XLSmart Telecom Sejahtera (EXCL IJ)

1Q26 Earnings: Reported EBITDA In-line; Synergies Continue to Emerge

 

  • 1Q26 revenue & EBITDA came broadly in-line, with ARPU rising to Rp47.3k (+5.6% qoq) amid continued subscriber normalization.
  • Peak integration costs are behind us, though elevated accelerated depreciation of Rp5-6tr is expected to continue through FY26.
  • Maintain Buy with higher TP of Rp3,700 (5.2x FY27F EV/EBITDA), on 3.1-4.4% EBITDA upgrades and FY26F margin of 47.8%.

 

1Q26 revenue & EBITDA broadly in line; ARPU reached Rp47.3k

EXCL posted broadly in-line 1Q26 results, with revenue and EBITDA reaching 24.9%-25.3% of our/consensus FY26 estimates. Mobile revenue was broadly flat at Rp10.8tr (+0.5% qoq), despite ARPU rising +5.6% qoq to Rp47.3k, as subscribers continued to decline to 69.4mn (-3.6mn qoq). This was due to the ongoing cleanup of low-value subs, while partly offset by higher data yield (+3.9% qoq to Rp2.8k/GB). We slightly raise our FY26-28F revenue forecasts by 1.4%, driven by a 2% increase in data yield assumptions, while lowering FY26 mobile subscribers to 68.9mn, reflecting continued subscriber rationalization and implementation of biometric SIM registration.

 

Peak integration cost behind; Acc. depreciation still elevated at Rp5-6tr

Reported net loss improved to Rp716bn (+60.7% qoq), supported by normalizing personnel cost at Rp877bn following peak employee alignment costs in 4Q25. Integration cost also fell sharply to Rp28bn, with management guiding FY26F below Rp500bn. Meanwhile, accelerated depreciation remained elevated, with FY26F guidance of Rp5-6tr (1Q26: Rp2.1tr), driven by the ongoing retirement of 900MHz spectrum and legacy vendor equipment. Reflecting this, we lower FY26F integration costs to Rp500bn while raising accelerated depreciation to Rp6tr, resulting in a 2.3% cut to our FY26F net profit. Meanwhile, we raise FY26F EBITDA by 4.4% (47.8% EBITDA margin).

 

Maintain Buy rating with higher TP of Rp3,700; 77% sites dismantled

We maintain Buy rating with a higher TP of Rp3,700, following our 3.1-4.4% EBITDA upgrades across FY26-28F. Our TP implies 5.4x/5.2x FY26F/27F EV/EBITDA. On integration, EXCL reported 77% completion of the targeted 17k overlapping tower dismantling, supporting synergy realization of US$250–300mn synergy target for FY26. Tactical (3M) view: N, given uncertainty surrounding the upfront cost of the upcoming spectrum auctions. Management remains interested in both the 700MHz and 2.6GHz spectrum auctions, while maintaining disciplined bidding and capital allocation.

 

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