TOWR has released its 1H25 results. Headline 1H25 profit came in at IDR1.7tn (+3% y-y), in-line with our full-year FY25F projection. Our forecasts reflected the company’s financial post rights issue while the actual 1H25 results did not reflect that, as corporate action was done post 2Q25 (July 2025). 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 than the telecom sector, which could benefit from healthier pricing dynamics. Post results, we retain our Buy rating on the stock with TP unchanged at IDR1,150.

2Q25 results summary

● 2Q25 revenue reached IDR3.2tn (-1% q-q; +3% y-y), bringing 1H25 revenue to IDR6.4tn (+4% y-y). This accounts for ~50% of our FY25F revenue estimates.

● In terms of total tower sites, TOWR reported 35,825 sites (+1% q-q; +14% y-y). Total tenants rose to 58,158 (flat q-q; +7% y-y). This brings implied co-location ratio to 1.62x (a slight decline from 1.63x in 1Q25 and 1.72x 2Q24).

● 2Q25 EBITDA reached IDR2.6tn (-1% q-q; +2% y-y), bringing 1H25 EBITDA to IDR5.3tn (+4% y-y) and accounting for ~49% of our FY25F projections. This implies EBITDA margin of 83.3% (-20bp y-y). We think with a higher co-lo ratio as well as increased economies of scales, margins could improve further in the coming quarters.

● 2Q25 net profit stood at IDR849bn (+6% q-q; +5% y-y), bringing 1H25 profit to IDR1.7tn (+3% y-y) and accounting for ~47% of our FY25F projections

Valuation and risks

We derive our TP of IDR1,150 based on a DCF-based model, with a risk-free rate of 6.2%, a discount rate of 7.4%, a terminal growth rate of 1.0% and a beta of 1.0x, our WACC stands at 8.1%. At our TP, the stock would trade at 10.2x 2025F EV/EBITDA. Downside risks include adverse macroeconomic developments, irrational competition leading to lower rental rates, lower than-projected tower renewal rental rates, slower organic growth, higher opex trends and/or co-los, and/or difficulties in securing new sites to accommodate telecom operators' network expansions, as well as consolidation of cellular operators.

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)