ABSTRACT
This study aims to compare the estimated stock fair value for a telecommunications company in Indonesia—PT Indosat Tbk (Indosat Ooredoo)—based on the Discounted Cash Flow (DCF) model and that based on Ministry of Finance regulation. We conducted valuation by using historical data and financial statement projections. Indosat Ooredoo is a large company in the telecommunications industry that rebranded in 2015 in an effort to increase its growth and market share and become a leader in digital services in Indonesia. The first model applied is the Free Cash Flow to Firm and Free Cash Flow to Equity, based on Damodaran (2012), while the second model is based on Indonesian Ministry of Finance regulation SE-54/PJ/2016. The Discounted Cash Flow (DCF) model estimates that the intrinsic value of Indosat Ooredoo is Rp7,695 per share, while valuation based on the Ministry of Finance regulation estimates that the fair value is Rp7,935 per share. This result indicates that the share price of Indosat Ooredoo on December 31, 2016, at Rp6,450, is undervalued compared to the intrinsic value (fair value) derived from both models.
