Telkom Indonesia(US:TLK)2023-08-01 20:11Financial Performance - As of the second quarter of 2023, the company maintained revenue growth of 2.1% year-on-year, with EBITDA also increasing by 2.1% quarter-on-quarter, while quarterly net income decreased by 1.4% [6][24][25] - The EBITDA margin for Telkomsel was maintained at 56%, supported by revenue growth and a successful cost leadership program [7][24] - The company recorded a decline in IndiHome's ARPU to IDR 160,000 due to economic offers, although the EBITDA margin remained stable at around 50% [10][9] Business Line Performance - The mobile business segment experienced a 1% year-on-year revenue growth, driven by a 6.1% increase in data internet and IT services [24][25] - The enterprise segment grew by 7.8% year-on-year, reaching IDR 4.5 trillion, indicating successful strategic alignment [11] - IndiHome added approximately 316,000 customers in the first half of 2023, bringing total subscribers to 8.9 million, a 7.2% year-on-year increase [9] Market Data - Telkomsel's customer base increased to 153.3 million in the second quarter of 2023, up from 151.1 million in the previous quarter, with ARPU rising from IDR 45,300 to IDR 49,700 [25][26] - The company reported a 4% year-on-year revenue growth in the Wholesale & International business segment, driven by the international wholesale voice business and digital infrastructure [53] Company Strategy and Industry Competition - The company is focusing on the B2B business as a future growth engine, with the establishment of a group business development directorate [5][12] - The Five Bold Moves strategy is seen as crucial for sustaining growth in the digital business sector in Indonesia [29][30] - The company aims to enhance competitiveness through the spin-off agreement with Telkomsel, which is expected to improve operational efficiency and market positioning [21][30] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the B2B market's potential and the positive impact of recent spectrum costs on service quality and capacity [6][24] - The company anticipates that cost synergies from the fixed mobile convergence initiative will start to materialize in the second half of 2023, with an expected synergy of IDR 500 billion for the first year [68][49] - Management acknowledged challenges from legacy business declines but emphasized a focus on digital connectivity growth [48][93] Other Important Information - The company has signed a spinoff agreement with Telkomsel to enhance synergy between B2C and B2B businesses, aiming to become the strongest fixed-mobile converged operator in Indonesia [21][22] - Mitratel, the tower subsidiary, reported a revenue growth of 10.8% year-on-year, with a tenancy ratio improvement [34][59] Q&A Session Summary Question: What is the strategic objective of the Telkomsel-1 brand? - Management indicated that the objective is to enhance market share through bundling discounts and retention strategies, with cost synergies expected to kick in from the second half of 2023 [38][68] Question: What is driving the decline in EBITDA margin in the non-mobile segment? - Management explained that the decline is due to conservative recognition of costs and allowances for bad debt, particularly in the enterprise segment [39][64] Question: How does the company plan to address rising operational costs? - Management noted that costs are expected to normalize over the year, with a focus on efficiency in asset management and personnel costs [46][111] Question: What is the outlook for IndiHome's customer additions in the second half? - Management stated that the focus will be on both fixed wireless access and fiber customers, with expectations for continued growth [97][100] Question: How does the company view competition in the market? - Management acknowledged elevated competition but emphasized a focus on profitability and customer value management to maintain market share [98][103]