TLKM has released its consolidated 2Q25 results, which in our view has yet to fully reflect the positive impact from ongoing market repairs in the cellular space given that price hikes for starter packages (SPs) have only become more visible towards the end of 2Q25. As such, the company reported 1H25 profit of IDR11tn that was behind our FY25F projection (accounting for ~45% of our FY25F projection). We expect the impact from price increases as part of market repairs will be gradual, specifically for renewal packages. We think quarterly earnings likely bottomed out in 2Q25, with recovery thereafter.

2Q25 results summary

● 2Q25 gross revenue reached IDR36.4tn (-1% q-q; -4% y-y) driven by lower cellular revenue, bringing 1H25 revenue to IDR73.0tn (-3% y-y) – accounting for 49% of our FY25F revenue expectation.

● 2Q25 EBITDA stood at IDR17.9tn (-2% q-q; -3% y-y), implying 1H25 EBITDA of IDR36.1tn (-5% y-y) at ~50% of our FY25F projection. This brings margin of 49.5% (-80bp y-y).

● 2Q25 net profit was IDR5.2tn (-11% q-q; -10% y-y) – implying 1H25 profit of IDR11.0tn (-7% y-y). This accounts for 45% of our FY25F profit estimate.

Overall soft 1H25 results can be largely attributed to weaker-than-expected cellular results (refer to tables inside for details). Post results, we reiterate our view on the growing needs for major cellular operators in Indonesia to push toward market repairs, as we think current service prices may not be sustainable for the industry.

Valuation and risks

We derive our TP of IDR3,650 based on DCF methodology, assuming a risk-free rate of 6.5%, an equity risk premium of 7.8% and a terminal growth rate of 1.5%. At our TP, the stock would trade at 5.2x 2025F EV/EBITDA (compared with 3.9x at the current price). Risks are adverse macroeconomics, lower data traffic growth, irrational competition, lower ARPUs, declining cellular revenue market share from outside Java and difficulties in securing new sites for network expansion.

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)