Sector Update / Telecommunications / Click here for full PDF version
Author(s): Aurelia Barus ; Belva Monica
- We upgrade aggregate EBITDA growth to +7% yoy for FY26F and resulted in 4% CAGR FY24-27F amid stronger mobile ARPU outlook.
- Indonesia's growth and dividend yield are catching up with regional peers while still trading at a discount, supporting further re-rating potential.
- We retain our Overweight rating, with as our top pick for its fastest growth and strongest operating leverage.
Improved FY26F EBITDA growth on better mobile ARPU
We upgrade our FY26F aggregate EBITDA estimate by 3%, now forecasting 7% yoy growth (vs. 5% previously), driven by improving mobile ARPU amid a tad stronger household consumption (5.2% yoy in FY26F vs. 5.0% in FY25F), faster data usage growth and better data yield. Meanwhile, FTTH growth remains muted. Through 9M25, average monthly mobile data usage rose 11% yoy - 3% above our prior estimate, supported by improving network performance (download speeds of 28.5 Mbps, +22% yoy as of Dec25). In FY26F, we expect data usage growth of 9% yoy with data yield improving but still declining by 2% yoy. Overall, we raise our FY25-27F EBITDA estimates by 1-3%, lifting the sector's FY24-27F EBITDA CAGR to 4% (from 3%), with EBITDA margins gradually improving from 48% in FY25F to 50% in FY27F.
Costs highlight - pick-up due to 's integration cost
In FY26/27F, we estimate aggregate opex growth of 5%/0% yoy. Flat opex growth in FY27F reflects no additional integration costs or accelerated depreciation expected at . For , we assume integration costs of Rp2tr/Rp1.5tr and accelerated depreciation of Rp4/5.5tr in FY25/26F. For , we have not factored-in potential gain from efficiency pending management clarity. We also have yet included potential second ERP accruals by 4Q25F and any accelerated depreciation from the InfraCo spin-off, both of which shall have no impact to dividend. For , we assume normalized employee and marketing cost unless additional provision is booked in 1H26F.
Potential upside risks: M&A, restructuring, and additional dividend
For , the anticipated InfraCo spin-off (by end of 1H26), followed partial stake divestment, and potential asset disposals (e.g., AdMedika with a book value of Rp790 and a 2% stake in GoTo acquired at c.Rp6tr) could support higher long-term dividends. For , guidance for a higher FY26F DPR of up to 70% (vs. our 55% assumption), together with a potential sale of a 55% stake in its fiber assets, presents dividend upside risks. For , faster-than-expected integration progress and potential new collaborations could lift earnings and dividends.
Our OW rating is maintained; room for further re-rating
Indonesian telco operators trade at 5.1x EV/EBITDA FY26F with an FY24-27F EBITDA CAGR of 4% and dividend yield of 4%. Regional peers (India, Malaysia, Thailand) trade at 7.6-14.3x EV/EBITDA FY26F with -5% to 12% EBITDA CAGR and 0-4% dividend yields, suggesting rerating scope for Indonesian operators and narrow the valuation gap. Our top picks remain > > . preferred for its fastest EBITDA growth (9% CAGR FY24-27F) and strongest operating leverage. Our target prices are based on 7-9x EV/EBITDA FY26F, implying 47-64% upside from last close. Key downside risk is slower-than-expected mobile performance.
Sumber : IPS