ARTICLE

TLKM – Reported net income decreased by 7.8% yoy, missing estimates primarily due to a one-time expense In 1H24, Telkom Indonesia (TLKM) recorded growth of 2.5% yoy to IDR75.3 tn in revenue supported by the growth of data, internet & IT services at 9.2% yoy to IDR45.5 tn. EBITDA stood at IDR37.9 tn, with EBITDA margin at 50.3%. Meanwhile, by factoring out the early retirement program, its normalized EBITDA grew by 1.9% yoy with normalized EBITDA margin at 51.9%. Net income was booked at IDR11.8 tn with net margin stood at 15.6% during the period. Meanwhile, by factoring out the mark-to-market mainly from GOTO, early retirement program, and Telkomsel’s asset unlocking, TLKM operating net income grew by 4.2% yoy with operating net income margin at 17.3%. Telkomsel's total expenses surged 57.2% yoy to IDR30.4 tn, primarily driven by the Indihome integration's impact due to a new wholesale agreement. While this impact normalized quarter-over-quarter, ongoing integration efforts, coupled with cost optimization and synergy creation, yielded a healthy EBITDA margin of 46.8%. Management indicated that the integration process is still ongoing and will further enhance profitability in the future. Telkomsel reported a net income of IDR11.1 tn, up 3.2% yoy, which included non-operating gains from investments and asset disposals. Operating net income for the first half of 2024 reached IDR11.5 tn, demonstrating sustained profitability. (Source : Company). Comment : TLKM’s 1H24 revenue of IDR75.3 tn was relatively in-line with our/consensus expectations at 48.6%/48.7%. Personnel costs surged by 20.9% yoy/29.8% qoq, driven by a IDR1.24 tn early retirement program aimed at fostering youth talent and streamlining operations, which was a one-time expense. This accounted for 13.1% of total 1H24 personnel costs. Consequently, TLKM's 1H24 EBITDA reached only 46.9%/47.0% of ours and consensus’. The 1H24 net profit of IDR11.8 tn significantly underperformed both ours and consensus' by 45.9% and 45.6%, respectively. The primary reason for the missed net profit was a 1.8% qoq/7.8% yoy increase in finance costs.