Telkom Indonesia(TLK) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics - Revenue increased by 3.6%, EBITDA by 4.5%, and net income by 6.9% year-on-year in the first half of 2022 [11] - Telkomsel maintained a healthy EBITDA margin of 57.1% and a net income margin of 26.2% [11] - Unrealized gain of IDR305 billion from equity investment in GoTo shares [11] Business Line Data and Key Metrics - IndiHome revenue reached IDR13.8 trillion with 8.9 million customers, adding 288,000 new customers [12] - Enterprise segment contributed IDR8.7 trillion in revenue, driven by B2B IT Services and Enterprise Connectivity solutions [12] - Wholesale segment revenue increased by 14.6% year-on-year to IDR7.9 trillion [13] Market Data and Key Metrics - Telkom launched a second international communication gateway in Manado, enhancing connectivity for eastern Indonesia and the new capital city [9] - Completion of Phase 1 of the HyperScale Data Center (HDC) and ongoing development of submarine cables Bifrost and SEA-ME-WE 6, expected to be completed in 2024 and 2025 respectively [13][14] Company Strategy and Industry Competition - Telkom is transforming from a telco to a digital telco company, focusing on digital business growth and offsetting legacy revenue decline [9][11] - The company is enhancing its data center business with the completion of the first phase of the HyperScale Data Center, leveraging integrated networks for future business digitization needs [14] - Fixed-mobile convergence (FMC) is being explored to improve customer experience and data integration, with products like Orbit and Smooa [15] Management Commentary on Operating Environment and Future Outlook - Management emphasized the importance of maintaining competitive advantages and focusing on high-value customers to drive healthier growth [20][22] - The company is managing cost pressures and inflation through strategic initiatives, including cost transformation and efficient CapEx allocation [27][28] - Telkomsel aims to defend market share and drive personalized offerings, focusing on network leadership and digital service maximization [34] Other Important Information - Telkom is fostering its ESG strategy by reducing carbon dioxide emissions through the use of gas-fired power plants and solar panels in its HyperScale Data Center [15] - Mitratel acquired 6,000 towers from Telkomsel, strengthening its position as the largest tower provider in Indonesia [16] Q&A Session Summary Question: Mobile base reduction and broadband momentum slowdown [19] - The decline in mobile subscribers is attributed to rotational churn and post-festive season consolidation, with a focus on maintaining leadership and high-value customers [20] - Broadband growth slowdown is due to competition and a strategic focus on high-value customers, with complementary products like Orbit addressing low-end market competition [22] Question: O&M costs moderation and staff costs increase [25] - O&M costs were moderated due to lower content costs, with Telkomsel managing costs related to services like Disney, Netflix, and Zoom [27] - Staff costs increased due to the establishment of the new IndiHome company and its subsidiaries [29] Question: Telkomsel mobile growth and data center updates [33] - Telkomsel aims to defend market share and drive personalized offerings, focusing on network leadership and digital service maximization [34] - Data center revenue growth is expected to pick up with the completion of the HyperScale Data Center, with plans for additional data centers and potential IPO or strategic investment [36] Question: Tariff hikes and industry revenue growth [41] - Tariff hikes are focused on balancing profitability and market share, with competition in Java remaining intense [42] - Industry revenue growth is expected to recover with better competition and pricing strategies, though macro conditions and inflation will be monitored [47] Question: Data center expansion and fixed-mobile convergence strategy [52] - Telkom plans to build two additional HyperScale Data Centers in Cikarang and a greenfield data center in Batam with SingTel, with a capacity of 10 megawatts initially and up to 80 megawatts maximum [53][57] - Fixed-mobile convergence strategy is progressing, with discussions on the injection of IndiHome assets into Telkomsel and potential monetization of fiber assets [62][64]