Full Year 2024 Indosat Tbk PT Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Piyush Choudhary - HSBC - Analyst : Yeah, hi, good afternoon, thanks for the call. Three questions, please. Firstly, the mobile revenue growth was very slow at only 2% year-on-year in fourth quarter. Can you talk about the competitive landscape? What is the outlook for mobile industry revenue growth, ARPU growth? Your subscribers are still declining. So if you can touch like you're expanding the coverage, but subs decline is continuing. So if you can talk about that also. Second question is on the EBITDA margin, which is down sequentially. Any one-off cost over here, particularly in the cost of services, which has grown sequentially? And thirdly, on the dividend payout ratio, you didn't mention 70% by 2026, but can you share something how we are thinking about 2024? Thank you.

Question: Piyush Choudhary - HSBC - Analyst : Has there been any -- thanks Ritesh, but has there been any kind of change since fourth quarter because you have raised tariffs also and Telkomsel was also talking about raising tariffs? Or is the competitive environment still very intense on the acquisition side? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 7:00AM, ISAT.JK - Full Year 2024 Indosat Tbk PT Earnings Call And I appreciate that your VLR base is the same, but you have been expanding coverage, right? So it's not yielding any kind of improvement in your subscriber growth, so how is these investments being viewed by the Board?

Question: Piyush Choudhary - HSBC - Analyst : Sure, thanks Nicky. But just getting back to the industry side, could you share how you are thinking the industry can grow for the mobile in 2025? Like what's the expectation for the industry?

Question: Piyush Choudhary - HSBC - Analyst : Got it. Thanks, Vikram. Thanks a lot.

Question: Arthur Pineda - Citi - Analyst : Hi, thanks for the opportunity. Firstly, just to go back to the cost issue on what drove down the margin in the fourth quarter. You've mentioned cost of sales and marketing spend. I'm just wondering what percent of this would actually be recurring. Do we see that as actually declining into 1Q and we're seeing normalized margins again? Second question I had is with regard to CapEx. It seems to be a bit higher year-on-year. What's driving this? And does this include any 5G assumptions, assuming that spectrum auctions are done? Thank you.

Question: Arthur Pineda - Citi - Analyst : Timing issue?

Question: Arthur Pineda - Citi - Analyst : Understood, thank you very much.

Question: Ranjan Sharma - JPMorgan - Analyst : Hi, good afternoon, and thank you for the presentation. Three questions from my side. With the tariff improvements that you delivered in the fourth quarter and the changes that you've seen in the market, can you help us with a sense of how ARPUs are trending in the first quarter so far? The second is that we are seeing softness in revenues and EBITDA, but we are talking about 10% plus growth in EBITDA in 2025. So what would be the drivers of that? And last question is, if you can give some clarity on your comments on this GPU as a service. This $30 million revenue, is it for the multiyear period or it's an annual revenue that you expect? And what is the cost associated or the CapEx associated to deliver that kind of revenue? Thank you.

Question: Ranjan Sharma - JPMorgan - Analyst : Okay, so the $30 million is an annual revenue sir, is it?

Question: Ranjan Sharma - JPMorgan - Analyst : Got it. And maybe if I can just take a quick follow-up on the EBITDA growth guidance. Does sir, is that in any way affected by the planned fiber restructuring? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 7:00AM, ISAT.JK - Full Year 2024 Indosat Tbk PT Earnings Call

Question: Ranjan Sharma - JPMorgan - Analyst : Got sir. If you were to restructure the fiber business and capitalize some costs, so the EBITDA number could be higher. Is that the correct understanding?

Question: Ranjan Sharma - JPMorgan - Analyst : Okay, thank you.

Question: Sukriti Bansal - Bank of America - Analyst : Hey, high management, thank you for the call and the presentation. First question on GPU as a service. So you mentioned you spent about $60 million last year. What kind of CapEx are you looking at for 2025? And of the multiyear contract customers that you have anything you can share on the nature of these customers or which sectors, et cetera, do they come from? The second, on the broadband side, we've also seen some very cheap offerings come in the market from the incumbents. So and also the competition, I think, from thethree3 year wave continue. So what is your strategy on this business? And how are you seeing competition all? Thirdly, on the competition on the cellular side, you said that you mentioned that acquisition competitiveness increased, especially in Java, that was true for 4Q. Has anything changed in 1Q so far? That's all from my side right now.

Question: Sukriti Bansal - Bank of America - Analyst : Anything has changed?

Question: Sukriti Bansal - Bank of America - Analyst : Thanks, and sorry, going back to the previous question from Piyush on dividend outlook. Can you share anything on 2024, '25, how you're looking at the gradual improvement from 40% to 70%?

Question: Sukriti Bansal - Bank of America - Analyst : Got it, thank you. There's just one follow-up. Ritesh, you mentioned -- sorry, I think I wasn't clear. In 1Q 2025 has competitiveness improved? Or has the competition remained as it was in 4Q in '24? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 7:00AM, ISAT.JK - Full Year 2024 Indosat Tbk PT Earnings Call

Question: Sukriti Bansal - Bank of America - Analyst : Got it. That's all. Thank you, thank you so much management.

