Earnings call transcript: Indosat Q1 2025 sees net profit rise, revenue falls

Published 30/04/2025, 09:36
Earnings call transcript: Indosat Q1 2025 sees net profit rise, revenue falls

Indosat Tbk (ISAT) reported its Q1 2025 financial results, highlighting a mixed performance with a significant increase in net profit but a decline in revenue. The company’s stock saw a marginal decline of 0.26% following the announcement, reflecting a cautious investor sentiment. According to InvestingPro data, the stock’s RSI suggests overbought territory, despite trading at an attractive P/E ratio of 12.8x. With a market capitalization of $3.7 billion, Indosat’s strategic focus on AI initiatives and cost reductions were key points of discussion.

Key Takeaways

  • Indosat’s net profit rose by 27% quarter-over-quarter, driven by one-off gains.
  • Revenue fell by 3.5% year-over-year, despite a 1.4% increase on a normalized basis.
  • EBITDA margin improved, rising by 1.9 percentage points to 47.2%.
  • The company added 700,000 customers and increased ARPU by 0.8% to 39,200 IDR.
  • Indosat is investing in AI and digital services, expecting $35 million in new revenue from AI in 2025.

Company Performance

Indosat’s Q1 2025 results show a company navigating through a challenging market environment. While the decline in revenue may be concerning, the growth in net profit suggests effective cost management and strategic gains. The focus on AI and digital services is part of Indosat’s broader strategy to enhance its service offerings and drive future growth.

Financial Highlights

  • Revenue: 13.6 trillion IDR, down 3.5% YoY
  • EBITDA: 6.4 trillion IDR, up 0.6% QoQ
  • EBITDA Margin: 47.2%, up 1.9 percentage points
  • Net Profit: 1.3 trillion IDR, up 27% QoQ
  • ARPU: Increased 0.8% QoQ to 39,200 IDR
  • Net Debt to EBITDA Ratio: Improved from 0.4x to 0.36x

Outlook & Guidance

Indosat is committed to achieving a 10% growth in EBITDA for 2025. The company anticipates progressive ARPU growth and plans to add 100,000 fixed broadband customers in 2025. The potential spectrum auction for 1.4 MHz and 700.6 MHz is also on the horizon, which could impact future operations. InvestingPro’s comprehensive analysis shows the company maintains a "GREAT" overall financial health score of 3.2, with particularly strong metrics in profitability and growth potential. For detailed insights, investors can access the full Pro Research Report, which provides in-depth analysis of Indosat’s market position and growth trajectory.

Executive Commentary

CEO Vikram Sinha emphasized the company’s cautious optimism regarding ARPU growth and reiterated the focus on delivering a superior network and customer experience. "We want to ensure EBITDA grows faster than revenue," Sinha stated, underscoring the company’s strategic priorities.

Risks and Challenges

  • Revenue Decline: Continued revenue decline could pressure financial performance if not reversed.
  • Market Competition: Intense competition in the Indonesian telecom sector may impact pricing strategies.
  • Cost Sustainability: Questions remain on the long-term sustainability of current cost reductions.
  • Regulatory Environment: Upcoming spectrum auctions could introduce regulatory complexities.
  • Regional ARPU: Under-indexed ARPU in Indonesia presents both a challenge and an opportunity for growth.

Q&A

During the earnings call, analysts inquired about the use of GPU services, SIM card pricing strategies, and the sustainability of cost reductions. The management addressed these concerns, highlighting the strategic rationale behind each decision and reaffirming their commitment to AI compliance and regional expansion plans.

Full transcript - Indosat Tbk (ISAT) Q1 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to Probuphine TBK First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded.

I would now like to hand the call over to your first speaker today, Bae Inder. Please go ahead.

Bae Inder, Moderator/Investor Relations, Indosat: Yes. Thank you. Good afternoon, everyone, and thanks for joining us today. With us on the call today, we have Vikram Sinha, our Chief Executive Officer, Aniki Lee, our Chief Financial Officer, Paritesh Kumar, our Chief Commercial Officer and we also have our Chief Marketing Officer, Pavvivik Mehendarata, who joined us in October, joining us on the call today. I will now hand over the call to Pavvikram for his opening remarks.

Over to you, sir.

Vikram Sinha, Chief Executive Officer, Indosat: Thanks, Indir. Good afternoon, everyone. Let me start my presentation by sharing with you the highlight of our Q1 performance. Despite a challenging market environment in first quarter of the year, we managed to deliver a progressive set of numbers for the quarter with most financial and operation metrics improving quarter on quarter. We added 700,000 customers this quarter and more than 1,300,000 data unique users, as we see positive momentum on our subscriber base.

