies and gentlemen, it is my pleasure to introduce Telkom's Board of Directors who are joining us today. Mr. Rinaldi Firmansyah, our President Director and Chief Executive Officer; Mr. Sudiro Asno, the Director of Finance and Chief Financial Officer; Mr. Ermady Dahlan, the Director of Network and Solution and Chief Operating Officer; Mr. Prasetio, the Director of Compliance and Risk Management; Mr. I Nyoman Gede Wiryanata, Director of Consumer; and Mr. Indra Utoyo, Director of Information Technology and Chief Information Officer.

Also, present today are members of Board of Directors of Telkomsel, Mr. Sarwoto Atmosutarno, President Director; Miss Triwahyusari, Director of Finance; and Mr. Hendri Mulya Syam, EVP Sales Operation

And now, I would like to give Mr. Rinaldi Firmansyah an opportunity to deliver his remarks. Pak Rinaldi, the time is yours.

Thank you, Prakoso. Good afternoon, ladies and gentlemen. On behalf of Telkom's management and employees, I would like to thank all our valued stakeholders for your support for the Company. We sincerely appreciate your participation on this conference call.

I would now like to present several business highlights from the nine months 2011. First, our broadband customers rising 75% to 11.2 million in nine months 2011. Our fixed broadband revenues were almost IDR3 trillion, while mobile broadband were IDR3.6 trillion.

Cellular customer base grew strongly by 11.8% year on year to 104.1 million customers, with net add for this quarter of 1.9 million new customers.

In September 2011 we also do an early retirement program, and 762 of our employees participated. And it incurred a one-off cost for severance pay of IDR629 billion. We expect this program will help to reduce the costs, going forward, and prepare Telkom to go into the new area of businesses.

Now, I shall present the operational and financial performance for nine months of 2011. Ladies and gentlemen, availability of cheaper smartphones and personal computers, as well as more affordable Internet access, have shifted the usage from voice to data and Internet. The trend shifting is shown by significant growth in broadband (inaudible). Our fixed broadband, Speedy, achieved 2.2 million subscribers, and mobile broadband achieved 5.9 million users, plus 3 million users, so 8.9 million users, up 43%, 39% and 430% year on year -- 43% year-on-year increase respectively.

Fixed broadband revenues contributed IDR2.9 trillion (sic - see slide 9), and mobile IDR3.6 trillion, a 12% and 61% increase respectively, compared to the period last year. It shows that Telkom has been able to harness the momentum of broadband booming. With over 104.1 million subscribers, we remain the leading provider in cellular market with around 44% market share.

In the full year, total cellular BTS reached more than 41,000 units, 16% growth compared to the same period last year.

Cellular voice revenues contributed IDR20.9 trillion, a 9% increase, compared to the same figure in the previous quarter, due to the Lebaran festive season. Meanwhile, in year on year, it declined by 3.4%, mainly as an impact of shifting to -- [for] data and Internet.

Our fixed wireline subscribers increased by 2% to 8.5 million. Meanwhile, our fixed [wireless] Flexi subscribers increased to 18 million subscribers. Fixed line revenues contributed total IDR8.7 trillion, a decline of 10.3%, compared to the same period last year.

Ladies and gentlemen, I shall now briefly discuss the financial result and try not to repeat all the information that you may have read in the InfoMemo posted on our website.

One, financial position on year-on-year basis. Total assets decreased by 0.6% to IDR99.5 trillion; total liabilities is decreased by 11% to IDR41.2 trillion; total equity, excludes non-controlling interest, increased by 8% to IDR46 trillion.

Two, with respect to our comprehensive income on a year-on-year basis operating revenue increased by 3% to IDR53 trillion (sic - see slide 12) ; total expenses increased by 8% to IDR36.7 trillion; EBITDA decreased by 4% to IDR27.1 trillion; and EBITDA margin decreased to 51.1%. Income for the period attributable to the [owner of the parent] decreased by 6% to IDR8.4 trillion.

In quarter 3, 2011, Telkom spent a non-recurring cost of IDR629 billion for ERP, while in the previous year, there were non-recurring costs of personnel. And also, to make it comparable, we normalized the non-recurring costs including IDR326 billion for actuarial salary hike and CDMA frequency fee adjustment. Resulted net income for the period of nine months 2011 grew by 2% from IDR8.7 trillion to IDR8.9 trillion (sic - see slide 12).