Question: Niko Margaronis - BRI Danareksa - Analyst : Hi, good evening -- sorry, good afternoon. I would like to ask the management about currently the outlook for the fixed broadband, yeah? And we were talking in previous and in previous earnings call that we will see some improvement on this space. And if you could inform us about what is the subscribers currently in a fixed broadband?

Question: Niko Margaronis - BRI Danareksa - Analyst : Thank you. So if I can follow up, how many home passes and customers you currently have in quarter four? And if you talked about fixed broadband. Do you have any intentions of rolling out fixed wireless? And if you can give us maybe some view if you're going to participate in this fixed wireless spectrum they're going to auction very soon? Thank you.

Question: Niko Margaronis - BRI Danareksa - Analyst : Great, okay, thanks for, and maybe one more last question. Aside from the competition and starter pack from IDR25,000 to IDR10,000, how do you assess, evaluate current purchasing power the consumer purchasing power, is it -- has it improved? Or do you think it's going to be at the same sentiment in going to Ramadan and (inaudible) Thanks.

Question: Niko Margaronis - BRI Danareksa - Analyst : Okay, thank you very much.

Question: Ranjan Sharma - JPMorgan - Analyst : Hi, one quick follow-up. I mean if I look at all the telcos, rather all the major telcos that they've been communicating to investors and analysts about tariff in third and fourth quarter, if you were to raise more tariffs in the coming periods. But then you're also talking about competition for start-up packs and acquisition products. How do you square that? Like why are telcos or the industry be raising tariffs and cutting them at the same time? And how does -- what does it mean for the industry?

Question: Ranjan Sharma - JPMorgan - Analyst : Okay. Is this happening other chief startup. yeah, sorry. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 7:00AM, ISAT.JK - Full Year 2024 Indosat Tbk PT Earnings Call

Question: Ranjan Sharma - JPMorgan - Analyst : Yeah, can I just check? So is the chief startup pack happening mainly in Java region? Or are you seeing that across -- I mean, not sort of Java as well?

Question: Ranjan Sharma - JPMorgan - Analyst : Okay, thank you.

Question: Piyush Choudhary - HSBC - Analyst : Yeah, hi, thanks a lot for the opportunity again, a few follow-ups. Firstly, in the mobile segment, Ritesh, you mentioned you have reduced the validity from 30 to 28, and was passed on to customers. So may I check when has this kind of begin? And what is the expectation of blended ARPU improvement by these initiatives?

Question: Piyush Choudhary - HSBC - Analyst : Got it, got it. Second question was, if you can share some views on the upcoming spectrum auction, what is the latest, which bands are going to come? Any discussion on the pricing side? And what is your strategy? It looks like after smartphone mergers, they have -- they would likely have 2.3 gigahertz, which can be used for 5G, but what's kind of your strategy for 5G? And last question, Nicky, you mentioned about cost of sales going up, but we are not seeing a similar increase in your non-mobile revenue. So I'm just puzzled why the cost base has increased while there is no commensurating? It can be a low-margin business, but there is no revenue increase on the non-mobile services or I'm missing something. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 7:00AM, ISAT.JK - Full Year 2024 Indosat Tbk PT Earnings Call

Question: Piyush Choudhary - HSBC - Analyst : No, I appreciate year-on-year. Sorry, I was not clear earlier. I'm seeing quarter-on-quarter, this expense item has increased a lot, while there is no commensurate increase in revenue. That is where I was a little puzzled.

Question: Piyush Choudhary - HSBC - Analyst : Got it, got it. And Vikram, if I may ask on the spectrum side, like is there any certainty on what bands are likely to come in 2025? Or still there is -- it's in discussion phases right now?

Question: Piyush Choudhary - HSBC - Analyst : Got it. Thanks a lot. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2025 / 7:00AM, ISAT.JK - Full Year 2024 Indosat Tbk PT Earnings Call

Question: Arthur Pineda - Citi - Analyst : Hi, I actually have two questions as a follow-up, but I'll do it one by one. Firstly, on the comment on the IDR10,000 starter pack. Just wondering which operators are driving this. And when was it launched? Are you seeing overall the industry is moving back to a scratch card where people just buy these starter packs and then throw it away? I'll pose that question first before the second question.

Question: Arthur Pineda - Citi - Analyst : Yeah, so was this target with the Telkomsel Lights program? Maybe that's the other way to ask it.

Question: Arthur Pineda - Citi - Analyst : Okay, then it goes to your second question, if the larger operators the one driving this lower price points, how would you be optimistic that you'd have a better competitive dynamics with consolidation, if it's the market leader is actually driving this?

Question: Arthur Pineda - Citi - Analyst : Understood. Yeah, thank you very much.