XLSMART Telecom (EXCL IJ) (Neutral) - 1Q26 results in line

1Q26 results in line

EXCL’s 1Q26 results were broadly in line with our expectations at the operating level. The company reported a net loss of IDR717bn (-60.7% q-q; -286.4% y-y), which was largely anticipated given the ongoing integration phase following the completion of the merger in mid-April 2025. Management indicated that meaningful merger synergies are expected to materialize starting from 2Q27E, approximately eight quarters post-merger.

1Q26 marked the second consecutive quarter of operational improvement, underpinned by resilient performance of the Data/VAS segment, which remained the key revenue growth driver at IDR10.9tn (+0.5% q-q; +38% y-y). The improvement in data yield (+3.9% q-q; +1.5% y-y) more than offset the intentional contraction in the subscriber base, with total mobile subscribers declining 5% q-q to 69.4mn. This in our view reflects management’s disciplined quality-over-quantity strategy, including the removal of freebies, enforcement of a minimum starter pack price of IDR5,000–10,000, and the cleanup of inactive or sub-three-month SIM cards across XL, Axis, and Smartfren brands.

On the regulatory front, the mandatory biometric SIM registration requirement, effective July 2026, could introduce near-term uncertainty around subscriber headcount. However, EXCL’s earlier cleanup of low-tenure subscribers should help mitigate incremental downside risks. Meanwhile, participation in the upcoming 5G spectrum auction could further strengthen network differentiation and support long-term monetization opportunities. For FY26E, management guided for revenue growth broadly in line with industry expectations, with EBITDA growth projected to outpace revenue growth by roughly 2x, while capex is expected to remain elevated at approximately IDR15tn.

1Q26 results summary

Headline revenue came in at IDR11.8tn (-0.7% q-q; +37.4% y-y), accounting for ~24% of our FY26F projection. Growth was primarily driven by the Axiata-Smartfren merger consolidation , festive demand during the Ramadan/Lebaran period, and continued mobile ARPU expansion — up 6% q-q to IDR 47,300 — reflecting management's disciplined quality-first, price-rationalization strategy.
EBITDA came in at IDR5.4tn (+31.3% q-q; +25.0% y-y), accounting for ~25% of our FY26F projection. This is a meaningful improvement from the distorted 35% in 4Q25 (bloated by integration opex) — signaling the combined entity's cost structure is beginning to normalize..
The company reported a net loss of IDR717bn, which was somewhat expected. We think if the market repair momentum persists, broad top-line and margin improvements could continue in the coming quarters. These should be long-term positive catalysts for the stock, in our view.

Valuation and risks

Our TP of IDR3,300 is based on a DCF analysis, assuming a risk-free rate of 6.2%, an equity risk premium of 7.4%, and a terminal growth rate of 2.5%. This results in a WACC of 9.0%. Given the recent share price performance, we maintain our Neutral rating. At our TP, the stock would trade at 2026F EV/EBITDA of 5.5x (compared to 4.5x at the current price). Upside/downside risks include better/adverse macro conditions, higher/lower customer spending, more/less service price hikes leading to higher/lower data prices, and/or lower/higher opex.

Fig. 1: EXCL quarterly results

EXCL QoQ IDRbn	1Q25	4Q25	1Q26	Q-Q	Y-Y	2026F	VS FY26F
Gross rev	8,601	11,898	11,819	(0.7)	37.4	49,128	24.1
Cellular rev	8,188	11,106	11,117	0.1	35.8	45,853	24.2
- Data/VAS	7,887	10,815	10,864	0.5	37.8	41,877	25.9
- Non-Data	196	185	147	(20.5)	(24.9)	3,975	3.7

Op. inc	1,350	(1,214)	(103)	(91.5)	(107.7)	5,943	(1.7)
Margin %	15.7%	-10.2%	-0.9%			12.1%
EBITDA	4,321	4,116	5,402	31.3	25.0	21,558	25.1
Margin %	50.2%	34.6%	45.7%			43.9%


NP	385	(1,824)	(717)	(60.7)	(286.4)	249	(287.7)
Margin	4.5%	-15.3%	-6.1%			0.5%
EXCL Operational data	1Q25	4Q25	1Q26	Q-Q	Y-Y	2026F	VS FY26F
Total subs ('000)	58,900	73,000	69,400	(4.9)	17.8
ARPU IDR	40,000	44,800	47,300	5.6	18.3
Data traffic (PB)	2,848	3,998	3,867	(3.3)	35.8	16,751	23.1
Data yield IDR/MB	2.8	2.7	2.8
Data ARPU IDR	38,529	43,511	46,227	6.2	20.0
HomeConnect ('000)	1,020	940	940	0.0	(7.8)
Data (ex VAS)	7,887	38,568	10,864	(71.8)	37.8
Data as % of rev (RHS)	91.7	90.9	91.9	1.2	0.2
Capex	1,263	11,186	2,253	(79.9)	78.4
Capex as % of rev (RHS)	14.7	26.4	19.1	(27.7)	29.8
Net debt (cash)	43,368	60,161	58,584	(2.6)	35.1
Net debt to equity %	171	202	201
Net debt to EBITDA x	2.5	3.7	2.7
Total BTS	164,984	225,649	253,750	12.5	53.8
3G/4G BTS	115,542	165,530	183,505	10.9	58.8

Source: Company data, Verdhana estimates

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.

GENERAL DISCLOSURE/DISCLAIMER
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Rating Table

Rating Remains	Neutral
Target price Remains	IDR 3,300
Closing price 12 May 2026	IDR 3,100

Research Analysts

Erwin Wijaya (erwin.wijaya@verdhana.id)

Tags: TELECOMS, XLSMART Telecom, EXCL, EXCL JK, EXCL IJ, Erwin Wijaya

XLSMART Telecom (EXCL IJ) (Neutral) - 1Q26 results in line

1Q26 results in line

Fig. 1: EXCL quarterly results

Rating Table

Research Analysts

Erwin Wijaya (erwin.wijaya@verdhana.id)

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XLSMART Telecom (EXCL IJ) (Neutral) - 1Q26 results in line

Fig. 1: EXCL quarterly results

Erwin Wijaya (erwin.wijaya@verdhana.id)

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