Telkom, XL Axiata and Indosat's Revenues Increase in Semester I-2023

Telkom, XL Axiata and Indosat Ooredoo Hutchison posted revenue growth in the first half of 2023. One of the main contributors to the increase in revenue is internet and digital data services.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI.

KOMPAS/FERGANATA INDRA RIATMOKO

Contract workers of PT Tower Bersama Infrastructure Tbk (TBIG) company climbed up the telecommunication tower managed by the company at Maguwoharjo Stadium in Sleman, DI Yogyakarta on Wednesday (10/9/2019).

JAKARTA, KOMPAS — Telecommunications operators in Indonesia are still posting revenue increases in the first half of 2023. The emergence of 5G mobile access technology should spur further growth for the industry, but deployment has been limited so far. Steps to convergefixed network services and telecommunications mobile networks will be beneficial to streamline the company's costs.

Throughout the first semester of 2023, PT Telkom Indonesia (Persero) Tbk or Telkom posted consolidated revenue of IDR 73.5 trillion, an increase of 2.1 percent compared to the same period last year. Revenue from data, internet and information technology services business lines accounted for nearly half of the company's total revenue, which was Rp 41.6 trillion. Telkom's profit before interest, tax, depreciation and amortization was recorded at Rp 38.4 trillion. The company's net profit reached Rp 12.8 trillion.

Main Director of PT Telkom Indonesia Ririek Adriansyah said that the performance in the first half of 2023 cannot be separated from the company's focus on accelerating transformation and developing telecommunication infrastructure. The Telkom Group has acquired additional 2.1 gigahertz (GHz) and 2.3 GHz frequency spectrum in order to secure capacity and service quality in the future, although this acquisition resulted in an increase in costs of 2.9 percent or to Rp 50.5 trillion.

Until June 2023, Telkom has utilized 20.5 percent or IDR 15 trillion of its total revenue for capital expenditure. It is allocated for the development of telecommunication network infrastructure. For the fixed telecommunication network business, the capital expenditure is used for the development of fiber optic access and submarine cable infrastructure. Capital expenditure is also used to enhance the quality and capacity of the 4G network, develop 5G technology, telecommunication towers, data centers, and information technology systems.

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"One of the new implementations that we have just inaugurated is the convergence of fixed network services and mobile telecommunications network services at Telkomsel. IndiHome has moved to Telkomsel. This action also signifies that Telkomsel will focus on targeting the retail segment, while we as the parent company will focus on the business to business (B2B) segment," said Ririek in a press release in Jakarta, Friday (28/7/2023)."

XL Axiata

Meanwhile, PT XL Axiata Tbk (XL Axiata) posted a total revenue of IDR 15.78 trillion in the first half of 2023, up 12 percent compared to the same period in 2022. Revenue from data Internet and digital services contribute 91 percent to total revenue.

President Director and CEO of XL Axiata, Dian Siswarini, stated that the strong revenue growth in the first semester of 2023 was accompanied by proper cost management. The revenue before interest, tax, and amortization (EBITDA) grew by 14 percent annually, with a margin increasing by 49 percent to Rp 7.65 trillion. The net profit after normalization reached Rp 658 billion.

As of the end of June 2023, XL Axiata's gross debt was recorded at IDR 9.97 trillion with a ratio of gearing net debt to EBITDA (the company's ability to pay off debt), including finance leases (lease activities ), of 2.67 times. Meanwhile, the company's net debt is Rp 8.4 trillion. Dian said the company does not have debt denominated in US dollars. "All these positive achievements are the result of our maximum efforts in all aspects of the business to win the market," he said.

Total subscribers until the end of June 2023, said Dian, reached 58 million subscribers. The mixed average revenue per user or average revenue per user (ARPU) spent on purchasing services has increased from IDR 38,000 in semester I-2022 to IDR 41,000 in semester I-2023.

KOMPAS/SATRIO PANGARSO WISANGGENI

XL Axiata CEO Dian Siswarini spoke at Kompas Talks which were held on Monday (27/7/2020) via the Instagram Live channel.

