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Catching the holiday momentum. Most MNO players raised the headline prices for their data packages in Nov-23 to take advantage of the holiday momentum in Des-23, in line with our expectations; TSEL increased its overall effective data yield further by cutting bonuses, mainly in its Internet Max packages, both the local quota bonus and other bonuses (i.e. Youtube, Vidio, etc.) while raising the headline price by ~+7-12%, increasing its overall effective package data yield by +11.4% MoM and cumulative data yield to IDR 5.24/MB in Nov-23 (+11.4% MoM), while for By.U, we saw no adjustment in offerings in Nov-23. IoH and EXCL also raised the headline prices for their packages; IoH raised the headline prices for its Freedom packages by +5-17% MoM across the board, thus bringing its overall data yield to IDR 3.44/MB (+6,0% MoM). Meanwhile, EXCL also raised the headline prices for its 30-day packages (XTRA Combo Regular & VIP) by +5-25% MoM, while cutting the headline price for its 7-day-package (XTRA Combo Mini) by ~10%, bringing its cumulative effective data yield to IDR 4.02/MB (+2.8% MoM). Regarding the Live-on packages, EXCL made no adjustment in Nov-23. Last but not least, FREN slightly adjusted the bonuses in its Unlimited Non-Stop 6 GB package by adding the Vidio Premier Gold bonus in Nov-23. We expect to see better ARPUs from Indonesian MNO players as most of them plan to continue their current pricing discipline in order to maintain rationalization within the industry. Also, we noticed a short-term positive catalyst for ARPU from the potential increase in data traffic during the Christmas and New Year holidays and the election in 1Q24.
Adjustments in FBB and FMC packages. EXCL revamped its XL Home offerings (Value, Smart Family) by raising the speed limit by ~33-50% for the first six months before bringing it down by ~60-70%, thus bringing its overall effective yield to IDR 5,408/Mbps (+77.6% MoM), while MyRepublic offers more bonuses by adding Free WeTV VIP bonuses to all of its packages. We expect the competition in the FBB market to remain intense as most players focus on providing attractive entry point offerings for prospective subscribers (to gain market share), also considering Indonesia’s concentrated FBB market. Regarding the FMC market, we saw no adjustment in the headline prices or packages.
Maintain OW. We maintain our OW call for the telco sector, with a pecking order of TLKM (TP IDR 4,500)> ISAT (TP IDR 11,500)> EXCL (TP IDR 2,700). Going forward, we expect the pricing rationalization in the cellular market to remain intact as all MNO players maintain their pricing discipline. We chose TLKM as our top pick, as we believe that its dominance will help support its earnings growth and profitability in the long term. Also, it is worth noting that its robust balance sheet will put TLKM in a favorable position for the spectrum auction in 2024-2025F. Meanwhile, we expect the competition in the FTTH and FMC markets will remain intense for a while due to the relatively concentrated market.
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