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Indonesia’s telco Big 3 booked aggregate 3Q24 revenue of IDR 59.1 trillion (-2.5% QoQ, +0.7% YoY). The QoQ decline was attributed to subdued consumer spending, reduced legacy service usage, and lower ARPU. ISAT posted the highest top-line growth among the three (-2.2% QoQ, +8.2% YoY), supported by +5.1% YoY increase in 3Q24 ARPU to IDR 37.2k. The bottom-line performance was also quite underwhelming, with aggregate net profit of IDR 7.3 trillion (-3.7% QoQ, -7.8% YoY), mainly due to higher fixed costs and investment losses in associates, particularly EXCL’s investment in LINK. These results fell short of both our expectations and consensus forecasts.
Despite recent mixed performance, we maintain an optimistic outlook for telco sector in FY25, supported by: 1) robust data demand growth, driven by government-led digital penetration and transformation, 2) opportunities to expand subscriber bases in uncovered areas, 3) the upcoming spectrum auction may help MNOs improve network quality and attract new subscribers, and 4) strategic initiatives from telco companies, such as TLKM’s data center expansion, ISAT’s focus on Artificial Intelligence (AI) and GPU-as-a-Service, and EXCL’s emphasis on AI and digitalization, as well as its potential merger with FREN.
Our picking orders are ISAT (BUY, IDR 3,125), TLKM (BUY, IDR 3,600), and EXCL (BUY, IDR 2,900).
Samuel Sekuritas Indonesia is a leading Indonesian securities brokerage firm. Established in 1997, the firm has grown to become one of the most respected and trusted financial services companies in the country. With a wide range of services and products, Samuel Sekuritas Indonesia has become a trusted partner to many investors, both institutional and individual.
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