Telkom Indonesia (TLKM IJ)

Streamlining and Value Unlocking at the Core of New Transformation Pillars

• TLKM new mgmt. sets 4 transformation pillars focused on efficiency, portfolio streamlining, value unlocking, and strategic holding shift.
• Restructuring becomes a key move as TLKM plans to streamline from 55 to 22 subsidiaries and unlock up to Rp100-150tr in asset value.
• We maintain a BUY rating with a TP of Rp3,500, supported by ongoing industry price repair and visible progress on product simplification.

TLKM’s new leadership drives strategic reset

Under new management, TLKM has rolled out a 3-5yr transformation agenda built on four pillars: operational excellence, business streamlining, asset value unlocking, and a strategic holding shift. A core focus is disciplined capital deployment, with a Rp6tr annual capex and open reduction target driven by IRR-based investment gating. The company is pivoting toward big-ticket, high-impact initiatives, while legacy “Five Bold Moves” remain embedded but with stronger execution focus. The end-state aims to simplify the portfolio around B2C and B2B Infra in the near term.

Refocusing on core segments and infrastructure value unlocking

We see TLKM’s most notable strategic shift as the streamlining of its group structure, with plans to reduce subsidiaries from 55 to ~22 to eliminate redundancies, exit non-core businesses, and boost efficiency. In parallel, TLKM is accelerating its asset monetization agenda, targeting up to Rp100-150tr in potential value from infrastructure assets. Data center and InfraCo are positioned as near-term catalysts, with NeutraDC progressing toward a strategic partnership by the end of FY25. TLKM is in the process of shifting its fiber assets into InfraCo, which will serve as the group’s infrastructure platform; monetization may follow either through standalone IPOs of individual subsidiaries or by bundling multiple assets under a single vehicle.

Healthier market structure supports strategic expansion

Management sees early signs of market repair, driven by industry consolidation and price rationalization, especially in starter packs. Product simplification plays a key role, with Tsel reducing SKUs from 6,000 to 400 and targeting 200. On spectrum, mgmt. highlights congestion concerns, noting Tsel serves nearly 1mn customers per MHz (well above peers’ ~600K) making upcoming auctions in the 700 MHz and 2.6 GHz bands strategically important. With a sharper focus on profitability and efficiency, along with ongoing asset monetization, TLKM has ample reinvestment capacity, evidenced by its low 1Q25 ND/EBITDA of 0.5x. This underleveraged position supports potential expansion across core B2C, B2B infrastructure, and IT solution segments.

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