Company Update

06 April 2023

TLKM IJ - MNC Sekuritas Equity Report April 6, 2023

Strategizing Growth in the Digital Frontier

Key Takeaways :
▪️TLKM reported a FY22 revenue growth of IDR147.3 tn (+2.9% YoY), primarily driven by the data, internet, and IT services segment, which contributed 55.7% of the total revenue at IDR82.1 tn (+6.0% YoY). IndiHome's revenue reached IDR28.0 tn (+6.4% YoY), while Telkomsel experienced positive revenue growth at IDR89.0 tn (+1.8% YoY).

▪️EBITDA dropped 8.2% YoY to IDR72.8 tn due to the IDR6.7 tn unrealized loss from TLKM's 2% ownership in GOTO. Furthermore, core net income came in at IDR20.7 tn (-16.2% YoY), translating to a margin of 14.1% (vs 17.3% in FY21)

▪️TLKM has initiated the Five Bold Moves strategy aimed at creating new revenue streams and strengthening the company's position in the digital telco market. The management expects to launch the Fixed-Mobile Convergence (FMC) services in 3Q23E, which is expected to increase IndiHome's total subscribers by 1 million and boost IndiHome's revenue by 18.9% YoY.

▪️We forecasts TLKM to book a revenue and core net profit of IDR154.9 tn (+5.1% YoY) and IDR28.3 tn (+3.9% YoY), respectively, in FY23E, with EBITDA projected to reach IDR82.1 tn (+12.7% YoY) and maintaining its market share at ~50%.

▪️ We recommend BUY for TLKM IJ at a TP of IDR4,650, implying 5.1x FY23E EV/EBITDA. Downside risks include limited growth of Telkomsel’s subscribers, interest rate hike, GOTO investment, and data tariff war.

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