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801

Advances in Social Sciences Research Journal – Vol.7, No.6

Publication Date: June 25, 2020

DOI:10.14738/assrj.76.8506.

Daryanto, W. M., Alfathan, I. R., & Siregar, Y. R. N. (2020). Financial Performance Analysis Before And After Company Acquisition: Case

Study In Pt. Indosat Tbk. Advances in Social Sciences Research Journal, 7(6) 801-811.

Financial Performance Analysis Before And After Company

Acquisition: Case Study In Pt. Indosat Tbk

Wiwiek Mardawiyah Daryanto

Sekolah Tinggi Manajemen IPMI

Irfan Rizky Alfathan

Sekolah Bisnis dan Manajemen, Institut Teknologi Bandung

Yunandra Reza Nugraha Siregar

Sekolah Bisnis dan Manajemen, Institut Teknologi Bandung

ABSTRACT

Telecommunications companies in Indonesia have increased revenue

from data services. This is due to the increased penetration of

smartphones in Indonesia and the wider coverage of 4G LTE services.

Indosat Ooredoo, company name is PT Indosat Tbk. with the previous

name Indosat is one of the companies in Indonesia who provides

telecommunications services and networks. In 2013, the Qatar

telecommunications company controlled 65% of Indosat's shares and

planned to replace all of its owned companies with the name Ooredoo

Asia Pte. Ltd. On November 19, 2015 Indosat finally changed its identity

and logo with the name Indosat Ooredoo. Because of that, the intent of

this case is to know the financial performance of Indosat Ooredoo and

to verify the significant differences between financial performances

before and after the acquisition in 2015. Data collected from Indosat

Ooredoo financial statements are taken with two periods: before the

acquisition (2012-2015) and after the acquisition (2016-2019). Paired

sample t-test and financial ratio analysis method were used to analyze

the entire data. The research proves that Indosat Ooredoo is in a very

good financial condition with good performance after the acquisition.

Even if several factors are not significantly improved. The author

believes that the research will be useful to prove the true effect of

acquisition decisions within Indosat Ooredoo Company.

Keyword: Financial performance; Acquisitions; Telecommunication

Company; Pair Sample t-test.

INTRODUCTION

The growth of the telecommunications industry is currently increasing rapidly because of many

factors. The number of consumer demand for telecommunications operator facilities is very high,

so the company is popping up with various types and supporting features as their superior

products. This can be seen from the raising uses of telecommunications facilities that are needed by

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URL: http://dx.doi.org/10.14738/assrj.76.8506 802

Daryanto, W. M., Alfathan, I. R., & Siregar, Y. R. N. (2020). Financial Performance Analysis Before And After Company Acquisition: Case Study In Pt. Indosat

Tbk. Advances in Social Sciences Research Journal, 7(6) 801-811.

various groups, and also the large market opportunities are very promising for the development of

the telecommunications industry.

One of the famous telecommunication companies in Indonesia, is PT. Indosat tbk (Indosat). Indosat

started its operational activities in 1967. Indosat provides different communication channels like

prepaid and postpaid for cell phone users. And also provides other services like voice

communication channels for fixed telephones including. Indosat also provides data communication,

multimedia, and internet services.

At the end of 2015, Indosat decided to change their identity by changing the company name into

Indosat Ooredoo. The reason behind their decision is because Indosat largest shareholder, the

international telecommunication company Qatar Telecom QSC had renamed their brand with

Ooredoo. Therefore, all of its subsidiaries had to change their names. By performing this action

between Indosat and Ooredoo, the company hoped that they could improve their performance and

increase the product quality. This research about acquisition is all about to see if Indosat Ooredoo

brings financial performance into a very good state by analyzing the data before the acquisition

(2012-2015) and after the acquisition (2016-2019).