Revenue contribution for this period was still dominated by cellular voice which accounted for 39% of our total operating revenue.

The second major revenue contributor was data, Internet and IT, that contributed 34%; followed by fixed line, with a 17% contribution. Interconnection, network, and others combined added 10% of the total revenues.

Meanwhile, operation and maintenance was 35% of total expenses; while depreciation and amortization expenses were 29%. Personnel expenses contributed 18%; and interconnection, G&A, and marketing contributed 18% to total expenses.

As of September 30, 2011, CapEx, capital expenditure, allocated to Telkom, Telkomsel, and other subsidies amounted to $280 million, $600 million, and $140 million, respectively.

The CapEx was utilized, predominantly, to enhance infrastructure and broadband access, and to develop and promote new business lines.

With the continuous growth of our data, broadband, and [total sales] growth for IPTV and video, we are developing infrastructure out of optical cable in major islands in Indonesia and connected all the islands with marine cable. We call it Nusantara Super Highway.

All the optical cables line reaches 47,000 kilometers. It is longer than the Globe's diameter, which is 40,000 kilometers. Nusantara Super Highway covers 440 cities and counties.

In the meantime, Telkomsel CapEx was primarily utilized to expand network infrastructure and IT systems. With the increase in demand for data service, we accelerated the capacity and coverage expansion to support the growth of our broadband data service. Currently, we have deployed our 3.5G HSDPA [HSPA] network in 45 big cities in Indonesia, supported by more than 9,000 3G [Node B].

With the widest and the most comprehensive infrastructure [arm], Telkom is able to serve subscribers, customers, and build the [various remaining] areas.

(inaudible). We have been preparing various programs and initiatives to allow us a [giving] year end 2011, and so on.

Mobile broadband. Internet access has been a new revenue growth driver. Customers can get access to our data service through our Flash BlackBerry and pay-as-you-use packages.

In addition to accelerating the deployment of our data network, we also have done some efforts to further increase the penetration, such as through partnership and bundling program; solving user barriers through customer allocation and device barriers; enhancing distribution and promotion.

Fixed broadband. Along with the new program launches, which was mentioned in the previous quarter's conference call, such as IPTV and Speedy Flash bundling, we have decided to gradually upgrade all Speedy subscribers who currently have speeds of between 384 kbps and 512 kbps to a speed of 1 mega bps and above.

In the future, Speedy will only provide package with minimum 1 Mbps speed. 1 Mbps bandwidth is a minimum requirement for (inaudible) video experience. This is done to maintain customer satisfaction and loyalty.

To provide more convenience and flexibility for Speedy subscribers, we will deploy [wire free] facilities, WiFi facilities, call innovation WiFi. All Speedy subscribers will finally be able to access all hot spots available.

We also have a program, four to five-year program, to replace our copper access to fiber optic. This is done so that we would have the capacity of 20 Mbps to 100 Mbps for most of our subscribers by [2015].

Currently, [last mile in a few] locations have been upgraded, and we started offering triple play of IPTV, Internet, and voice. This would strengthen our fixed position and compensate the decline in voice, and at the same time complement the cellular businesses.

On the cellular side, with the decline growth of voice revenues, we continued our efforts to sustain revenue growth. With more stable competitive environment during the last few quarters, we have been implementing price optimization to improve our revenue per minute and revenue per SMS in order to improve the revenue growth on voice and SMS.

We also have put more focus on customer retention program to maintain healthy customers and increase active customer base.

We also have looked at other new revenue streams, value-added services, contents, digital, lifestyle, while exploring new platforms for these new businesses.

One of the new services that we launched in the third quarter 2011 was Telkomsel [Easy]; a mobile payment transaction service with a contactless technology with radio frequency identification, RFID.

IME. Our information services, media, and entertainment contributions are not yet a significant source of revenue. However, they are growing very quickly.

Our Pay-TV subsidiary, Indonusa, has, of September, had 596,000 -- or 600,000 subscribers; a 194% increase year on year.

With a revenue growth of 28% for our IT services and 29% of our media businesses, we are improving our IME businesses from time to time.

Our subsidiaries, Infomedia, Metra, and Telin, are targeted to book revenue of IDR1 trillion by end of this year.

Currently, our IT, media, and edutainment businesses contributes almost 5% of total revenue. We definitely expect four years from now it could contribute 12% to 15% of our total revenue.