This is supplemented by our ARPU rising 0.8% quarter on quarter to R39,200. Revenue was slightly weaker during the quarter due to challenging market environment seasonality, but we performed well on the equal day basis. The biggest positive is that both our EBITDA and net profit grew by 16% quarter on quarter respectively, reflecting our focus on profitable growth. I have put something important in the slide, something which we have been consistently highlighting since our merger is the need for Indonesia to realize its potential and grow its mobile ARPU, which still remain under indexed relative to the region and very affordable as a percent of GDP. As an average USD 2.4 ARPU, it is important for us to realize this potential and IOH is ready to play its part by offering a world class network in customer experience and pursue more sustainable pricing in the market.

We have seen positive ARPU momentum continue in Q1 twenty twenty five where we have consistently grown our ARPU for last five years from a level of below R30,000 to now close to R40,000, which is an increase of 32% over the past five years. Our initiative we have implemented will continue to drive our ARPU growth through the rest of 2025 and beyond. This is through our implementation of AI across the business, which allow us hyper personalization initiative as well as smart CapEx and distribution, as our revamped postpaid product, iM3 Platinum, which is seeing good momentum. Finally, we have taken a bold step towards further sustainable pricing, where the SIM card price have been raised to R35,000 across both brands. This will promote rational and real subscriber net addition.

AI continued to be a core part of our DNA, guided by our AI North Star. As I spoke previously, part of our AI native tech co is embedding AI in across all parts of our business, from the customer experience to network experience to smart CapEx. Our AI Techco business is also doing well with revenue contribution to start in Q2 and we are confident of delivering USD 35,000,000 net new revenue in 2025. The new batch of NVIDIA GPU GB200 have been ordered and the service will be operational by Q3 twenty twenty five. That ends my presentation and I will now hand over to Niki for more detailed financial presentation.

Aniki Lee, Chief Financial Officer, Indosat: Thank you, Parvikram, and good afternoon everyone. As mentioned by Patrick Rem, we achieved progressive results for the first quarter in twenty twenty five. Overall revenue, 13,600,000,000,000.0 for first quarter, fell by 3.5%, mostly due to two day less in the quarter and low season effect. On the same day basis, the normalized change is around 1.4%. Below revenue, we have maintained our strong operational efficiency and profitability as we have reduced our total cost of services and OpEx by 22.2%.

This helped to uplift EBITDA by 0.6% to 6,400,000,000,000.0 and also EBITDA margin up by 1.9 percentage points. Going down the profit and loss, we got one off gain of around $250,000,000,000, propelling net profit to 1,300,000,000,000.0, up 27% from Q4. Excluding one offs, the normalized net profit is CHF1.2 trillion, up 6% quarter on quarter. And I will provide more details on these items later. In terms of net debt to EBITDA ratio, it dropped further from 0.4x to just 0.36x, reflecting primarily team’s effort on deleveraging our balance sheet.

If we move on to the next slide, focusing on the first quarter performance against the same period in 2024, reported revenue fell by 1.9%. Again, if we normalize for one extra day in 2024, which is twenty ninth Feb twenty twenty four, the two quarters actually came in with similar revenue. And in terms of reported basis, this revenue movement also explained why EBITDA dropped 1.4% year on year. The lower OpEx this year helped to cushion the impact on EBITDA level and also improved EBITDA margin by 0.2% to 47.2%, if I may pardon. Moving on to the top bottom line, we got an improvement of 1.3% as the one off provided an uplift to the bottom line.

Let’s move on to look at our cost. As mentioned earlier, we have managed to reduce our cost. And if you look at the individual lines, essentially, we have spend less across all lines when compared to the last quarter. Cost of sales experienced a 2.2% year on year increment primarily due to higher partnership costs associated with wholesale business, which were in line with the corresponding revenue movement. However, on a quarter on quarter basis, we saw a 5% decrease largely attributed to reduced installation costs and partnership costs associated with midi and wholesale business, which typically peaks in quarter four.

Personnel cost reduced by 16% year on year and 50% quarter on quarter, mainly driven by lower bonus and incentives. And this has also included 88,000,000,000 reversal of bonus provision following actual payment in the first quarter. We are also seeing significant reduction in marketing expenses by 2021% year on year and quarter on quarter respectively. This is attributable to lower level of activity, also with more focus on digital marketing. On G and A, it dropped by 5% year on year and 3% quarter on quarter, coming mostly from lower PR and also cost optimization impact.

