Telkom Maintains its Position as Market Leader with a Profitability
Net Income Margin of 17.4%
Jakarta, 28 July 2023 - In the midst of its ongoing intensive transformation, PT Telkom Indonesia (Persero) Tbk (Telkom) recorded a fairly good performance throughout the first half of 2023. The company recorded consolidated revenue of 73.5 trillion rupiah which grew by 2.1% year-on-year. This achievement was made possible by the contribution from the increasingly strong performance growth from data, internet and information technology services of 41.6 trillion rupiah, IndiHome with its continued position as the market leader with 14.4 trillion rupiah, and Interconnection with 4.5 trillion rupiah with respective growth of 6. 1%, 4.0% and 5.7% from the same period last year.
The composition of Telkom's revenue moves dynamically in line with the company's transformation where the revenue contribution from digital business continues to increase, despite decreasing revenue contribution from legacy business. This shift shows that the company's transformation is on the right track to continue to grow sustainably according to business changes.
Telkom's earnings before interest, taxes, depreciation, and amortization (EBITDA), and net profit were recorded at 38.4 trillion rupiah and 12.8 trillion rupiah respectively. This was due to the company's focus on accelerating the transformation steps with its Five Bold Moves main strategy and continuing to improve service quality through infrastructure development. One of them is the acquisition of an additional 2.1 Ghz and 2.3 GHz frequency spectrum in order to secure the capacity and quality of TelkomGroup services in the future, which has an impact on increasing costs (expenses) which grow 2.9% year-on-year to 50.5 trillion rupiah. The company believes that this is a long-term investment that will have a positive impact on customer service, performance, and Telkom's profitability.
"Throughout the first semester of 2023, Telkom continues to accelerate the implementation of the Five Bold Moves main strategy, which we have planned since last year. One of the implementations that we just launched was fixed-mobile convergence, with IndiHome moving to Telkomsel. It indicated that in the future, Telkomsel would focus on targeting the business-to-consumer segment with complete and integrated service solutions, while Telkom in the business-to-business segment,” Telkom President Director Ririek Adriansyah said.
Ririek added that the company also continues to develop its infrastructure and networks. "We continue to develop network and service infrastructure, which has an impact on increasing expenses. However, we are sure that this is a good cost and a long-term investment, the results of which we hope to reap together later. Telkom also continues to spur growth through new engines of growth and strong performance from its subsidiaries. This is a provision for us to strengthen the company's fundamentals and profitability," Ririek said.
In the Fixed Broadband segment, IndiHome still maintains its position as market leader by posting 14.4 trillion rupiah in revenue or grew 4.0% year-on-year with a total contribution to the company's revenue reaching 19.6%. Until the end of June 2023, IndiHome served 9.5 million customers or grew 7.2% compared to the same period last year with a relatively stable ARPU.
In the Mobile segment, Telkomsel managed to record revenue of 44.0 trillion rupiah. It was significantly contributed by digital business performance, which continued to strengthen by 7.4% year-on-year to 37.7 trillion rupiah, and contributed 85.6% to the company's total revenue, an increase from 80.5% in the previous year. Even though the legacy business experienced a significant decline of up to 25.7% year-on-year, the growing digital business has become ammunition for Telkomsel to maintain performance and profitability. The company believes this business has the potential to continue to grow until the end of 2023 and beyond.
Telkomsel's operational performance has also improved, supported by data traffic growth of 9.4% year-on-year to 8,728,935 TB and data consumption reaching 12,935 MB per data customer or growing 11.2% year-on-year. In order to strengthen infrastructure leadership and service quality for the best digital experience, Telkomsel has completed the process of upgrading its 3G to 4G services (3G shutdown). Telkomsel owns 228,377 units consisting of 178,945 4G Total Base Transceiver Stations (BTS) and 420 5G BTS by the end of the first semester of 2023.
The enterprise segment recorded satisfactory performance with revenue of 9.3 trillion rupiah or grew 6.7% year-on-year, where business-to-business information technology services and digital services for corporations were the largest contributors. Enterprise segment performance growth increased significantly compared to the same period last year which only grew 0.3% year-on-year. Telkom continues to strengthen its capabilities in the cloud business through strategic partnerships with global technology players, while continuing to improve its quality in providing digital solutions to customers.