ERP. Commencing in August, we conducted the early retirement program. As mentioned earlier, the program was offered to employees. And in the future, we plan to have approximately [17,000] employees by 2014.

Tower business. Our tower subsidiary, Metratel, as of September 2011, owned [1,817] towers of its own, and operated 2,800 Telkomsel's towers and 1,500 Telkom's towers and rented them to the third parties.

Starting this year, Telkomsel will not build tower of its own, but instead they will rent towers from Dayamitra. We hope, by this arrangement, Telkomsel and Flexi will focus on serving their customers better; and, on the other side, Dayamitra will focus on maintaining and monetizing Telkom's group tower asset.

Cost optimization. We have been carrying our cost optimization program, and most of the cost optimization program will be realized once the copper infrastructure is replaced with the fiber optic infrastructures, starting 2012 and so on.

Ladies and gentlemen, that ends our presentation for the nine months of 2011. Let us continue onwards now with the question and answer session, and shall be moderated by Prakoso. Thank you.

Thank you, Pak Rinaldi. Now let's open for the Q&A session. Operator, may we have the first question, please?

The question and answer session will be conducted electronically. (Operator Instructions).

Sachin Mittal, [DBS Vickers]. Thanks for the call. Just three questions. You have expressed your intent to buy remaining stake in Telkomsel. You already have a majority control of Telkomsel; the question is, what can be the potential savings if Telkom owns 100% of Telkomsel? With a majority control you can execute most of the things you can even now, right, so just want to understand the benefits of full control.

Second question is on the recent announcement by the government to complete the 3G spectrum reorganization by end of this year. I think [minister] also said that Telkomsel must move with Channel 4 to Channel 6, so I just want to understand what are the changes we can expect for Telkomsel because of this 3G spectrum [rearrangement].

Third, we have seen lower EBITDA margins in this quarter due to higher operating and maintenance and general admin expenses. My question is, you have a cost optimization program running, but increasing these costs, what are the reasons behind the increase and are these costs going to remain high for the remaining quarter and years ahead? Thanks.

Okay, about the 3G spectrum rearrangement, we talked intensively with the government. And you know that Telkomsel, a proportion is that in this spectrum, either (inaudible) or even [allocation and evaluation method], we try to have another subcarrier in this 3G spectrum to go in 1 megahertz.

So it is very important to us to prepare and develop our 3G network with a more efficient way. That's why we are still discussing in this regard to government, that 3G spectrum reallocation to operators should be considered all of the aspects that's not only how to allocate to each operator, but we have to again take a look what is the impact in the future strategic things.

With this association today that actually Telkomsel is still in the position that we have need third carrier of 3G in this case.

I quite understand the position today. Is there a possibility that you may have to give up your 3G spectrum and -- just could you share some details, what is government's stand; what is your stand?

Yes, it is still possible. We are now still discussing about it.

Okay. Would it be (inaudible) to be compensated for returning (inaudible)?

Let me [complete]. Actually rather than moving Telkomsel's spectrum which is two carriers, it is easier to move other spectrum, which is only one. So that's our position. And we are still discussing with the government on this.

Second, I think you were asking on the [D&A] yes, increase. Yes, one of the significant growth there is the government PSR program which under -- after the AGM last May, while last year it was only 1% of the net income, and in the AGM it was decided that it was 2%. So there is an additional offer around [IDR9 billion] that contributed to the big increase in the (inaudible) D&A. That is compulsory because of the decision of the AGM.

The first question, I think on the 65% (inaudible), I prefer to discuss it separately, if you don't mind. Maybe please also basically we can discuss perfectly on this one.

And just to understand the increase in operation and maintenance costs. Is it because of (inaudible)?

Yes, operation and maintenance costs, the components are comprised of a few things. One is definitely ERP IDR629 billion Second, is the -- last year we had an adjustment of the [DHP] frequency, so we recorded a minus IDR63 billion for the same quarter, while this quarter we recorded [IDR158 billion] for the ERP. That's for the DHP.

I think these are the two significant contributions of the expenses.

Okay. Thank you.

Luis Hilado, HSBC.

Three questions. The first is on the revenue side. Aside from mobile revenues doing well, we saw that interconnection revenues for the quarter were up [14%] Q-on-Q. Is that a seasonal effect because of the Lebaran or is that going to be sustainable going forward?

Second question relates to the Telkomsel sale proposal. Is the timeline for submitting a report card to the Government still at year end or has that been extended?

