Telkom Indonesia(US:TLK)2024-10-31 20:47Financial Data and Key Metrics Changes - For the nine months of 2024, Telkom Group reported a revenue growth of 0.9% year-on-year to IDR 112.2 trillion, while EBITDA decreased by 4.1% year-on-year to IDR 56.6 trillion [17] - The normalized EBITDA, excluding one-off costs, stood at IDR 57.8 trillion, reflecting a decline of 2.1% year-on-year, with a normalized EBITDA margin of 51.5% [18] - Operating net income fell by 5.1% year-on-year to IDR 18.6 trillion after adjusting for various one-off effects [19] Business Line Data and Key Metrics Changes - The B2C segment, particularly Telkomsel, experienced a strong growth of 16.4% year-on-year, although it saw a slight revenue decline of 2.1% in Q3 due to seasonality and purchasing power weakness [23] - The Digital business reported a 2.5% year-on-year growth, supported by a stable mobile customer base of 158.4 million [24] - Fixed broadband business showed significant growth of 200.6% year-on-year, driven by the integration of IndiHome and the addition of 682,000 new customers, totaling 9.4 million [26] Market Data and Key Metrics Changes - The competitive landscape in the telecom sector is stabilizing, with improvements in supply-demand dynamics and selective price increases from competitors [9] - The overall economic environment in Indonesia remains resilient, with inflation recorded at 1.8% year-on-year in September, down from 2.1% in August [7] Company Strategy and Development Direction - The company is focused on a "5 Bold Moves" strategy aimed at corporate transformation and efficient business processes, including procurement improvements [12] - Telkom Group is committed to avoiding price wars and instead aims for sustainable revenue generation by enhancing data consumption productivity [10] - The InfraCo initiative has progressed, with the establishment of PT Telkom Infrastruktur Indonesia to manage fiber assets, expected to start commercial operations by the end of 2024 [15][99] Management Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about future revenue growth, targeting low single-digit growth for 2024, with EBITDA margins expected to remain between 50% to 52% [29] - The company anticipates that improvements in purchasing power from social welfare programs could support consumer spending [10] - Management acknowledged the challenges posed by heightened competition and a relatively soft purchasing power environment [11] Other Important Information - Total liabilities remained flat at IDR 130.7 trillion, with a healthy net debt-to-EBITDA ratio of 0.6 times [22] - The company aims to accelerate CapEx spending towards the end of the year, targeting a CapEx to revenue ratio of 22% to 24% [21] Q&A Session Summary Question: Why are data revenues declining faster than legacy revenues? - Management indicated that the decline in data revenues is due to increased competition and price pressure, leading to strategic pricing adjustments to retain market share [32][33] Question: What are the targets for synergies from the fixed mobile conversion strategy? - Management confirmed that while synergies are being achieved, the full financial impact is expected to materialize in the coming years as integration progresses [34][35] Question: What is the outlook for Telkomsel's EBITDA margin? - The EBITDA margin for Telkomsel is expected to be around 45% to 46% by the end of 2024, influenced by increased operating and maintenance costs [56] Question: How is the company addressing ARPU declines? - Management noted that ARPU declines are primarily due to the legacy service contraction and emphasized efforts to stabilize ARPU through upselling and enhancing digital content offerings [62][85] Question: What is the status of the InfraCo initiative? - The fiber company, Telekom Infrastruktur Indonesia, has been established and will start commercializing fiber assets by the end of 2024 [99]