In terms of depreciation and amortization, it increased 5% year on year, primarily driven by the addition of fixed asset, our continued investment in network and also right of use assets. On a quarter on quarter basis, these expenses were relatively flat. In the first quarter, we have significant one off gains from reversal of tax provision following a win in the tax supreme court decision in the company’s favor in the amount of hundred and 57,000,000,000, and we also get gain on disposal of dismantled asset around 100,000,000,000. These gains and provision reversal contributed to a total other operating income of $3.00 3,000,000,000 in first quarter. This reflects a sharp turnaround from Q1 first Q1 ’20 ’20 ’4 and Q4 twenty twenty four, which recorded other operating expenses of 11,000,000,000 and 61,000,000,000, respectively.

Let’s take a look at our CapEx. CapEx booking has increased year on year following some project booking slip from Q4 to this quarter, but it only amounts to 20% of our full year guidance for 2025. We do expect we will catch up in the subsequent quarters in the year. Net debt up from 6,700,000,000,000.0 to 9,300,000,000,000.0 year on year due mainly to mostly timing of payment leading to working capital movements, repayment of tower collocation incentives, and also funding for network rollout. On a quarter on quarter comparison, it dropped by over 10% as payments are lower for Q1 generally.

And there’s a quick summary for finance section. Now I’ll pass the time to Pavitesh.

Paritesh Kumar, Chief Commercial Officer, Indosat: Thanks, Niki. So quarter one, we have seen a growth of around 700,000 customers. ARPU also increased 0.8% to 39,200 now. And good thing is that we have been able to gain our data unique users in Q1 over Q4 by 1,300,000. Data traffic we saw some degrowth because of two days lesser in Q1 over Q4 and also some seasonality.

Our commitment towards keeping empowerment to Indonesia and keep on bringing good quality network experience for our consumers, we continue to invest our network, what Niki also talked about CapEx investment, and we are also including AI to make sure the customer experience are being well taken care of and we are putting the right investment in the right place focusing on customer satisfaction. So that’s all from my side. I’ll give it back to Indir.

Bae Inder, Moderator/Investor Relations, Indosat: Thank you. Thank you, everyone. Desmond, can we go to the first question on the question and answer queue?

Conference Operator: Certainly. Our first question comes from Piyush Chaudhary from HSBC. Please go ahead.

Piyush Chaudhary, Analyst, HSBC: Yes. Hi. Thanks for the opportunity. Could you talk a little bit about the outlook on mobile revenue growth on the back of recent initiatives, which has been discussed? When should we start seeing the impact of new startup pack, etcetera?

Secondly, you know, EBITDA has significantly yes, has improved quarter on quarter due to significant cost discipline, but a lot of these costs which have come down are discretionary in nature. So can we check the sustainability of this cost going forward and outlook for the margins? Thank you.

Vikram Sinha, Chief Executive Officer, Indosat: Hi. Hi, Piyush. This is Vikram. I think what what I spoke about in terms of fundamental, when you talk about mobile revenue growth, which is our core business and which is very important for us, the most important thing I want to highlight that there are two parameters which are in the right trajectory, one is the base movement and second is the ARPU. We will see this improving month on month.

This time, Lebron was also March. Especially March, we saw things coming back from a consumer sentiment also. And and we have taken action on starter pack, which will help bring more discipline not only for us and also for the industry. All these things on starter pack which we are doing will start reflecting from June. So I think what we see is a more progressive performance with the right trajectory here onwards on the core business.

In fact, on guidance on EBITDA, I will request Niki to share more on detail, but we stay committed on the guidance which we have given on 10% mainly because of two reasons or three reasons. One, core, we want to make sure we grow ARPU and I have spoken about it in my presentation, there is a clear opportunity, We are, as an industry, as an endosat, we clearly see there’s an opportunity and all our AI initiative, our data modeling, our whole thing, it takes some time. And again, we have been in this for three quarters. We have put use cases. Next quarter, there’ll be more use cases coming in.

But once your models and your platform is ready, we have taken a platform and domain approach. Then the use case scale up happened fast, and the approach is reusable, so we can do lot of scale up at the friction of a cost. So one is growing core, we stay committed on that. Second, EBITDA growing faster than revenue, we still have opportunity, we want to have cost leadership for growth and then you will see that continue that whatever revenue we are doing, we are very mindful that it has to flow into EBITDA, so we want to make sure from the core side also, we are driving EBITDA growth faster than revenue. And our AI business, what I spoke about, will start flowing in mainly from third quarter, fourth quarter in our PLN.

It will show up on midi revenue and then what we have already booked, we just need to start delivering. It will contribute to around US35 million dollars and this also comes with anywhere between 55% to 60% EBITDA margin. So when I put all these three things together, in a challenging environment also, as management team, we stay committed to our guidance of 10% EBITDA growth. But I’ll give it to Nikky on specific on Q1 questions.

