Company Update

02 Desember 2022

Telecommunication Sector Update December 2, 2022

One Giant Leap for Connectivity
Key Takeaways
• Several operators have spent majority of their FY22E capex for the development of FMC, such as TLKM who have spent more than IDR20 tn or >50% of their FY22E capex for their FMC development, while EXCL have spent IDR8.7 tn for its acquisition of LINK.
• We assess that FMC brings cost optimization to the opex and capex of the MNOs, which specifically can be seen through single billing system, common marketing campaigns, joint product development, and integrated IT systems.
• To compete with other players, the operators must keep improving their services by offering value, irrespective of their prices.
• By 9M22, several operators increased its data package by 4-20% YTD as there is less competition in the industry with the number of operators has diminished to only 4 big players.
• We maintain our Overweight rating on the telecommunication sector as we believe that FMC can benefit users for connectivity and operators for lower expenses due to cross-selling. Also, the increase of data plans can improve their earnings and services, and next year, we expect for more increases of data packages. Currently, TLKM and EXCL are traded between its 5-year average mean and STD-1 of EV/EBITDA band.

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