Telkom Indonesia(US:TLK)2022-11-01 19:57Financial Data and Key Metrics - Revenue grew by 2.7% in the first 9 months of 2022, with EBITDA and net income margins at 54.6% and 15.2%, respectively [9] - Mobile segment revenue grew by 1.6% YoY, with EBITDA margin at 37.1% and net income margin at 25.4% [11] - Fixed broadband business (IndiHome) added 138,000 customers, reaching 9 million subscribers, contributing IDR 20.9 trillion in revenue with a growth of 6.4% and a stable blended ARPU of IDR 269,000 [11] - Enterprise segment revenue declined by 0.8% YoY to IDR 13.7 trillion due to the transfer of data center business, but showed a QoQ growth of 10.5% [12] - Wholesale and international business revenue increased by 7.6% YoY to IDR 11.3 trillion, driven by international wholesale voice and digital business [13] Business Line Performance - Mobile segment focused on maintaining customer value, resulting in better customer profiles and a 3.8% QoQ improvement in ARPU [10][27] - IndiHome (fixed broadband) maintained strong growth despite intense competition, with a focus on quality customer acquisition [11][41] - Enterprise segment saw growth in digital IT services and connectivity, despite a slight YoY decline due to business transfers [12] - Wholesale and international business benefited from international voice and digital services, including A2P (Application-to-Person) messaging [13] - Mitratel (tower business) managed over 35,000 towers with a tenancy ratio of 1.44, expanding into fiber-to-the-tower business [13][14] Market Performance - Mobile industry competition became more rational, with Telkomsel focusing on customer value and personalization [10] - Fixed broadband market faced increased competition, but IndiHome maintained its position as the market leader [11][41] - Wholesale and international business saw growth in international voice and digital services, driven by demand for A2P messaging [13] Strategic Direction and Industry Competition - The company is exploring collaborations in data center and cloud business with Microsoft and Singtel, aiming to diversify into retail platforms and services [8][9] - InfraCo initiative aims to optimize infrastructure assets, improve CapEx efficiency, and unlock value through infrastructure sharing [15][20] - The company is pursuing a 5 Bold Moves strategy, focusing on FMC (Fixed-Mobile Convergence), Data Center Co, and InfraCo [15] - Data center business is being consolidated under PT Telkom Data Ekosistem, with plans to complete restructuring by 2024 [17][18] Management Commentary on Operating Environment and Future Outlook - The company faces a challenging macroeconomic environment post-COVID-19, with higher inflation and interest rates impacting Indonesia [7] - Management is focused on maintaining healthy growth in mobile and fixed broadband segments, despite competitive pressures [10][41] - The company sees opportunities in the tower business due to increasing demand for cellular data and upcoming 5G technology [14] - Management is optimistic about the potential of fixed-mobile convergence (FMC) to drive efficiency and customer loyalty [42][71] Other Important Information - The company accelerated depreciation of legacy copper-based technology, impacting IDR 1.584 trillion in Q2 2022 [44][45] - Data center business contributed IDR 1.2 trillion in revenue for the first 9 months of 2022 [79] Q&A Session Summary Question: Subscriber decline in mobile segment - The decline in mobile subscribers is part of a consolidation strategy to focus on quality customers, resulting in a 3.8% QoQ ARPU improvement [26][27] - The consolidation process will continue to improve customer quality and reduce value-seeking customers [29] Question: Strategic intent behind InfraCo - InfraCo aims to optimize infrastructure investments, comply with new regulations, and unlock value through infrastructure sharing [31][32][33] - The company is considering private and strategic investors for InfraCo, with no immediate plans for an IPO [57] Question: Mobile pricing outlook - Mobile pricing adjustments are on hold due to macroeconomic conditions, with a focus on maintaining competitiveness [38][39] - The company is exploring optimal pricing levels while considering customer purchasing power and inflation [48][50] Question: Fixed broadband growth slowdown - Growth in fixed broadband slowed due to increased competition, but the company remains selective in acquiring quality customers [40][41] - The company believes in the long-term potential of the fixed broadband market, with current household penetration at 15% [43] Question: Data center business valuation - The data center business is expected to achieve EBITDA margins of 40%-50% at optimal utilization, with current revenue contribution at IDR 1.2 trillion [76][79] - The company is on track with data center consolidation and development, with plans to list the business in the future [59] Question: Fixed-mobile convergence (FMC) strategy - FMC aims to create value for customers by integrating fixed and mobile services, rather than offering discounts [62] - The company expects cost synergies from FMC, particularly in marketing and CapEx optimization [74][75]