Telekomunikasi Indonesia

Stock Quote Telekomunikasi Indonesia - TLKM:

Business Summary

Telkom Indonesia offers a wide range of network and telecommunication services. These include include fixed wireline and fixed wireless telephone connections (CDMA), cellular services (GSM), network and interconnection services, as well as internet and data communication services. Telkom also provides services in information, media and edutainment, including cloud-based and server-based managed services, e-Payment and IT enabler services, Pay-TV, as well as e-Commerce and other portal services.

The company has become too large for the domestic market only and thus expanded its focus to international expansion in order to sustain growth. Telkom provides services in various countries, including Myanmar, Macau, Hong Kong, Malaysia, Taiwan, Singapore and USA.

Through its subsidiary Telekomunikasi Selular (Telkomsel), Telkom is one of the dozen Indonesian companies that compete to tap the lucrative Indonesian telecommunications market. According to data from the Indonesian Cellular Phone Association (ATSI), there were more than 250 million Indonesian cellular service subscribers (a number that exceeds the total number of Indonesians) in 2012. The large and young population in combination with its rising per capita GDP are reasons that Indonesia is one of the world’s most crowded telecommunication markets.

Telkomsel, the group's GSM and UMTS Mobile phone network operator, is the major revenue contributor for Telkom, accounting for about 60 percent of Telkom's consolidated revenues.

Telkom’s shares are traded on the Indonesia Stock Exchange (IDX), the New York Stock Exchange (NYSE), the London Stock Exchange (LSE) and publicly offered without listing in Japan (POWL). However, per 5 June 2014, Telkom withdrew from the London Stock Exchange due to the small proceeds obtained in combination with the high listing fee.

Telkom's Operational Highlights:

	2009	2010	2011	2012	2013	2014	2015	2016
Cellular Subscribers	81.6	94.0	107.0	125.1	131.5	140.6	152.6	173.9
- Prepaid (Simpati & Kartu As)	79.6	91.9	104.8	123.0	129.0	137.7	149.1	169.7
- Postpaid (KartuHALO)	2.0	2.1	2.2	2.1	2.5	2.9	3.5	4.2
Fixed Line Subscribers				26.8	16.1	14.1	10.3	10.7
Fixed Broadband (Speedy)	1.1	1.6	1.8	2.3	3.0	3.4	4.0	4.3
Mobile Broadband (Flash)				11.0	17.3	31.2	43.8	60.0
Blackberry				5.8	7.6	5.8	-	-

^{in millions
Source: Telekomunikasi Indonesia, Annual Report 2016}

Telkom's Financial Highlights:

	2010	2011	2012	2013	2014	2015	2016
Total Revenues	68,629	71,253	77,143	82,967	89,696	102,470	116,333
Operating Profit	22,937	21,958	25,698	27,846	29,206	32,418	39,195
Net Profit	11,537	10,965	12,850	14,205	14,471	15,489	19,352
EBITDA	37,549	36,821	40,215	43,626	45,673	51,415	59,498
Total Assets	100,501	103,054	111,369	127,951	141,822	166,173	179,611
Total Liabilities	44,086	42,073	44,391	50,527	55,830	72,745	74,067
Income per share¹	117,3	111,9	133,8	147,4	148,1	157,8	196,2
Dividend per share¹	64,52	74,21	87,24	102,40	89,46	94,64

^{in billion IDR rupiah, except stated otherwise
¹ in IDR rupiah
Source: Telekomunikasi Indonesia, Annual Report 2016}

Future Outlook of the Indonesian Telecommunication Sector

Indonesia is unique in the sense that mobile phones are the primary tool for telecommunication. Not only with regard to telephony but also in terms of internet usage. Mobile phones are used as main tool device to access the internet by Indonesians. Mobile phone penetration has surged from 20 percent in 2005 to - currently - over 80 percent (although about 30 percent of Indonesian subscribers hold more than one SIM card). This indicates that the mobile phone subscription market is heading towards saturation; growth in voice and SMS revenue is stagnating. Internet penetration, however, is relatively low, thus having ample room for growth in the near and middle term future. High-speed broadband services are now the new focus of telecommunication companies. However, profit from call services remains to be the primary source of income for Indonesian mobile operators.

Indonesia is also unique in the sense that the country is predominantly a voice market due to low voice tariffs set by operators. Over 60 percent of total revenue in the mobile service sector is derived from voice services, while the remainder comes from non-voice or data services. The growing popularity of smartphones, however, contributes heavily to the growing data revenues. According to data from Frost & Sullivan, a consulting firm, smartphone penetration in Indonesia will exceed 50 percent in 2015 from only nine percent in 2012. The firm believes that the Indonesian market is in the early to middle stage of data usage increase.

Due to the promising perspectives of the mobile phone sector in the last decade, a number of companies are in fierce competition for market shares. Out a total of 11 telecommunication operators, five companies control a combined market share of around 90 percent. These five are: Telekomunikasi Indonesia - and its subsidiary Telekomunikasi Seluler (Telkomsel) -, Indosat, XL Axiata and Bakrie Telecom. Competition has brought tariffs for mobile phone services down significantly, while a new group of subscribers (from the poorer segments of society) has limited spending capacity. Instead, companies now focus on data services (broadband services) and value added service to attract subscribers, both of which are estimated to grow by 35 percent up to 2014. In 2011, there were around 70 million mobile phone data services users. This is estimated to increase to 160 million by 2015.

Projection Telekomunikasi Indonesia's Future Corporate Earnings:

	2017	2018	2019	2020F	2021F	2022F
Net Revenue	128,256	130,784	135,567	130,222	134,972	143,106
Net Profit	22,145	18,032	18,663	20,441	23,804	26,673
EBITDA	64,609	59,181	64,832	68,764	73,757	79,480
P/E Ratio (x)	14.7	15.1	14.6	13.3	11.4	10.2
P/BV (x)	2.9	2.3	2.3	2.2	2.1	1.9
ROA (%)	11.7	8.9	8.7	9.1	10.2	10.9

^{in billion IDR, unless otherwise stated
Source: Trimegah Sekuritas Indonesia (19.10.2020)}