And last question is ,with regard to the recent ruling on the deregistration of VAS subscribers what percent of Telkomsel's revenues are potentially affected by that event, and what are you doing to -- as a remedy?

Okay I think we start from the lifting of the (inaudible).

Thank you. Basically the background of regulation -- regulator decision about the (inaudible) of the [SMS] promotion, and also (inaudible) all of registered to our [CP] services it's because of [some CPs] do more aggressive promos to the low end market.

And we already calculated that the impact of the [deactivation] of the CP services to Telkomsel calculated around IDR420 billion until the end of this year. So we're impacted in the fourth quarter. It's around [less than] 1% of our total revenue [this year].

Do you think it will be resolved by next year?

No, I think on next year the pick up will be slowly, but again we have tried to discuss with the government, and also all of CP association how to make [it acceleration].

I'm going to talk about the interconnect revenue growth, Q-on-Q, was increased around 14%. And I think going forward it will be 1% to 2% lower than last Q-on-Q of Q3.

So because going forward this traffic is maybe not really more than to on-net and off-net. And the tariff of on-net is much lower than off-net.

Any particular reason why that (inaudible) was quite strong?

I think on that one, one is because of the transit traffic during the Lebaran (inaudible), so there is a (inaudible). And transit is actually on and off, and it's not really a continuous growth on that one.

And the other question is on the (inaudible) and the report card to the government. Yes, I think because it has been announced and stated in the AGM of Telkom, we have to follow the instruction given by the majority shareholders. So we definitely will make a report to the government by the year end.

I think that is what I can share for the time being, and I will see from there what would the government instruct us to do on this one.

Thanks.

Roshan Raj Behera, BofA Merrill Lynch.

Two questions. One is on CapEx. Your nine-month CapEx is about $1 billion, and of that $280 million has [been spent] on Telkom. For the year you are looking at $522 million for Telkom. I'm just trying to understand if there is a case for actual CapEx for the year being really below what you're targeting for this year.

And secondly, can you share some color in terms of what your [investment] is going to be like next year?

And a question on Telkomsel. For the quarter the growth was (inaudible). So anything which would help the growth for the quarter?

Can you repeat the second question?

Just for Telkomsel, the quarterly revenue growth, as in year-on-year trends were effectively better. So, is that driven by some one-off events, or there has been some strategic change, or new plans which have really helped Telkomsel drive this growth?

I think on the CapEx, on the Telkom side, CapEx is mostly -- one is on the building of the access broadband. And secondly it's also on the transport to support both the fixed and the cellular for data. So, on those basis we estimated the CapEx of Telkom of around slightly more than $500 million.

And next year we are -- I think for the time being, because we have the program of replacing most of our coppers last mile to the fiber optic, I think we still are going to spend around -- for the time being I cannot say the exact number because we are still calculating. But I think it's around 20% to 23% of our revenue on the Telkom side.

On Telkomsel, I think (inaudible).

Thank you. I think Telkomsel's strategy has clearly followed the direction of the parents that basically we are trying to push the growth of non-voice and SMS revenue and compensate the decreasing of voice especially. And we're developing product services that is quite new innovation there to push mobile, and then also evaluated services and so on.

But, again, that all the product side we also focus on how to provide readiness infrastructure, especially in outer Java, because outer Java still gives us very good margin in the more basic services also. And then we provide big cities to be ready on the broadband.

And then, most important in the commercial side, we do bundling with the terminal manufacturers [bad clusterings] in terms of distribution, and also micro pricing below the line.

And very important is also how we transform our IP infrastructure to support all of these services. This is basically our strategy that can push our growth in the future.

Thanks for these points. I just wanted to understand if there was something different which is done in this particular quarter versus the previous quarters and is this strength sustainable or likely to moderate in the next few quarters? That's what I was trying to understand.

I think what difference for Telkomsel is the responding time to the customers and competitive landscape. So I think the ability for Telkomsel to segment their sales and marketing in a sharper way. And we hope that would go along the way.

Okay. Thank you.

We'll now move to our next question. Your line's open. Please go ahead.

This is (inaudible), Morgan Stanley. I have a couple of questions. One, on the CapEx, again on the wireless side, for absolute CapEx for the year and if you compare that with the kind of numbers that Excel and Indosat are spending, your number is only slightly higher, despite you're still being 3 times their scale.

