Indosat Tbk PT Q3 2024 Earnings Call Transcript

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

Question: Piyush Choudhary - HSBC - Analyst : Several questions, actually. Firstly, on subscriber base. This has been continuously declining. On the one side, you have been expanding coverage in rural areas. So what factor is attributing to subscriber loss, if you can highlight that and the outlook for the same? Secondly, on ARPU, we have seen some weakness on a quarter-on-quarter basis where ARPU has declined sequentially. What is driving that? And if you can, again share the outlook. And thirdly, on the EBITDA margin outlook. Your guidance still states EBITDA margin inching up closer to 50%, but third quarter, you're around 47.6%. So could you highlight what cost elements you are expecting efficiency? And is this more of a fourth quarter target or it's more next year target now, on 50% EBITDA margin?

Question: Piyush Choudhary - HSBC - Analyst : Just following up on subscriber and ARPU question. So the softness is more pertaining to 3Q. Are you seeing trends improving in October where subscriber base is improving, ARPUs are improving? Could you shed some light on how you're expecting on both subscriber and ARPU going forward?

Question: Piyush Choudhary - HSBC - Analyst : Right. And just last one. The price increases were already reflected in September, or it will show in the fourth quarter. And how much price increase you have taken across?

Question: Arthur Pineda - Citigroup Inc. - Analyst : Several questions, please. Firstly, can you get some color on the broadband user growth and revenue momentum? I'm not sure why this is trending lower Q-on-Q year-on-year. Where are we in terms of net adds for this space? And second question I had is with regard to pricing, which I think was raised by Piyush earlier. Can we get any clarity on when this was implemented and what delta had been seen on the pricing side? That's the second question. Third, I had is with regard to the MIDI service. I do know that it's gone up a fair Q-on-Q year on year. I'm just wondering what are the nature of this contracts. Are they chunky contracts? Or are you seeing this as a recurring in nature and should expand going forward? And maybe just the last one, sorry, a fourth question. With regard to the issue on the distributors on reactivating SIM cards, I was wondering what is this covered upon further examination? Is this just a one-off? And is the scope quite limited? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 7:00AM, ISAT.JK - Q3 2024 Indosat Tbk PT Earnings Call

Question: Piyush Choudhary - HSBC - Analyst : So if I could just clarify, what kind of margins do you realize on these services?

Question: Henry Tedja - PT Mandiri Securities - Analyst : Perhaps two questions from me. First one, I think Pak Vikram and Pak Ritesh mentioned about the challenging macro. So just curious, can you provide us some color on how bad is the impact of the consumer purchasing power in the first half or nine months? And how do you see the trend in the fourth quarter and perhaps next year? That would be my first question. Second question, perhaps more about a housekeeping question. I think Pak Vikram mentioned earlier about the synergy from the merger of Indosat and PT Hutchison, which now stands around like USD450 million, right, which is above the initial guidance. Just curious were those all the synergies that -- the excess synergies comes from. And do you think we can still see some synergies excess in the future as well? So those are my two questions.

Question: Henry Tedja - PT Mandiri Securities - Analyst : Okay. I think that's very clear. Perhaps one follow-up question, Pak, a quick one. Can you provide some updates perhaps on the spectrum auction from the government?

Question: Ranjan Sharma - JPMorgan Chase & Co - Analyst : I'm sorry, I joined a bit late so I might have missed this. But can you provide an update on the fiber restructuring that Indosat is pursuing? Where are we in the process? And what is the end objective?

Question: Marissa Putri - UBS Investment Bank - Analyst : There were mentions about some consolidation and increase in pricing for the online channel. So how big was the impact on the consolidation to your numbers in Q3 and the total online channels subscribers to your total subs as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 7:00AM, ISAT.JK - Q3 2024 Indosat Tbk PT Earnings Call

Question: Marissa Putri - UBS Investment Bank - Analyst : No, I guess just a consolidation thing. I think you mentioned that there was some a negative impact to revenue to overall telecom industry.