Aniki Lee, Chief Financial Officer, Indosat: Hi, Piyush. Thank you for your question. I think in in terms if I would split your question into two part, one is on cost of services and and OpEx. So the only item I highlighted in terms of, like, accounting changes is in relation to the bonus reversal. But still, we get a pretty good, cost management impact on across all the other lines.

So we are seeing a lot of these good work would be sustainable. Yes. Below the below EBITDA at the other operating expenses, get some, again, some good input on managing tax issues as well as disposing some equipment that we don’t need. Right? So it’s not a one off thing for that.

We we continuously look at what equipment we don’t need, and we we dispose it and in booking profit on that. So it’s the the amount would go up and down, but it’s not a kind of a a one off exactly. We still see a lot of opportunities going forward in in across all the call lines or network, how we can optimize power consumption, deploy technology to reduce our not even beyond not even in OpEx. I remember we discussed about CapEx saving in the last quarter. So we we’re using AI for ways to optimize our network investment and make sure we only invest at the right time in the right place.

Right? So all these things we are seeing the benefits. More and more, we are getting the confidence that we’ll be able to drive cost down a bit, more definitely improving our efficiency going forward.

Piyush Chaudhary, Analyst, HSBC: Thanks, Vikram and Nikki. If I may clarify one thing, in the mobile segment, have reported subs have gone up quarter on quarter, and ARPU has also improved sequentially. But if I look at cellular revenue, that is down quarter on quarter. Can you help us reconcile this?

Paritesh Kumar, Chief Commercial Officer, Indosat: Yeah, thanks Piyush for the question. See, the ARPU reflects on the average number of quarters, while the subscriber at the end of quarter, how many subscribers we have. So during Q1, our subscribers started to increase from March and majority of the growth came in the month of March wherein we have added subscribers. So that’s how the number is stacking up.

Piyush Chaudhary, Analyst, HSBC: Got it. Thanks, Ritesh, for clarification. Thanks a lot.

Conference Operator: Thank you for the questions. Our next question comes from the line of Ranjan Sharma from JPMorgan. Please go ahead.

Ranjan Sharma, Analyst, JPMorgan: Hi, good afternoon and thank you for the presentation. Couple of questions from my side. Firstly, the the adjustment that you have talked about on the SIM card, is that broad based across the country? And can you also share if other competitors have followed through as well? Similarly, are you only making changes to the start up packs, or have there been any adjustments to the renew renewal plans as as well?

And lastly, on the AI CapEx side, can you help us can you remind us how much capital you are deploying in 02/2025 and 02/1926 to unlock those revenues?

: Thank you.

Vikram Sinha, Chief Executive Officer, Indosat: Hi, Ranjan. This is Vikram. So first on the SIM card, you know, on fifteenth March, we implemented, and then I think within two days, we saw everyone in the market, and it is broad based across. I think the good thing is it is bringing simplification in the industry. It is for us, it is both the brand and it is across the country, and same we have seen for others also.

So next on that, are you making changes? Yes. So so this is this is starter pack. Now, you know, when you look at our quarter four CapEx sorry, capacity in terms of data traffic and then you see our yield. So we we have been started using hyper personalization.

So we have been very rational on managing our traffic yield, which is more sustainable and which moves in the right direction. So we have not taken any headline price increase on the re buys and all. We feel there is an opportunity, but overall consumer sentiments were also very soft. We have been managing our data traffic, our yield for growing more sustainably through all these hyper personalization for now. Third question is on GPU, I think two things I want to call out here, last year we had invested, because our data center partner is BDX, where we have 25% equity, so we don’t have to put any CapEx on that, it is all done by our data center for data center requirement.

Where we put CapEx is on the GPU. So this year, we have ordered GB200, it is around 120,000,000 and the good thing is we have locked the customer, it is a multi year contract and then also we have taken a very conservative approach on this situation and all, So these are very value aggregating contract customers which we have closed and then you will see the impact of it coming Q3 onwards. This year it will be only four, five months, but next year onwards, you will see a full year impact of these contracts and business on AI cloud.

Ranjan Sharma, Analyst, JPMorgan: Okay. Thank you so much. If if I if I can have a quick follow-up. So with the changes that you have made in terms of pricing, how can we think of mobile industry revenue growth in 02/2025? Thank you.

Vikram Sinha, Chief Executive Officer, Indosat: I think it it these are early days, Ranjan. We have to be cautiously optimistic. But at least on the SIM card implementation, which we have done, we will see benefit coming from June onwards. But I think let’s wait for one more quarter. Personally, we see the right projection, but we should wait and watch more in terms of the industry revenue guide.

: Thank you.