So I was just wondering if there was any argument for you to accelerate your CapEx in terms of 3G and data and probably use your strong balance sheet to get a bit of a head start, which was obviously your core advantage in the 2G space as well. So that's the first question, just trying to think through how you look at CapEx for Telkomsel in particular.

The second question I had was, if you look at the subscriber numbers, I know revenues for Telkomsel were pretty strong in the quarter, but your net adds, compared to both Indosat and Excel are a bit on the soft side. And we've historically seen that net adds are visible ultimately in revenues with a lag of a quarter or so. So is that something that concerns you?

And the third question I had was on the fixed broadband ARPU, which, after staying stable for a long time, has started declining in recent quarters. Just wondering, again, is it a deliberate strategy on your part to actually grow there. How should we look at that going forward? Thanks.

Basically if we look at the CapEx on Telkomsel, we consistently to put our CapEx to develop [foundation] on the 3G and data network. But also we still consider the development of handset in the market, that still most of them is [3G] (inaudible).

So, our CapEx for infrastructure basically in line with what happened in the market, so if we look in our customer base, you already -- it's very visible to see that more than 104 million customer base in this case. You see that 42.5 million our customer is using (inaudible). So we learn from the content provider incident this month. And most of 40 million is the data users.

So this means that our CapEx is in line with the growth of the future business in wireless itself.

So we are confident and expect that our guidance on CapEx and use of CapEx is very in line with our strategic long-term strategy plan. Okay?

Yes.

Second question.

(inaudible) --

We'll now move to our next question.

No, no, not yet. I think on the fixed broadband, on the area, because we are expanding the area, there are two things. One is our strategy to increase the speed, because more and more subscribers, basically, they are regularly using for a video for YouTube, etc., but they subscribe only for the lower speed; [384], something like that. We actually improved the speed to 1 meg.

Second, it's also ARPU, why lower? Because we have more subscribers, plus in certain areas actually the promotion tickets has to be offered, which is at the lower price as compared to before.

So going forward on the broadband, I think we will continue on offering the triple play now. We already offer the triple play in Jakarta and we are going to offer minimum 1 Mbps. Plus with the improvement in our last mile for the years to come, I believe that would create an opportunity.

In addition to that, we are building the innovation WiFi, which is catered to serve both the fixed broadband subscribers plus our wireless subscribers, so they can use a broadband, Internet in better quality in anywhere. I think that is in short the explanation. Thanks.

Navin, for the second question regarding the subscriber number of Telkomsel, could you please repeat the point? Okay, could we have next question?

(Operator Instructions).

This is Kelvin Goh from CIMB. I've got three questions. The first one is on your cost optimization. Could you give us an idea what you'll probably achieve here; what sort of cost savings you will have over the next few years? That's number one.

Number two is on your balance sheet. Gearing has come down substantially; now very low. Do you have any plans for special dividends or to optimize your balance sheet?

And the third question is on your planned acquisition of Telkomsel. We seem to be getting a bit of a contradictory news out of SingTel who say that first you say that you are talking with them and SingTel denied that. So, could you give us an idea of what's actually going on right now. Thanks.

I think on the costs, I think we just realized that the cost perspective especially on the fixed line will be executed and we will be experienced once we replace most of the old equipment and infrastructure with the new [fiber infrastructure]. We currently only have three examples, three central telephones in process until the year end. We are calculating what kind of savings which we currently are going to have.

So maybe the best way we will update you again once one of those central phones is being switched off. However, I think one of the areas which will be definitely be declining is the electricity renting of power which would decline by around 10%. Space management we will think it will also reduce the costs of the space management by around 10% to 15%. And plus because more and more the human resources, the people, which is currently being employed there, however we have to do another round of the ERP before we have the saving going forward.

So I think we have I think Prakoso and Agus will be able to guide you along the cost optimization details after this conference call.

Second; on the balance sheet. Thank you for the reminder. So we have not discussed that yet internally in the management. We are taking that into our consideration. Because the government -- we also have not met with the government, especially we currently have the new minister, so we will also discuss that issue.

On the acquisition, I think we should talk that separately. I think we will be happy to answer your question separately.

Just a quick follow up on your cost optimization. Is there any sort of -- can you give us a guidance as to what sort of absolute amount you hope to shave off your OpEx?

Yes, I think for guidance next year, we are outside -- are excluding the ERP, if we plan. I think we plan to have the costs on the fixed side, a cost increase of only 0%.

