Eyeing the Ramification of the Synergy
Key Takeaways:
• TLKM’s net profit in 1H23 decreased by -4.2% YoY, reaching IDR12.8 tn (vs IDR13.3 tn in 1H22) due to increase in the finance expense (+15.0% YoY). Yet, TLKM managed to report a steady revenue growth by +2.1% YoY, primarily driven by the data, internet and IT service segment (+6.1% YoY) amidst rising mobile data traffic.
• In 2Q23, Telkomsel reported a revenue increase of +4.7% QoQ, driven by a substantial +7.7% QoQ hike in data revenue after successfully adding 2.2 mn subscribers to 153.3 mn subs.
• With the spin-off of IndiHome to Telkomsel, we project revenue in FY23E to reach IDR153.3 tn (+4.0% YoY) where we expect 700k IndiHome subscriber growth by FY23E.
• We recommend BUY with TP: IDR4,200/share (+12.0% upside), implying FY23E EV/EBITDA 5.2x. Downside risks: 1) data tariff war; 2) limited mobile subscriber growth.
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