Conference Operator: Thank you for the questions. Our next question comes from Sachin Mittal from DBS. Please go ahead.

: Yeah. Thank you. Park Vikram and Park Niket. Just to follow-up. So you said $120,000,000 has CapEx has been incurred already on the GPUs.

Right? I mean, is it a full year, or is the CapEx incurred so far? That’s question number one. And two other questions, meaning the cost side, 16% reduction in personal cost, which we saw. Do you think this is sustainable because of the base of, you know, the level which we are seeing this quarter?

Is are these sustainable levels of of personal cost and also on the marketing side? And the third question is on the EBITDA. When I look at the EBITDA by adding the depreciation and amortization to the operating income, I get much higher, you know, not 6.4, but 6,700,000,000,000.0 EBITDA. So what am I missing here in terms of why why the math doesn’t work in terms of adding? Is there some kind of one off or some changes there that better seems to be understated if we add the operating income and B and A?

Thank you.

Aniki Lee, Chief Financial Officer, Indosat: Start with Vikram. If I can start and you can supplement. On the first question, depending on what we get what what what new business we will get on the GPU side, we may need to incur we we do buy basically, what we are trying to do is not to buy GPU in advance, but then we will secure customer order first. So depending on what customer would order, then we will buy the GPU type accordingly from NVIDIA. Just so just so you’re clear, we customer order and contract, we’re talking about long term contract.

So we will make sure we get all of our investments plus a reasonable return on these contracts. So potentially, we may need to incur more, but that’s a good thing for us for 2025.

Piyush Chaudhary, Analyst, HSBC: Got it.

Vikram Sinha, Chief Executive Officer, Indosat: And So before just to add on this section, I think this is something, you know, is a new business for us, but it’s we are seeing because we got our factory up last year, and we got with h 1 hundred, and and we got support from NVIDIA on the allocation of GB 200. So this $120,000,000, we locked the customer. It is a three plus two five year contract, and then we we are getting it here and it will be ready for service by July. And as Nikki said, our approach has been, especially for regional global customers, to lock the customer first and then lock the data center readiness. We have strategic partners on data center, and then then make sure that, you know, we we order.

So that is the approach which we are taking.

Piyush Chaudhary, Analyst, HSBC: Got it. Thank you. So coming to

Aniki Lee, Chief Financial Officer, Indosat: Coming to Sachin, coming to your second question, as I highlighted earlier, we have a a bonus cost reversal in first quarter. Except for that, I think, whether it’s personnel or other marketing expenses, you also mentioned across different quarter, there would be some volatility, but overall, we see the cost base to be sustainable.

Ranjan Sharma, Analyst, JPMorgan: Got it. Thank

Conference Operator: you for the questions. One moment for the next questions. Our next question comes from Securities.

Vikram Sinha, Chief Executive Officer, Indosat: I think

Aniki Lee, Chief Financial Officer, Indosat: there is also a question on EBITDA. So I think Inder can help you. We’re working offline to there are certain item in other expenses that we need to be taken out. Yeah. But we can work with you offline, Sachin.

Conference Operator: Thank you for the questions. Next question comes from Sukriti Bansal from Bank of America. Please go ahead.

Sukriti Bansal, Analyst, Bank of America: Hi. Thank you, management, and thanks for taking my question. Couple of questions. Firstly, on the GPU as a service, you mentioned that once you get orders from customers, that’s when you start ordering the GPUs from NVIDIA. So, just to be clear, if the customer is asking, incrementally for GB 200, what kind of use cases, if you can, elaborate just a little bit, are those customers using these advanced GPUs for?

And, also, you mentioned these are long term contracts, but as new chips start coming in, given they are demanding for newer NVIDIA chips, will they do they expect you to keep progressing to newer NVIDIA GPUs over time? And, also, is there also any condition from NVIDIA, given that you have a partnership with them that you have to buy certain GPUs from them, or it could be anywhere from zero to any number that you wish to buy? And secondly, on the dividend, you know, can you give any kind of, you know, timeline on how you’ll be progressing to the 70% payout by 2027? What kind of growth will we be seeing over time?

Vikram Sinha, Chief Executive Officer, Indosat: Ricky, you can start with dividend, and then I’ll come to GPU.

Aniki Lee, Chief Financial Officer, Indosat: I was hoping you’ll do this first. It’s okay. So on on dividend, I I think you’re referring to the dividend policy we So so, basically, what we try to do is to to give the guidance that we will be paying dividend on a progressive basis in terms of both the amount and also the dividend payout rate with the expectation that we will continue to improve our business performance and deliver more profits going forward. But what see, last year, we the payout ratio is little bit below 50%.

