Tiphone Mobile Powering Up Through Acquisitions

Company Profile
Established in June 2008, PT Tiphone Mobile Indonesia Tbk (Tele)’s main business is in the trading of telecommunications products. It focuses on selling and distributing starter packs and vouchers from network operators such as Telkomsel, Telkom Flexi and XL. Recently, the Company has also focused on selling handsets such as iPhone, Samsung and LG through several deals and strategic acquisitions.

Highlights
Growing appetite for smartphones
Indonesia’s rising middle-class is driving up the country’s consumption growth, as shown by the overwhelming response to new handset launches such as Blackberry (BB)’s Z10 and Q10 and Samsung’s Galaxy S4, which were sold out in a matter of hours. Indosat, one of the operators that provide bundled data packs for BB Q10, believes that it can sell 15,000 units in three months, whereas the largest operator Telkomsel is optimistic that it can sell 5,000 units before the Lebaran season. Most Indonesian customers are keen to keep up with the trend by upgrading their handsets to the latest models. Thus, we see strong potential in the Indonesian market amid new product launches by vendors.

Strategic Acquisitions to Fuel Growth
Tele is acquiring three companies this year, namely Telkomsel’s iPhone distributor – Mitra Telekomunikasi Selular (MTS) – by 1H13 and two Samsung distributors for Jakarta and West Java by early 2H13. This should shore up the Company’s handset contribution from 6.0% of total sales in 2012 to around 23% this year, thereby boosting margins. Telkomsel targets to sell 500,000 units of iPhone 5 over the next three years, excluding the new iPhone series slated to be launched in 3Q13.

Meanwhile, Samsung sales have been robust driven by new product launches such as the new Galaxy Tab 3 and the upcoming Galaxy Note III. We are optimistic that Tele’s latest acquisition will significantly boost its sales growth. Furthermore, we see that bundled packages with complete data services and handsets will remain attractive to customers.

New electrifying business. Tele has taken the opportunity to work alongside Perusahaan Listrik Negara (PLN) in providing prepaid vouchers as well as SMS-based payment services for recharging bills.