MTEL has released its 1H25 results. Headline 1H25 profit of IDR1.1tn (+3% y-y) came in within our FY25F projections with the y-y growth largely due to an increased revenue from its fiber optic services. We remain positive on the tower sector’s long-term outlook (given rising data traffic). However, in the near term, we view the sector’s competitive dynamics as less favorable compared to those of the telecom sector, which could benefit from healthier pricing dynamics. Post results, we maintain our Buy rating on the stock with a TP of IDR750.

2Q25 results summary
● 2Q25 revenue reached IDR2.3tn (+3% q-q and y-y), bringing 1H25 revenue to IDR4.6tn (+2% y-y) and accounting for ~49% of our FY25F revenue estimate.

● In terms of total tower sites, MTEL reported 39,782 sites (+1% q-q; +3% y-y). Total tenants rose to 60,907 (+1% q-q; +4% y-y), bringing the implied co-location ratio to 1.53x (a slight increase from 1.52x in 1Q25 and 2Q24).

● 2Q25 EBITDA reached IDR2.0tn (+6% q-q; +8% y-y) – bringing 1H25 EBITDA to IDR3.9tn (+4% y-y) – accounting for ~50% of our FY25F projection. This implies EBITDA margin of 84.9% (+190bp q-q; +390bp y-y). We think that with higher co-lo as well as increased economies of
scales, margins could improve further in the coming quarters.

● 2Q25 net profit stood at IDR568bn (+8% q-q; +5% y-y) – bringing 1H25 profit to IDR1.1tn (+3% y-y) – accounting for ~51% of our FY25F projection.

Valuation and risks

We derive our TP of IDR750 based on a DCF model, with a risk-free rate of 6.2%, an equity risk premium of 7.44%, beta of 2.0x, and a terminal growth rate of 2.5%. At our TP, the implied FY25F EV/EBITDA is at 10x (compared to 8.4x at the current price). Downside risks include adverse macroeconomic developments that would reduce operators’ network expansions, irrational rental price competition, a higher tower rental churn rate, and difficulties in securing new sites to accommodate built-to-suit, and/or higher opex increases.

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general. 

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Erwin Wijaya (erwin.wijaya@verdhana.id)