Meanwhile, the Wholesale and International segment recorded revenue of 8.2 trillion rupiahs or grew 3.2% year-on-year contributing to growth in the international wholesale voice service business and digital infrastructure business.
In the telecommunications tower business, Mitratel is still the largest tower provider in Southeast Asia with 36.719 towers, or grew 27.6% year-on-year with a tenancy ratio of 1.49x from 1.46x in the first quarter of 2023. Mitratel posted a net profit of 1.02 trillion rupiah in the first half of 2023, an increase of 14.7% year-on-year. The increase in profit was supported by revenue which grew 10.8% year-on-year to 4.13 trillion rupiah. This revenue was driven by tower leasing which earned 3.45 trillion rupiah in revenue, an increase of 15.5% year-on-year. This business dominates up to 83.6% of total revenue. Meanwhile, Mitratel's EBITDA margin and net profit margin grew quite well at 81.2% and 24.8%. Mitratel also strengthened its fiber optic business by building 10,628 km in the first half of this year and bringing its total optical fiber to 27,269 km.
As an effort to improve the quality of infrastructure, solutions, and services to the community, until June 2023, Telkom has spent the company's capital expenditure of 15.0 trillion rupiah or 20.5% of total revenue. This budget is focused on developing telecommunication network infrastructure for a better digital customer experience. In the fixed broadband business, capital expenditure is used to develop fiber optic access, submarine cable infrastructure, and other projects such as telecommunications towers and data centers. Meanwhile, Telkom also spent some capital expenditure to improve the quality and capacity of 4G networks, develop 5G technology and strengthen its information technology systems.
IndiHome Officially Moves to Telkomsel, TelkomGroup is Optimistic FIXED-MOBILE CONVERGENCE Will Have a Positive Impact on Company Profitability and Indonesia's Digitalization
IndiHome officially moved to Telkomsel on 1 July 2023, following a previously signed deed by Telkom and Telkomsel for a spin-off. This is an important milestone to implement the TelkomGroup FIXED-MOBILE CONVERGENCE initiative as part of the company's main strategy Five Bold Moves, to create a sustainable impact on society such as presenting broader, more equitable, and reliable broadband services, supporting the acceleration of digital inclusion and the digital economy, increasing level playing. field of the Indonesian telecommunications industry, as well as strengthening the company's business in the future.
Furthermore, on 21 July 2023, Telkomsel continued this step by launching a new product under the brand "Telkomsel One" which provides a seamless broadband connectivity experience, both inside and outside the home, for guaranteed connected internet solutions and digital entertainment for all customers and the public. Telkomsel One provides a wide selection of superior customer-centric packages according to customer needs, with prices starting from 120,000 rupiah for a one-month subscription, as well as home internet speeds of up to 2 Gbps. Customers in 501 districts/cities in Indonesia can subscribe to this service.
"IndiHome will synergize with Telkomsel to present innovations that will make this fixed-mobile convergence a success and provide maximum results for the company and all stakeholders. We are optimistic that fixed-mobile convergence will strengthen the company's performance, while Telkom will continue to improve its capabilities to become a big business-to-business player. TelkomGroup will continue its other Five Bold Moves transformation plans such as InfraCo, Data Center Co, business-to-business Digital IT Service Co, and DigiCo," Ririek said.
As a manifestation of its commitment to developing the business-to-business segment, Telkom recently launched Indibiz precisely at the Digiland 2023 moment in Jakarta. Indibiz is an ecosystem of digital solutions for the Indonesian business world to bring small and medium enterprises going global through four pillars, namely platform solutions and digital services, collaboration with startups and developers that focus on solutions for developing small and medium enterprises, collaboration on financing solutions with financial institutions, and collaboration with the business community to increase the productivity of small and medium enterprises. Telkom will also accelerate the transformation of the business-to-business segment to the Telkom Regional level so that it can serve this segment as a whole, to support the corporate sector, micro, small and medium enterprises, and government agencies in carrying out digitalization.