The study was undertaken to evaluate the prospect of financial services in PT Pos Indonesia ("The Company") and to provide an alternative strategic exposure that can be pursued by the Company. Currently, financial services contribute around 11 % of total Company's operating revenues but generate significant portion of non- operating revenues. In total, approximately 20% of Company's revenues are derived from these services.

The study consists of:

Module 1

Assessment on the strategic position of financial services in PT Pos Indonesia

Module 2

A case study on the joint operation arrangement between PT Pos Indonesia and PT Sigma Cipta Caraka

The assumptions and financial projections developed by Posigma Group are based on the historical performance, industry analysis and the representation as to the future plans of the business. Hence, any changes in one or combination of the assumptions and business's future plans will affect the realization of this study.

The highlights of the study outcomes are as follows:

1. The existing financial services of PT Pos Indonesia faces critical situation as the business environment change. The projected performance of the financial services shows unfavorable figures in which the Company will experience loss starting year 2002 and negative cash flows starting year 2005.

2. There is an opportunity to implement the concept of National Payment Systems that will enable on-line transaction among post offices throughout the country. This new practice is expected to reduce transaction costs and enhance revenues by creating new businesses. The projected figures of the new financial services illustrate promising prospect, thus the opportunity is viable to be implemented.

3. Considering the urgent needs of having IT expertise, management experience, and fund to implement the new business, it is recommended to PT Pos Indonesia involving strategic partner under Joint Operation scheme. This will expedite the process and expectantly create better outlook to the business.

4. Under base case scenario, the strategic partner involvement in the business will generate Rp184.5 billion as the value of the new business. From this figure, PT Pos Indonesia will hold 51 % of shareholding portion, while the strategic partner will get the remaining 49%. Another scenarios can be applied to the financial model to run the sensitivity analysis. In summary, the value of the new business is ranging from Rp127.4 billion to Rp.260.6 billion, in which the strategic partner holds 34% to 67% of share holding portion.

5. Involving strategic partner in the implementation of the new financial services results higher value to PT Pos Indonesia compare to self-implement it. Although the Company only holds 51% of shareholding portion under Joint Operation arrangement, it can create value of Rp.94.3 billion. This value is higher in comparison with value of Rp.73.8 billion (after deducted by initial investment of Rp.71.8 billion) under the wholly-owned business scenario.



Research Location: PT Pos Indonesia

Supervisor: Roy Sembel, PhD.

Accepted : 16 February 2001