Telco

Strong Market Repair Signal, Shift to Reloads

 

  • Telcos hike SP prices to Rp35k/3GB, nudging SIM-rotating users toward reloads for better value, reinforcing sector discipline ahead of Eid.
  • Staggered SP rollout ensures a smooth transition, phasing out old inventory before Eid to support sector growth in 2025.
  • Maintain sector OW; prefer ISAT as a key contender benefiting from SP developments, a sturdier outlook, and attractive valuation.

 

Telcos align on SP price hike ahead of Eid, steering users toward reloads

Telcos are reducing the number of starter pack (SP) variants while increasing prices to Rp35k with lower data bonuses (down to 3GB). TSEL, IOH, and XL have implemented these changes within a short three-day window, likely starting March 15. The timing—just before the Lebaran peak—suggests tacit coordination and sector maturity. Higher SP prices and reduced data significantly increase the cost per GB, potentially shifting SIM-rotating users to buying reload packs instead, which offer better value (current avg. usage ~14GB/month vs. 3GB in SPs). Depending on the customer profile, reload packs may offer similar or lower prices with more data.

 

Staggered implementation of new higher priced SPs

Telkomsel's prepaid SP is priced at Rp35k with a 3GB bonus, discounted to Rp27k on e-commerce at specific hours, with discount to run until 31Mar. TSEL Lite quota is rationed to 3GB, albeit priced at Rp20k. ByU has standardized its SP at Rp35k/3GB, removing any customized SPs. IM3 and Hutch Tri launched Rp35k/3GB SPs, currently on websites, while IM3's app still offers existing packs alongside the new SP. EXCL IJ introduced Rp35k/3GB SPs for XL and Axis on 15Mar as per company, with existing SPs still running across its channels.

Limited downside risk from Smartfren and XLSmart

 

Major players participate in the market repair effort, except for Smartfren. We think its smaller coverage makes its conduct less impactful. Moreover, the XL-Smartfren merger should enhance industry discipline. Additionally, XL-Smartfren’s nominee CEO emphasized optimizing ARPU from its 95.3mn subscribers (combined XL and Smartfren) across three brands instead of pursuing market share expansion, with all brands retained for now.

 

Market repair dynamic seems sustainable

To project sector growth in 2025, we use IOH’s ARPU and revenue growth guidance of 6-7% yoy from our latest meeting with the company. Given weak consumer spending and assuming flattish qoq growth in 3Q25 due to low seasonality, we expect telcos to deliver an average of 3% qoq growth in 1Q25, 2Q25, and 4Q25. Market repair should take effect in late 1Q25, maximizing peak seasons during Eid and year-end.

 

Maintain sector OW seeing limited downside risk

We maintain our OW sector rating, as we see limited downside risks from SP competition, while weaker consumption is already factored into our estimates. While Competition may shift to reloads, each player can leverage its core competencies to drive ARPU. AI integration should enhance demand assessment, customer profiling, and marketing decisions. We prefer ISAT (Buy, TP Rp3,200) as a market contender benefiting from SP developments and sturdier outlook.

 

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