LITERATURE REVIEW

Indonesian Telecommunications Market

The telecommunications market in Indonesia is one of the fastest improving in the world. This was

driven by the development of mobile and internet subscription. according to forecasting that mobile

subscription will continue to experience strong growth in 2019 after experiencing slow

development in 2018. The number of internet subscriptions will continue to increase after the

government imposes a SIM registration policy in 2018, having a significant impact on the market so

that it is predicted to increase again between 2019 and 2023. Mobile network operators are facing

competitive pressure with the market shifting to unlimited voice and text and data allowance

increasingly becoming the sole offering differentiator.

Three large telecommunications companies listed on the Indonesia Stock Exchange (IDX), namely

PT. Telekomunikasi Indonesia Tbk (TLKM), PT. XL Axiata Tbk (EXCL), and PT. Indosat Tbk (ISAT),

both recorded growth in financial performance. In the second quarter of 2019, ISAT and EXCL

respectively recorded revenue growth of up to 19% and 13.4%. Meanwhile, TLKM grew below

double digits, which was 7.7%. The performance of telecommunications issuers in the two quarters

of this year became a turning point after last year in the same period which experienced minus

growth in the revenue account. The problem that occurred last year was the SIM card registration

policy regarding the new SIM card that issued by the Company for new customers. TLKM posted a

net profit of Rp 11 trillion in the first half of 2019. This increase in profit reached 23.6% compared

to last year in the same period. Furthermore, EXCL, which was able to make a profit of IDR 282.7

billion after the previous year, had to lose IDR 81.7 billion. Meanwhile, ISAT still has to record losses

in the first half of this year. But, this loss decreased compared to the same period last year. In the

first semester of 2019, ISAT posted a current year's loss of Rp 331.8 billion, while last year it was

Rp 693.7 billion. The improved financial performance of telecommunications issuers is related to

increased revenue in the data post and the internet. In general, the portion of data revenue is more

than 50% compared to total cellular revenue. In fact, XL and Indosat touched numbers above 80%.

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Advances in Social Sciences Research Journal (ASSRJ) Vol.7, Issue 6, June-2020

Financial Performance And Ratio Analysis

Financial statements have data about the state of the organization's assets. The financial statements

comprise of five sections, to be specific balance sheet, profit and loss statement, cash flow statement,

statement of owner's equity, and note of financial report. The reason for financial statement

investigation is to rate the possibilities and dangers of the organization, and to take dynamic. By

assessing the organization's possibilities and dangers, the organization can finish up an

investigation of the organization's financial condition in a specific timeframe (Peterson, 2009).

Performance is the output or result of the function of a work indicator. Based on management's side,

performance will measure three organizational perspectives namely marketing, financial and

operational. If it has excellent performance, then a company can compete with its competitors. The

important thing to measure organizational development is financial performance. When an

organization has an increase in financial performance, the company's financial performance will

improve by itself (Fauzi & Idris, 2010; Butt, et al, 2010). To determine financial performance, it is

necessary to use a ratio of measuring instruments to determine the value done by the company.

Variations in the type of ratio measurement can be seen from several aspects. Gitman and Zutter

(2012) starts with five categories of ratio measurement to measure several aspects of measurement

financial performance. These ratios contain profitability ratio, activity ratio, debt ratio, liquidity

ratio and market ratio.

Paired Sample T-Test

Paired t-test is a statistical technique which typically used to look at and break down the methods

for two related examples as clarified by Shier R (2004). This measurable tool is regularly performed

by analyst to assess the critical contrasts in pre and post concentrate in a wide range of fields,

including fund and business insights. For example, Daryanto et al (2019) explored the financial

performance analysis of the traditional taxi industry before and after the booming of the ride-hailing

organizations in Indonesia. Mahesh R. furthermore, Daddikar P. (2012) likewise utilized this

strategy for investigating post-merger and acquisition financial performance of airline companies

in India.

RESEARCH MODEL

This research model of Indosat Ooredoo financial performance was adapted from previous studies

that examined the analysis of financial performance before and after the global crisis regarding oil

and gas in indonesia conducted by Andika priyadi putra et al., in 2014. The search model of this

study is illustrated in Figure 3.1 below: