TLK

Management Statement and Operational Highlights

• Financial Overview: Telkom Group revenue grew 3.7% year-on-year to IDR 37.4 trillion, EBITDA stood at IDR 19.4 trillion, increased by 2.2% from the previous year.
• Telkomsel Performance: Maintained dominance with consumer value maximization, expanded mobile customer base to 159.7 million, and IndiHome B2C customers to 8.9 million.
• Data Center Initiatives: Prepared data center business for B2B future revenue growth, aiming to find strategic partners to unlock capacity.
• ESG Initiatives: Launched EXIST program covering environmental (reducing carbon emissions, using green energy), people (developing HR competency), and governance (sustainability governance) pillars.

Guidance

• Plan to fully unlock data center business by end of 2024 and aim for 400 megawatts capacity by 2030.
• PT Telkom Infrastruktur Indonesia to commence infrastructure asset managed service in 2024 and assume higher duty in 2025.
• Expect IDR 1.8 trillion synergy impact from IndiHome integration in 2024.

Segment Performance

• Mobile Business: Revenue increased 32.7% year-on-year to IDR 28.5 trillion, with IDR 21.9 trillion from mobile and IDR 6.6 trillion from fixed broadband. Digital business revenue after consol grew by 8.6% year-on-year, contributing 89.9% to mobile revenue.
• Wholesale and International Business: Contributed revenue of IDR 4.8 trillion, growing by 17.8% due to growth in international wholesale voice and digital connectivity infrastructure business.
• Data Center Business: Telkom has a 42 megawatts capacity with 70% utilization. Data center and cloud revenue in Q1 was IDR 449 billion, growing 6.4% year-on-year. NeutraDC is focusing on expanding ready-to-use capacity by 18 megawatts by end of 2024.
• Enterprise Segment: Recorded revenue of IDR 4.5 trillion, with B2B IT Digital Services and Enterprise Connectivity solutions as major contributors.

Risks

• Potential macroeconomic downturn, inflation, and geopolitical issues affecting business stability.
• Intense competition in the data center market, risk of lagging supply wiping out opportunities.
• Dynamic prepaid market requiring cautious monitoring and adjustment of Telkomsel Lite plan.

Question and Answer

• Q: Impact of Telkomsel Lite plan, spectrum auction timelines, IndiHome B2C revenue outlook A: Traction of Telkomsel Lite aligned to plan, monitoring prepaid market dynamics; waiting for official spectrum auction announcement from government; IndiHome B2C revenue affected by transition alignment, but showing positive sales progress.
• Q: Mobile ARPU decline, cost efficiency in O&M A: ARPU impacted by legacy revenue decline and seasonal factors; O&M expense reduced by one-off impacts (e.g., surface tower) and WSA contract adjustments.
• Q: IndiHome ARPU decline, by.U cannibalization, revenue reclassification A: Focus on higher ARPU accounts to balance ARPU decline; no cannibalization from by.U as it targets unique youth segment; reclassification for proper segment classification to clarify revenue reporting.
• Q: Competitor reaction to Telkomsel Lite, cost savings target, data traffic growth drivers A: Competitors adjusting strategies, but Telkomsel maintains premium pricing; cost savings plan with IDR 1.8 trillion impact from revenue uplift and OpEx efficiency; data traffic growth driven by increased users and productivity from Telkomsel Lite and existing customer initiatives.
• Q: Telkomsel Lite subscriber breakdown, data center plan, synergy impact quantification A: Telkomsel Lite in early stage, monitoring traction; data center expansion plan to add 18 megawatts by end of 2024; synergy impact from revenue cross-selling, OpEx efficiency, and CapEx optimization, though details not disclosed in full.