Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk Q1 FY2023 earnings call

Management Statement and Operational Highlights

• Telkom Group's 5 Bold Moves strategy drives competitive advantage. Telkomsel maintained revenue growth but EBITDA was impacted by spectrum costs.
• Digital business is a growth engine with increased contribution to total revenue. IndiHome maintained revenue growth and market leadership in fixed broadband.
• Signed conditional spinoff agreement with Telkomsel for fixed mobile convergence (FMC) initiative.推进 InfraCo project and focus on data center/cloud business. Acquired 997 towers from IOH.

Segment Performance

• Telkomsel: Maintained revenue growth, net income increased 2.5% year-on-year and EBITDA decreased by 2% due to spectrum costs. Revenue grew 1.1% year-on-year with EBITDA margin at 55.7%. Mobile and fixed broadband dominated revenue.
• Digital business: Recorded positive performance with 7.1% year-on-year growth to IDR 18.15 billion, contributing 84.4% to total revenue (up from 79.7% same period last year).
• Fixed broadband (IndiHome): Revenue grew 5% year-on-year to IDR 7.2 trillion, blended ARPU IDR 264,000, new customers up 7% year-on-year to 9.4 million.
• Enterprise business: Grew 7.8% year-on-year to IDR 4.5 trillion.
• Wholesale & International business: Grew 4.0% year-on-year to IDR 4 trillion.

Guidance

• Telkomsel's mobile revenue growth expected to be low to mid-single digits.
• IndiHome and FMC initiative to accelerate growth in the second half of 2023.
• Enterprise and Wholesale businesses expected to contribute to growth.
• Synergy benefits from IndiHome merger with Telkomsel expected to add IDR 5 trillion in EBITDA by 2027.

Risks

• Intensifying competition in fixed broadband, especially in high-income household segment.
• Impact of inflation on customer spending and pricing strategies.
• Legacy revenue decline continuing to affect mobile momentum compared to peers.
• One-off costs like spectrum expenses, professional fees, and foreign exchange losses.

Question and Answer

Q: Several questions on mobile side, impact of macro and revenue growth; fixed broadband competition; G&A and interconnect costs rise.

A: Mohamad Ramzy addressed mobile revenue growth influenced by legacy decline and macro inflation; F. M Venusiana discussed fixed broadband competition in big cities; Heri Supriadi explained G&A and interconnect cost increases due to seasonality and corporate action provisions.

Q: Questions on wireless revenue growth acceleration, cost optimization, content costs.

A: Heri Supriadi and Mohamad Ramzy discussed expected improvement in wireless revenue, cost optimization initiatives including spectrum costs and efficiency measures, and content cost management.

Q: Questions on mobile legacy revenue drag, inflation impact on price increases, fixed broadband momentum.

A: Mohamad Ramzy and others addressed legacy revenue alignment with peers, inflation impact on price adjustments, and fixed broadband growth potential despite competition.

Q: Follow-up on 2023 guidance and margin side.

A: Heri Supriadi reaffirmed low to mid-single digit growth guidance for cellular and emphasized margin optimization efforts.