Telco

1.4 GHz Spectrum Auction Nears; 5G FWA Could Reshape Industry Dynamics

• The 1.4 GHz spectrum opening for 5G FWA may disrupt mobile economics, with an estimated effective cost per GB ~14× below mobile.
• Recent media reports suggest the 1.4 GHz spectrum fee may come in lower, easing cost pressures and enabling low-priced FWA plans.
• Mobile faces risk, but open access could be a game changer; Maintain OW on 2H25 recovery from price repair and industry consolidation.

1.4 GHz spectrum dedicated for FWA; Three bidders left standing

The 1.4 GHz band is allocated exclusively for 5G FWA to expand fixed broadband (FBB) reach in fiber-underserved regions. The planned FWA offering at Rp100-150k/month aims to deliver affordable high-speed access, supported by lower deployment costs versus FTTH due to the absence of civil works and household fiber drops. TLKM, along with affiliated entities of WIFI and DSSA, remain the final bidders, with flexible outcomes (Komdigi allows winners to secure one or multiple regions depending on auction results).

Potential risks surface as FWA redraws the competition map

We believe the launch of this FWA could reshape competition across FBB and mobile, as it directly addresses key barriers to low FBB penetration namely high prices and limited coverage. We believe risks to incumbent FTTH should remain limited if zoning is properly enforced, while mobile could face greater exposure given FWA’s much lower effective cost/GB. Indonesia’s FBB traffic averages 522GB/sub, or ~145GB/person, far above mobile’s 16GB usage. At a planned price of Rp100k/month, FWA’s effective cost of Rp191/GB is roughly 14× cheaper than mobile (Rp2,610/GB, avg. 3 major MNOs in 2Q25). While affordability constraints remain, we believe affordable FWA in underserved fiber areas offers a compelling alternative, partially shifting high-bandwidth activities away from mobile.

Government pricing signals relief in 1.4 GHz spectrum auction

Media reports indicate the 1.4 GHz auction’s starting price (though still unconfirmed) that offers major relief from high spectrum costs, hence supporting low-priced FWA plans. The indicative fee is Rp463mn-2.9bn/MHz, far below prior 2.3 GHz (Rp17.7bn/Mhz) and 2.1 GHz (Rp60.5bn/Mhz) auctions, reflecting the government’s push to rebalance broadband economics and expand inclusion outside Java. We think cheaper spectrum does not guarantee cheaper rollout, as rural density and limited infrastructure could keep cost/subs elevated.

Maintain overweight; Open access may redefine competition

We see potential risks for MNOs’ mobile segments, particularly in fiber-underserved regions. Nonetheless, the proposed open-access framework could be a game changer, requiring winners to share spectrum and fiber backhaul, though execution remains uncertain as the implementation is still subject to Komdigi’s approval. We maintain Overweight on the telco sector, expecting recovery in 2H25 driven by price repair and ongoing industry consolidation.

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