For which year?

2012.

So you expect that -- you hope to have OpEx remain steady; Group-wide or just in Telkom level?

Telkom level.

Thanks.

Yes, Telkom under control.

Okay, thank you.

This is (inaudible) of (inaudible). I have one question. The strong mobile revenue growth that Telkomsel is feeling, I'm wondering whether it is evenly spread out across the geographies, across the regions, or is there a divergence between the revenue growth performance [in ex-Java and Java].

And related to that, do you think there are prospects of squeezing out more voice revenue from your existing subscribers in ex-Java?

Okay, (inaudible) speaking here. The increasing of the (inaudible) revenue mostly is coming from the ex-Java, especially from the Sumatra, [Alimatra] and Sulawesi and to the North (inaudible) and (inaudible).

And Java is also growing but it's not as high as the ex-Java.

Is the reason for this divergence because of net competitive pressure in ex-Java? Or is it because you're squeezing out more voice revenues from those subscribers?

In terms of the market share and in the site share, Telkomsel is more stronger compared in Java. That's why we are growing in quite big numbers in ex-Java. And the others like Sarwoto mentioned before, which part of the strategy that we increase of the revenue.

Okay. Thanks.

(Operator Instructions).

I just had one follow-up question. Are you anticipating in the fourth quarter whether there will be any one-off exceptional items; whether it's any retirement expenses or any other such expenses?

Yes, I think on the Q4, I think for the ERP there is none for the Q4. We will do it hopefully next year.

For the Q4, it's mostly coming for the premium content which is happening across the industries, so I think that is what Sarwoto has mentioned before.

Okay. Thank you very much.

(Inaudible) from Nomura. First of all a question on incidentals in 3Q. If I go through your press release it reads that in Q3 level the non-recurring cost was around IDR956 billion. But on the contrary if I go to the InfoMemo the incidentals, which have been normalized, they amount to around IDR787 billion. So it's down IDR100 billion gap. I'm just trying to understand why it's a IDR100 billion gap between the press release amount and the amount of the InfoMemo.

And the second question is ,I think some time back you provided the preliminary guidance for the revenue growth for the Group. And it was around 5% to 6%. Your nine months rate is 3.4% for the Group. So are you readjusting your revenue guidance for FY '11 for the Group?

For the non-recurring costs up to Q3 year. We had the (inaudible) like additional of repay employee allowance of the (inaudible). In this year it's higher than last year. This year it's 1.7 times, and last year was 1.4 times of the tariff.

So, mostly the (inaudible) of the factor is 1.7 times compared to 1.4 times. And for the change of (inaudible), last year the book started in July and this year the book started since January. That's only [half] the difference of [IDR50 billion], if we compare to the last year's accounting.

Okay.

For the revenue guidance for this year I think, basically, we still believe that we will achieve 4% growth as a Group.

That's at the Group level, 4%?

Yes, 4% is at Group level yes, consolidated level.

Okay, thank you, great.

There appear to be no further questions at this time.

I think it's going to be the last question that we can accept. Okay please.

Yes, there are no further questions at this time. I'll now hand the call back to the speakers for any additional or closing remarks.

Yes, thank you, Stacey.

Well thank you everyone for participating in nine months, 2011 results. We look forward to updating everyone in our full-year results. We apologize for those whose questions could not be addressed. If you have any further questions please feel free to contact us directly or send us an email. Before I end our conference call I would like to ask the CEO for his closing remarks.

Thank you Prakoso. Ladies and gentlemen, Telkom has been preparing for the next competition in broadband. We are anticipating the growing needs of fixed and mobile broadband to (inaudible) growth into access and (inaudible) to give continuum and ease in accessing Internet, cooperating with (inaudible) as well as (inaudible) TV and collaborating in businesses.

At the same time we are also developing our IT, Media and Edutainment businesses to anticipate the undergoing (inaudible) of Telkom businesses.

We are also (inaudible) that we have [powers], property, finance and our backbone networks to be able to give more values to our shareholders.

Last, but not least, we are committed to optimize our costs from time to time to make better bottom line. We believe this will be [capable] in the future. All the efforts above, and during our transformation, are to make sure that Telkom Indonesia is still growing.

I would like to thank you all again for participating in this conference call and look forward to meeting you again in the near future. And I wish you all a good day. Thank you.

This concludes today's conference. Thank you everyone for your participation.