XLSmart Telecom Sejahtera (EXCL IJ)
Positioned for Post-Merger Upside
- Network integration will boost coverage, capacity, and efficiency, hence positioning EXCL for stronger traffic and sustained yield gains.
- We project leverage to drop to 2.8x ND/EBITDA in FY26-27F, reflecting balance-sheet flexibility, supported by the MORA divestment proceeds.
- Maintain Buy rating with a higher TP of Rp4,100, supported by robust post-integration free cash flow of Rp8-10tr p.a. over FY27-30F.
Network integration unlocks further upside for LT mobile monetization
The MOCN integration, targeted for completion in 1H26, should unlock meaningful monetization upside for EXCL by expanding its effective spectrum pool to 152MHz (pre-900 MHz return) and strengthening network capacity. Early benefits already appeared in 3Q25, with download speeds across the three brands rising 71%. The company also noted that not all of the planned 17-18k site removals will proceed, as some will be redeployed to underserved areas. With broader coverage, higher efficiency, and greater capacity, EXCL is better positioned to drive sustained yield improvement. Smartfren’s low ARPU base also offers upside, as its mass-market positioning could enable ARPU re-rating supported by the enhanced integrated network.
Divestment of MORA strengthens balance sheet profile
EXCL divested its 18.32% stake in MORA at Rp432/share (implying a 7.7x EV/EBITDA), generating Rp1.87tr in proceeds and an estimated accounting gain of ~Rp112.6bn. While EXCL distributed a Rp2.9tr special dividend in Dec25, funded by the Rp2.7tr sale of treasury shares, we believe the proceeds from MORA divestment are primarily intended to restore balance-sheet flexibility. This is particularly important given EXCL’s elevated capex intensity in FY25-26F, and a higher debt load post-merger. Reflecting this improved liquidity position, we project ND/EBITDA to fall to 2.8x in FY26-27F (from our previous estimate of 3.1x).
Reiterate Buy rating on stronger free cash flow post-integration
We revise our FY26/27F net profit by +12/+20% on lower interest exp. from a leaner debt profile. We project reported EBITDA growth of 13.7%/ 12.5% yoy in FY26F/27F, with margins recovering toward ~49% by FY27F, supported by topline uplift from network integration and synergy-driven cost savings across sites, spectrum, and labor. We expect capex intensity to peak at 24%/ 21% of revenue in FY25-26F, due to merger consolidation, modernization, and early 5G preparation, before normalizing to sub-20% in FY27F onwards as EXCL shifts to a more mobile-focused post–fiber restructuring. We raise our TP to Rp4,100 (implying 6.2x/ 5.5x EV/EBITDA for FY26F/ 27F), underpinned by a stronger free cash flow generation over FY27-30F (projected Rp8-10tr p.a.).
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