The convergence business of fixed and mobile telecommunication networks will also be strengthened, both in terms of infrastructure and products. The majority of XL Axiata's total capital expenditure of IDR 8 trillion will be used for network infrastructure expansion.

Indosat

Meanwhile, Indosat Ooredoo Hutchison stated that the total revenue earned during the first semester of 2023 reached IDR 24.7 trillion, an increase of 10 percent compared to the same period last year. The growth in the company's total revenue was contributed by cellular business lines (up 8.4 percent), multimedia, data communication and internet (15.7 percent), and telecommunications fixed network services (25.9 percent).

Indosat Ooredoo Hutchison's EBITDA is also claimed to have increased 24 percent on an annual basis (year on year) to IDR 11.4 trillion. EBITDA margin of 46.1 percent. Profit for the period attributable to owners of the parent entity was recorded at IDR 1.9 trillion.

Indosat Ooredoo Hutchison's President Director and CEO, Vikram Sinha, stated at a press conference in Jakarta on Friday (28/7/2023) afternoon that the company had completed the integration of Indosat Ooredoo and Hutchison Tri Indonesia networks in April 2023, more than a year earlier than the target. By the end of June 2023, the company had reached 100 million customers.

KOMPAS/SUTTA DHARMASAPUTRA

President Director of PT Indosat Tbk (Indosat Ooredoo Hutchison / IOH) Vikram Sinha displayed his social media account while delivering the spirit of togetherness in an international conference.

Also read: Cellular Service Subscribers Tend to Decline

"Before and after the Covid-19 pandemic, the telecommunications industry still plays a vital role in Indonesia's Gross Domestic Product (GDP). The telecommunications industry is now heading in the right direction. In the past five years, the telecommunications industry grew by 1-2 percent, but now I can see that the industry can grow beyond the GDP growth rate," he said.

Vikram estimates that the telecommunications industry in Indonesia can still grow by 7-8 percent and even has the potential to grow by 10 percent again like a few years ago. He believes that there are still many opportunities that can be seized by telecommunications operators, such as digital economic activities.

"In the past five years, the telecommunications industry has grown by 1-2 percent, but now I can see that the industry can grow beyond the GDP growth rate."

Researcher at the Center of Digital Economy and Small Medium Enterprises at the Institute for Development of Economics and Finance (Indef), Nailul Huda, stated on Saturday (29/7/2023) in Jakarta that the Covid-19 pandemic and the emergence of digital economic activities are factors driving the telecommunications industry. The existence of 3G, 4G technology, and applications have created a strong demand for internet access. However, the most significant factor for the industry to soar is the innovation in mobile access technology.

"For now, I think the value of the telecommunications sector is also high and there have been no new digital economy technology or service findings that have driven the growth of the telecommunications sector. The presence of 5G cellular access technology can actually make the telecommunication industry grow faster than now, especially if there is a breakthrough in VR-AR and metaverse technology," he said.

The convergence breakthrough of fixed and mobile telecommunications services carried out by all operators, according to him, only aims to overcome costs and combine similar services. Telecommunication operators can operate more efficiently because of that convergence.

Ciptadana Sekuritas in the research report "Market Outlook 2023: Telco Sector", quoted from the company's blog, Saturday (29/7/2023), in Jakarta, argues, the telecommunications industry is still in the transition stage from legacy services. (voice and SMS) to internet data, but the transition phase for each operator is different. The lesson is, the level of competition among operators is stable. Challenging macroeconomic conditions will not have a significant impact on the industry as many people and businesses depend on telecommunications services.

The telecommunications industry is still in the transition phase from legacy services (voice and SMS) to internet data, but the transition phase for each operator is different.

In the same report, Ciptadana Sekuritas assessed that the massive deployment of 5G services in Indonesia will take longer to materialize. The inadequacy of available frequency spectrum is one of the obstacles.

The convergence of telecommunications fixed and mobile network services is not a game changer. Despite the company's cost efficiency benefits, Ciptadana Sekuritas believes it will be difficult to install fiber networks directly to homes and the subscription nature of the business may prove unsuitable for most Indonesians as it requires a high proportion of daily income.

Also read: Merger of Indosat and H3I Effective Early January 2022