TLK — Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk

Summary of Telkom Indonesia Q1 2024 Earnings Call

1. Key Financial Results and Metrics:

• Revenue: IDR 37.4 trillion, up 3.7% year-on-year.
• EBITDA: IDR 19.4 trillion, an increase of 2.2% year-on-year.
• Operating Net Income: IDR 6.3 trillion, up 3.1% year-on-year, excluding mark-to-market effects from GoTo.
• Mobile Revenue: IDR 28.5 trillion, a significant increase of 32.7% year-on-year, driven by mobile and fixed broadband contributions.
• Digital Business Revenue: Grew by 8.6% year-on-year, contributing 89.9% to mobile revenue.
• Customer Base: Mobile subscribers increased to 159.7 million; IndiHome B2C customers reached 8.9 million.

2. Strategic Updates and Business Highlights:

• Telkomsat: Emerging as a major revenue contributor with a focus on B2C services.
• Data Center Business: Plans to unlock data center operations by finding strategic partners, targeting a capacity of 400 megawatts by 2030.
• Integration of Services: Continued focus on Fixed Mobile Convergence (FMC) to enhance service offerings and customer experience.
• Mitratel: Expanded its tower portfolio to 38,100 towers, with a strong tenancy ratio improvement.
• Sustainability Initiatives: Launched the EXIST program focusing on environmental, social, and governance (ESG) aspects.

3. Forward Guidance and Outlook:

• Mobile Revenue Growth: Expected to remain stable with low to mid-single-digit growth for 2024.
• Cost Optimization: Targeting IDR 1.8 trillion in synergy impact from the integration of IndiHome and cost-saving measures.
• Data Center Expansion: Anticipating an increase in data center capacity by 18 megawatts by the end of 2024.

4. Challenges and Points of Concern:

• ARPU Decline: Mobile ARPU has contracted, attributed to a mix of legacy revenue decline and competitive pressures.
• Subscriber Growth: Flat quarter-on-quarter growth in mobile subscribers raises concerns about market saturation and competitive dynamics.
• IndiHome Revenue: Experienced a decline in revenue and ARPU due to alignment issues during the transition period to Telkomsel.
• Competitive Pressures: Monitoring competitor responses to new products like Telkomsel Lite, with concerns about potential price wars.

5. Notable Q&A Insights:

• Telkomsel Lite Impact: Management reported positive traction from the Telkomsel Lite plan, which targets youth and mass markets. However, they remain cautious about its long-term impact on ARPU and subscriber growth.
• Spectrum Auction: Awaiting government announcements on spectrum auction timelines, expected in the second half of 2024.
• Cost Management: Successful reduction in operational and maintenance expenses, with a focus on efficiency across various segments.
• Reclassification Concerns: Clarified that recent revenue declines in B2C are primarily due to reclassifications rather than actual declines in business performance.

Overall, while Telkom Indonesia demonstrated solid revenue growth and strategic initiatives, it faces challenges in maintaining ARPU and subscriber growth amidst competitive pressures and ongoing market dynamics.