Right? So what we are seeing in the space of three years’ time, from year ’24 to ’26, then we will be we will be improving we’ll be closing this 20% gap. Exactly how much in which year, we will need to figure out depending on different factor, which we also mentioned in the dividend policy note. So we’ll we’ll need to see, but 70% will be what we expect to pay out for the year 2026.

Vikram Sinha, Chief Executive Officer, Indosat: Hi, Sokriti. This is Vikram. So coming on to your first question on GPU, I think what what is important to understand is that last year, we got our Sovereign AI factory. And in NVIDIA, we worked very closely on making sure that the factory was up in October. What we saw, you know, there are there are two kind of demand.

One is domestic use cases, and for that sovereign domestic use cases, first you need to have the factory. So when we got the factory, we have seen some early wins, small number in order from banks, from mining companies, even some of the other startup companies, but the quantum of demand and the quality of power which is needed is not as advanced as GB. So all the Indonesia domestic demand, it is on L450, so we are putting most of the use cases which is domestic on L450. There are few of them who are on H100, but for GB200 and all, these are regional customers and these demands are training demands. The power of GB200 is cost per token is less than H100, so these are customers who so one of the example of this customer is they do weather forecasting, you know, at scale for Asia.

So some of these customers, when they train their data, they want the most latest one. So once we get the request, you know, we log the customer and long term contract. We have taken a very conservative approach on depreciation. I think Nikki can give more detail, but we we we have been taking a very conservative approach. In future, the first contract is locked.

In future, if they want something upgraded, they have to buy and order new one, so that is how it progressed. Specifically, NVIDIA and Accenture, they are working very closely with us on on helping us scale our sovereign AI factory. The help and support they are giving is how to create more domestic demand, more domestic use cases, especially with inferencing coming in. So that is where we are investing a lot of time with them, and they are giving us a lot of support.

Aniki Lee, Chief Financial Officer, Indosat: In terms of depreciation for these GPU chips, we are using five year. The actual use for life is significantly longer than that. So we have taken a relatively conservative treatment on that. On question number three, there is no commitment for us to buy whatever type or whatever number of GPUs from NVIDIA.

Sukriti Bansal, Analyst, Bank of America: Understood. Thank you, Baeshya.

Conference Operator: Thank you for the question. Our next question comes from Arthur Beneda from Citi. Please go ahead.

Arthur Beneda, Analyst, Citi: Hi, thanks for the opportunity. Two questions please. Firstly, on the GPU business, you’ve mentioned $35,000,000 in revenues booked over four to five months of operations this year and these are multi year contracts. Am I to understand that the revenue contributions from these contracts should basically more than double into the next year when you get full year’s worth of booking, or do the bookings tend to be lumpy? Second question I had is with regard to mobile.

When we look at this, it’s down q on q even though you have a seasonal peak of Liberan in the first quarter of this year. What’s driving down the revenues? Is this due to competition or reconsumption? Or are you seeing market share loss given activities from competitors? Thank you.

Paritesh Kumar, Chief Commercial Officer, Indosat: Yeah, so mobile revenue, as I said, in the month of March we saw towards the end of the month some growth coming as part of seasonality of leveron so we got some benefit in Q2 we will see some improvement coming against was happening on sim card price from R35,000 as Vikram also talked about in the month of June. And we don’t see any competition activity going up during the month of labor on, to be very honest. I think things are stable much better than what is the way before.

Vikram Sinha, Chief Executive Officer, Indosat: Yeah. So coming back to GPU business, sir, you are right. You know? So what we see this, the LCA 3035 is just part of this year. Full year twenty twenty six-twenty seven, these customers and the contract will deliver around 65,000,000 close to $40,000,000 EBITDA, both in 2026 and 2027.

Arthur Beneda, Analyst, Citi: Thank you.

Conference Operator: Thank you for the questions. One moment for the next question. Our next question comes from Aurelia Suthiabudi from BNI Securities. Please go ahead.

Bae Inder, Moderator/Investor Relations, Indosat0: Hi. Thank you for the opportunity. Congratulations, management, on the strong results in the first quarter. I would like to touch on the mobile business. Understand that the ARPU is being calculated as an average of the quarter, which was amazing at 39.2 rupiah, while the January, February number was supposedly to be on a weaker side.

And I would like to ask on the color. Well, moving into the second quarter, especially after the peak season of Labaran, how would you see the ARPU trending towards the month of April onwards, and especially with the increase in the start up pricing. Thank you.

Vikram Sinha, Chief Executive Officer, Indosat: Again, thanks. I think this is a very good question. I think Ditesh explained, but we are cautiously optimistic. We see progressive trend because Legrand also, we did not see the full Legrand impact, it was split in fact more on quarter two less on quarter one. So we are costlessly optimistic.