Question: Piyush Choudhary - HSBC - Analyst : A couple of questions. Firstly, you have started a kind of lending business also, right? So may I clarify if you also include lending revenue in mobile ARPU? And what's the contribution?

Question: Piyush Choudhary - HSBC - Analyst : It is flowing into ARPU.

Question: Piyush Choudhary - HSBC - Analyst : So basically, it's the net number, which is going into ARPU and flowing all the way to net profit.

Question: Piyush Choudhary - HSBC - Analyst : And secondly, with the free cash flow generation, which is happening, is it possible to talk about your dividend outlook? You were earlier contemplating or formalizing a dividend policy. Any update around that?

Question: Arthur Pineda - Citigroup Inc. - Analyst : Sorry, just one follow-up question. I was just wondering, in terms of your GPU as a Service offer, I think this was discussed earlier in your Investor Day. I'm just wondering how this is progressing. Has there been any commercial agreement signed yet? And what is the outlook for this in terms of contributions?

Question: Arthur Pineda - Citigroup Inc. - Analyst : Sorry, just to clarify. You said $6 million revenues in December, but $36 million for the next year, is that right?

Question: Arthur Pineda - Citigroup Inc. - Analyst : The $50 million to $72 million is the booking for next year, or that's the order book? Sorry, I'm just a little confused.

Question: Niko Margaronis - BRI Danareksa Sekuritas - Analyst : So basically, I want to have two housekeeping questions. You mentioned earlier, you're sticking with the EBITDA margin target. I just want to -- if you can specify, the 50% EBITDA margin is on the fourth quarter? Or are you talking about the full year 2024? I'm just trying to get a sense of the extent of the improvement we should expect in the fourth quarter. Secondly, maybe some KPIs on your fixed broadband business. What is the subscriber base currently and the revenue perhaps in year-to-date nine months? And maybe a bit of insight about, yeah, the outlook for the full year. Yeah, those are my housekeeping questions maybe. And maybe perhaps later can post some other things.

Question: Niko Margaronis - BRI Danareksa Sekuritas - Analyst : Yes. Yes, Pak Nicky.

Question: Niko Margaronis - BRI Danareksa Sekuritas - Analyst : I was referring to fixed broadband, Pak Ritesh, sorry.

Question: Niko Margaronis - BRI Danareksa Sekuritas - Analyst : Okay. All right. Do you see problems with this [are there] issue? Is it very alarming? How we should factor it?

Question: Niko Margaronis - BRI Danareksa Sekuritas - Analyst : I see, Pak. I see. Maybe if I can ask an additional two more questions to Pak Ritesh. You mentioned earlier, there's another 2,000 new service points. Is it -- this took place in the third quarter? Or is it in the last nine months? And do you think it's going to grow further, this number?

Question: Niko Margaronis - BRI Danareksa Sekuritas - Analyst : Yes. And maybe one last question to -- yeah?

Question: Niko Margaronis - BRI Danareksa Sekuritas - Analyst : Yeah. There has been some media news talking about the potential divestment of your fiber cables. I think that was like last year. It was mentioned in Bloomberg. Now I think it's back again. Maybe you can give us a bit more information, if there is a specific time line? And what gain we should be looking at?

Question: Piyush Choudhary - HSBC - Analyst : Just one follow-up on Arthur's question regarding GPU as a Service. So the initial kind of GPUs have all been contracted out. What's your kind of strategy over here on ordering or committing to purchase more GPUs? Secondly, could you also tell us how is the margin outlook for this business given now you have signed contracts? Like what's the EBIT margin of this business?

Question: Piyush Choudhary - HSBC - Analyst : Excellent. Just Nicky, as you mentioned that it's a CapEx-heavy business, right? So that's why I was asking, what is the EBIT margin profile? Any color over there? Or you would like the business to scale first to talk about steady-state EBIT margin?