TBIG has released its 1H25 results. Headline 1H25 profit of IDR823bn (+13% y-y) came in ahead of our full-year FY25F projection, largely due to lower financing and operational costs. 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 we believe could benefit from healthier pricing dynamics. Post results, we retain our Neutral rating on the stock with an unchanged TP of IDR2,175.

2Q25 results summary

● 2Q25 revenue reached IDR1.7tn (-1% q-q; +1% y-y), bringing 1H25 revenue to IDR3.5tn (+1% y-y). This accounts for ~50% of our full-year FY25F revenue estimate. Among key tenants, TBIG saw increased revenue from XLSmart (EXCL IJ, Buy) – more than offsetting the declined revenue from IOH (ISAT IJ, Buy).

● In terms of total tower sites, TBIG reported 24,056 sites (flat q-q; +3% y-y). Total tenants rose to 42,663 (flat q-q; +1% y-y). This brings implied co-location ratio to 1.78x (flat q-q, a slight decline from 1.81x in 2Q24).

● 2Q25 EBITDA reached IDR1.5tn (+3% q-q; +2% y-y), bringing 1H25 EBITDA to IDR3.0tn (+1% y-y) and accounting for ~51% of our FY25F projections. This implies EBITDA margin of 87.6% (+300bp q-q; +150bp y-y). This is slightly ahead of our FY25F margin assumption of 84.3%. We think with higher co-lo as well as increased economies of scales, TBIG’s margins could improve further in the coming quarters.

● 2Q25 net profit stood at IDR409bn (-1% q-q; +7% y-y), bringing 1H25 profit to IDR823bn (+13% y-y) and accounting for ~58% of our FY25F projections.

Valuation and risks

We derive our TP of IDR2,175 based on a DCF model, with a risk-free rate of 6.2%, cost of debt (after tax) of 5.3%, cost of equity of 14.4%, equity risk premium of 7.4%, WACC of 7.9%, a terminal growth rate of 2.5%, and beta of 1.1x. At our TP, the stock would trade at FY25F EV/EBITDA of 13.9x (compared to 13.5x at the current price). Downside risks include adverse macroeconomic developments, irrational competition leading to lower rental rates, lower-than-expected tower renewals, slower organic growth, higher opex trends and/or co-location, and/or difficulties in securing new sites to accommodate telecom operators' network expansions.

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)