Our clear focus is to have progressive and if you look at my presentation, have explained that the ARPU in Indonesia is under indexed. So it is important that we deliver good network and customer experience, and we will be partnering with a lot of digital services to grow ARPU.

Bae Inder, Moderator/Investor Relations, Indosat0: Thank you, Patrick. If I may have one more follow-up question. Regarding the strong ARPU that we see in the first quarter and also moving into the second quarter, would you be expecting this to be, you know, the growth of ARPU will be coming from the ex Java regions? Or it’s still, you know, quite a balance between the growth, you know, of stabilizing ARPU in Java and also, you know, the growing business in and presence in X Java?

Paritesh Kumar, Chief Commercial Officer, Indosat: No. I think coming from outside Java also, reason being we have improving our network. And as Nikheev Vikram also talked about that we are improving our customer experience. So we have seen outside Java, the usage per customer is growing up. So that’s where we are more confident that nationwide we keep on increasing our ARPU.

Bae Inder, Moderator/Investor Relations, Indosat0: And then if you can comment on your, you know, standing or or market market share in in Java.

Paritesh Kumar, Chief Commercial Officer, Indosat: We cannot go through that detail. But marketing expenditure, if you mean then we are using more tools internally for marketing tools. And also with the Circle way of working, are more mindful and more have control on the on ground activities. That’s where the efficiency coming in, wherein Nikhil also talked about that those are sustainable ones. So that’s how we see them efficiency in marketing cost.

Yeah.

Bae Inder, Moderator/Investor Relations, Indosat0: Okay. Thank you so much, Pantesh.

Conference Operator: Thank you for the question. We have follow-up question from Ranjan Samar from JPMorgan. Please go ahead.

Ranjan Sharma, Analyst, JPMorgan: Hi, thank you. Just quick two follow ups. Firstly, can you remind us what percentage of your revenues comes from starter packs? And second is if you can give us an update on where we are with respect to the fiber restructuring that was announced last year. Thank you.

Paritesh Kumar, Chief Commercial Officer, Indosat: So around four to 5% revenues come from our starter pack, Rajan.

Vikram Sinha, Chief Executive Officer, Indosat: What was fiber carve out? Fiber carve out, you know, we are still in the process. I think quarter two end, we will have more update. So the process is progressing well, and then we have seen significant interest on on our fiber carve out project.

Conference Operator: We also have follow-up questions from Piyush Chaudhary from HSBC. Please go ahead.

Piyush Chaudhary, Analyst, HSBC: Yes, hi. Just two questions. Firstly, any kind of update on the spectrum auction timeline pricing, if you can update on that? Secondly, in the first quarter, MIDI revenue is down year on year. Though small, like, it’s down point 5%, but if you can tell us, like, what’s happening in the enterprise segment and the outlook for it without, you know, excluding the GPU as a service, just the core enterprise segment outlook.

Thank you.

Vikram Sinha, Chief Executive Officer, Indosat: Thank you, Piyush. I think this is also a very good question. So two part to it. I think especially the when we talk about maybe our our subsidiary, LintaSata and Indosat B2B. We have seen some softness and slowness on especially government projects, but still we are confident that core revenue for Meedi will be close to double digit growth.

And on top of it, when you have AI services, you know, I’ve already spoken about it. But what you see now is little bit of seasonality, and June onwards, it will pick up. We see a very strong line on b to b, you know, at least we have to plan for six months, so we see a very strong pipeline coming up. Okay. The second question was spectrum auction timeline.

So what what what I’m getting is that this year, 1.4, seven hundred, and 02/2006. So we will wait for the more clarity. We have got very positive signs that government is very mindful of how spectrum has to help the industry, but we have not got any specific detail. So I will not be able to comment on pricing. Broad timeline, what we are hearing that these three spectrums will be coming this year.

The first one will be 1.4 MHz and 702.6

Piyush Chaudhary, Analyst, HSBC: Great. Thanks a lot, Vikram.

Conference Operator: Thank you for the questions. One more for the next questions. Our next question comes from Sukriti Bansal from Bank of America. Please go ahead.

Sukriti Bansal, Analyst, Bank of America: Hi. Thanks again for taking my questions. A couple of follow ups. Firstly, on the X Java expansion, you know, you are still expanding. But in terms of competition, are you seeing lesser expansion from competition given, you know, they’ve undergone merger and are probably going to proceed towards some network integration.

