Telkom Indonesia(TLK) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics - Telkomsel reported a 2.5% YoY increase in revenue and a 5.5% YoY increase in net income for Q1 2023 [7] - EBITDA decreased by 2% YoY due to significant spectrum costs allocated to maintain competitive advantages in the mobile business [7] - Telkomsel's EBITDA margin remained stable at 55.7% [8] - IndiHome's revenue grew by 5% YoY, contributing IDR7.2 trillion to total consolidated revenue [28] - Enterprise segment revenue grew by 7.8% YoY to IDR4.5 trillion [10] - Wholesale & International business segment revenue increased by 4.0% YoY to IDR4 trillion [29] Business Line Performance - Mobile and fixed broadband segments dominated revenue contributions due to favorable competition and new customer growth [26] - Data, internet, and IT services grew by 5.5% YoY [26] - IndiHome's blended ARPU was diluted to IDR264,000, with subscriber growth of 7% YoY, reaching 9.4 million customers [28] - Enterprise segment growth was driven by connectivity, digital solutions, and satellite businesses [10] - Wholesale business growth was supported by international wholesale voice and digital infrastructure [29] Market Performance - Fixed broadband competition intensified, particularly in high-income household segments served by IndiHome and competitors [9] - Telkomsel maintained healthy revenue growth of 1.1% YoY in the mobile segment [8] - The company faced high competition in big cities, with competitors offering attractive pricing and high-speed internet [20] Strategic Direction and Industry Competition - Telkom Group is focusing on B2B and B2C markets, emphasizing digital connectivity, platforms, and business [5] - The company is implementing the "Five Bold Moves" strategy, including the FMC initiative and InfraCo project [11][14] - Telkomsel aims to improve internal capabilities in data center cloud, B2B IT services, and digital business [6] - The company is exploring infra-sharing opportunities and positioning InfraCo as a solution to industry challenges [14] - Data center and cloud businesses are a key focus, with significant demand growth [15] Management Commentary on Operating Environment and Future Outlook - Management highlighted the impact of inflation, which reached nearly 5% in Q1 2023, affecting customer offerings [38] - The company expects to maintain low- to mid-single-digit growth in wireless revenue for 2023 [86] - Synergy benefits from the IndiHome-Telkomsel merger are expected to yield IDR5 trillion in additional EBITDA by 2027 [82][83] - The company is optimistic about growth in the second half of 2023, driven by fixed mobile convergence and other business initiatives [121] Other Important Information - Telkom signed a conditional spin-off agreement (CSA) with Telkomsel, transferring IndiHome business to Telkomsel [30] - Telkom's shareholding in Telkomsel increased from 65% to 69.9%, with Singtel diluting its stake to 30.1% [12] - The company expects to add 21 megawatts to its data center capacity in 2023 [54] Q&A Session Summary Question: What is driving the sequential decline in mobile revenue, and is mid-single-digit growth still targeted for 2023? - The decline is attributed to seasonal impacts and legacy revenue declines, which still contribute 15% of total revenue [97] - The company maintains its guidance for low- to mid-single-digit growth in mobile revenue for 2023 [86] Question: What are the synergy benefits from the IndiHome-Telkomsel merger? - Synergy benefits are expected to reach IDR5 trillion in additional EBITDA by 2027, with CapEx savings reducing from 25% to 20-22% of revenue [82][83] Question: How is inflation impacting price increases and growth prospects? - Inflation has led to cautious price adjustments, with selective portfolio updates to balance competitiveness and customer affordability [118] Question: What is the outlook for legacy revenue alignment with peers? - Legacy revenue is expected to stabilize at 5-10% of total revenue within the next 2-2.5 years [115] Question: What is the guidance for 2023? - The company maintains its guidance, expecting growth acceleration in the second half of 2023, driven by fixed mobile convergence and other initiatives [121]