Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PT Telkom Indonesia (Persero) Tbk (TLK, Financial) reported a healthy revenue growth of 2.5% year on year to IDR75.3 trillion for the first semester of 2024.
- The company successfully implemented a fixed mobile convergence (FMC) strategy, which has proven effective and positively impacted market share and profitability.
- Mobile customer base grew by 4.3% to 159.9 million subscribers, contributing to a sustained normalized EBITDA margin of 51.9%.
- PT Telkom Indonesia (Persero) Tbk (TLK) initiated an early pension program affecting over 1,000 employees, aimed at optimizing workforce efficiency and enhancing shareholder value.
- The company continues to expand its data center capacity, with significant contributions expected from hyperscale data centers and capacity expansions in 2024.
Negative Points
- EBITDA decreased slightly by 1.3% year on year to IDR37.9 trillion, primarily due to the early retirement program costs.
- Personnel expenses jumped by 20.9% year on year during the semester, driven by the early retirement program.
- General and administrative (G&A) costs saw a 20% increase quarter on quarter, attributed to bonus payments and allowances for bad debt.
- ARPU (Average Revenue Per User) declined slightly quarter on quarter, indicating potential challenges in maintaining customer spending levels.
- The company faces increased competition in the mobile segment, particularly outside of Java, which could impact market share and revenue growth.
Q & A Highlights
Q: Can you explain the spike in G&A costs in Q2 2024?
A: The increase in G&A costs was primarily due to the payment of bonuses for the management team. Additionally, there was an allowance for bad debt, which contributed to the rise. This is expected to normalize by the end of the year. (Unidentified Corporate Representative)
Q: Are there any costs related to the early retirement program (ERP) booked within Telkomsel?
A: No, the ERP-related costs are only booked at the parent company level, Telkom Indonesia. This program is part of our transformation to make the fixed mobile business more efficient. (Unidentified Corporate Representative)
Q: How are lease rates trending for data centers in Jakarta?
A: Due to high demand, lease rates are currently on an increasing trend. However, with more players entering the market, we expect rates to rationalize and potentially decline in the long term. (Derrick Heng, Director of Marketing, Telekomunikasi Selular PT)
Q: What is driving the growth gap in your wireless revenue market share?
A: The competition is expanding aggressively outside of Java. We are defending our market share by tailoring pricing strategies, enhancing customer experience, and launching new initiatives like Telkomsel Lite and by.U. (Derrick Heng, Director of Marketing, Telekomunikasi Selular PT)
Q: What are the key bottlenecks in driving better broadband subscriptions?
A: Affordability is a significant factor. We have launched EZnet to address this issue and are focusing on increasing fixed broadband penetration. We are also improving the quality and value-added services for our IndiHome subscribers. (Unidentified Corporate Representative)
Q: Can you quantify the savings expected from the early retirement program (ERP)?
A: The ERP is expected to result in an economic rate of return (ERR) of around 21%, with a payback period of approximately 2.5 to 3 years. This initiative will free up space for new talent with relevant skill sets. (Heri Supriadi, Director of Finance & Risk Management)
Q: Will there be any additional ERP in the second half of 2024 or next year?
A: No, we do not plan to implement another ERP in the near future. Most employees who needed to be transitioned have already been identified and included in the current program. (Unidentified Corporate Representative)
Q: How should we expect ARPU to trend in the upcoming quarters?
A: We aim to maintain ARPU stability through productivity gains, targeted segment strategies, and increasing digital adoption. Our focus is on maintaining subscriber growth and healthy market conduct. (Derrick Heng, Director of Marketing, Telekomunikasi Selular PT)
Q: What led to the 20% increase in personnel costs in Q2 2024?
A: The increase was due to the expenses related to the early retirement program (ERP), which affected around 1,000 employees. This initiative is expected to create a leaner organization and increase efficiency and productivity. (Heri Supriadi, Director of Finance & Risk Management)
Q: What is the impact of the FMC strategy on your mobile business?
A: The FMC strategy has helped maintain ARPU and market share. We have seen positive impacts from initiatives like Telkomsel Lite and by.U, which have helped manage churn rates and maintain competitiveness. (Derrick Heng, Director of Marketing, Telekomunikasi Selular PT)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
