Komdigi: 700 MHz and 2.6 GHz spectrum winners with TLKM as biggest winner. On 10 July 2026, Komdigi conducted the 700 MHz and 2.6 GHz spectrum auctions. Telkomsel emerged as the biggest winner with 100 MHz total, reinforcing its network advantage. Indosat secured 80 MHz to remain competitive, while XLSmart’s 700 MHz allocation and 2.6 GHz spectrum (also totaling 80 MHz) should strengthen coverage. All operators will see gradual capex increases to pay spectrum fees and meet rollout commitments, including expanding 4G to 538 underserved villages and deploying 5G to cover 51% of Indonesia’s population.

5G may squeeze margins short-term but supportive of long-term topline growth. The upfront fee is lower than the previous 4G auction, providing an incentive for telco players, though short-term margins may be pressured by fees and loan interest while 5G is unmonetized. Long-term revenue depends on 5G expansion, but adoption may remain slow without a “killer app,” with ARPU lift possible only under a three-player market structure allowing tariff adjustments.

Upgrade to Overweight on excessive discount to region with ISAT as top pick. We upgrade the telecom sector to Overweight following the 5G spectrum auction and attractive valuation, with 2027F EV/EBITDA at 4.2x, 16% below the Philippines. TLKM’s rating is raised to BUY (TP: 3,300), EXCL remains HOLD (TP: 2,700) due to post-merger work, and our top pick is ISAT (BUY, TP: 2,500) supported by its asset-light strategy and potential IDR 1.17tn fiber sale contribution.