Telkom Indonesia (TLKM IJ)

Mobile and Fixed Broadband to Turn the Corner

 

  • We cut FY25-27F net profit est. by 11.2-12.5%, factoring in slower-than-expected growth 1H25, but with expected 2H25 mobile recovery.
  • We expect easing mobile yield pressure amid ongoing price repair and product simplification; we see limited ARPU downside for Indihome.
  • Maintain TP at Rp3,500 as we raise EV/EBITDA target to mean (blended with DCF) amid better monetization prospects.

 

Yield pressure to ease in 2H25 despite persisting legacy drag

We anticipate mobile business to recover in 2H25 as industry price repair gains traction, underpinned by starter pack repricing (old products were largely absorbed by Jun25, according to mgmt), product simplification (SKUs reduced from 6,000 to ~400, with a 200 target), and bonus quota rationalization. Nonetheless, we forecast FY25 ARPU to contract -3% yoy, reflecting a steep -7.5% yoy decline in 1H25 and continued legacy erosion (still 9.2% of mobile revenue in 2Q25). This translates into -3% yoy mobile revenue in FY25F, implying data revenue rebound of +4.6% yoy in 2H25.

 

Indihome ARPU decline nearing a floor

Indihome ARPU dropped to Rp217k (-3.1% qoq, -9.6% yoy) on continued migration from 3P to 1P internet and deeper EZNet penetration. TLKM has raised EZNet’s entry plan from Rp150k (10 Mbps) to Rp170k (20 Mbps), while our Jul25 price tracker shows the launch of 150-200 Mbps tier and streamlined Phone/IPTV bundles, aimed at upselling and capturing high-value customers. With the cheapest 1P internet plan now at Rp230k (50 Mbps), we see ARPU downside is limited, estimating a FY25 at Rp220k (-8.0% yoy).

 

Infranexia value unlocking to monetize underutilized fiber assets

TLKM targets to unlock ~Rp150tn in value via Infranexia, with >50% of fiber assets transferred by end-2025 and full transfer by 2H26. Monetization levers include strategic partnerships, capital injections, or other corporate actions, capitalizing on current network utilization of just 40% to serve operators, enterprises, and hyperscalers. Mgmt. affirmed that access will only be in selective markets to safeguard IndiHome’s position and avoid cannibalization.

 

Maintain Buy rating and TP at Rp3,500 on sector rerating expectations

Overall, we cut our FY25F revenue forecast to -2.9% yoy (below management’s flat guidance), factoring in a -3% yoy decline in mobile, moderate IndiHome growth, and slower growth (+5% yoy) for Enterprise and Wholesale businesses. We lowered EBITDA by 4.8-6.0% for FY25-27F, with expectation of gradual margin improvement from 50% to 51% on the back of cost-discipline measures. We maintain our TP at Rp3,500, applying a higher 5-year EV/EBITDA multiple to mean, blended with DCF, as we see room for an industry re-rating in 2H25. Key risk is potential downtrading in data usage amid price repair, given TLKM’s higher data yield versus peers.

 

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