Is that impacting competition in ex Java for you? Is it has it come off slightly? And second, second, on EBITDA growth, I think you did provide some clarity on the 10% growth outlook. But if you could just broadly talk about what percent of this 10% growth could come from ARPU growth, what should be cost optimization and operating leverage, broadly, that would be very helpful. And, also, if I could just squeeze in one more question, on the GPU as a service.

Any, you know, you mentioned regional, operators or regional use cases. Are there also some, MNC or US based use cases which could see some risk from the AI diffusion framework?

Vikram Sinha, Chief Executive Officer, Indosat: Let me start with, you know, the last question. So the good thing is whatever customer and contract which we have closed, it has no risks or anything in terms of compliance because Indosat, you know, for us, compliance and governance, our shareholder, both OG and CKHSN, they are very supportive on making sure that we are % compliant on these things. So there is no risk at all. We just need to deliver. What happens in future on AI diffusion law will define how much more we can close and grow in these contracts.

So we’ll have to wait for June if some changes are happening on AI diffusion. But as of now, all these are secured, it is compliant with AI diffusion laws, all regulation. EBITDA, I think I’ll repeat the same thing, I think first, we want to grow core revenue and when I say core, it is ARPU and sequential positive growth on piece. Cost leadership, what you heard from Mickey, we have started using lot of initiative not to cut cost, but to, you know, be more efficient on how we do the same thing with less. So whether it is on CapEx, we have seen some win.

There are a lot of other things on digital marketing, even on distribution. So we want to make sure that EBITDA is growing faster than revenue. So that whole piece supported by GPU as a service, which will flow, but still this year it will be small, mainly it will be driven by core business on ARPU and sequential base growth and a very well managed cost. We have some more opportunity on cost optimization on IT side and all, which is progressing quite well. And the first one, we are too focused on making sure we drive our agenda, so I’ll not be able to comment more on competition and what they are doing, but for us, we have a clear plan, we see clear opportunities across and yes, ex Java, we have to serve across Indonesia, people have expectations from Indosat that it should work everywhere.

Sukriti Bansal, Analyst, Bank of America: Understood. Thank you. Thanks, Vikram.

Conference Operator: Thank you for the questions. We will now take the next follow-up questions from Arthur Pinheida from Citi. Please go ahead.

Arthur Beneda, Analyst, Citi: Hi. Thanks for the follow-up questions. Two questions for me. Can I ask about the mobile pricing trends for top ups? Were there any increases on top ups for 1Q or 2Q by yourself or your competition?

I know you mentioned that starter packs have been increased, but I’m just wondering for the 96% of the business, is that actually improving? Secondly, on broadband, can we get some color on this business? If I look at fixed revenues, that’s down year on year flat to in queue. Are you not seeing any pickup in fixed broadband? As I recall, you had aggressive market share targets on this.

I’m just wondering why it’s not growing faster considering the low broadband penetration in Indonesia. Thank you.

Paritesh Kumar, Chief Commercial Officer, Indosat: We can say Arthur is that on data packages, industry is more rational, that is what we can see. We are actually looking at, from our side, our product strategy point of view, are looking at ARPU accretive pricing and that’s where we can see like Vikram also talked about the moment we increase the SIM card prices, it was being followed So we keep on focusing on delivering good service and keep on focusing on making sure ARPU is going to the right direction by giving them right pricing what they want and also more digital services. On fixed broadband, it was in stress this year but we are committed to achieve our number of around 100,000 net adds for 2025.

Vikram Sinha, Chief Executive Officer, Indosat: No. No. Please go ahead.

Arthur Beneda, Analyst, Citi: I’m just trying to understand, when you say data accretive packages, are you actually seeing direct price increases in the market or is this basically an upsell that you’re seeing in the market? Has anyone been actually raising rates? Normally, we see that going up towards Kebaran, but it seems like we didn’t see that this year.

Paritesh Kumar, Chief Commercial Officer, Indosat: So two way of looking at things, Arthur. One is increasing the prices. Second one is, are we being rational? That’s what I mentioned here. Right?

For example, some product is giving some benefit which is not good for the industry but we can see that some rationalisation happening on the benefits which are going. Price hike, as we said that we are actually looking at our product study which is more arco creative products, more hyper personalization and what comment we can make here is we can see lots of rationalization happening in the market.

Arthur Beneda, Analyst, Citi: Understood. Apologies for interrupting, Vikram. I don’t know if you’re responding to the question.

: I I think so so I I

Vikram Sinha, Chief Executive Officer, Indosat: wanted to help you understand. You know? I think the SIM SIM thing which we are doing, it is not only 4%. You know, it was pulling the core revenue also down. You know, when you have lot of SIM in the market and when SIMs are getting sold

Recharge, you know, it it really bring the table down for the core business also. So I think SIMs, June onwards, at least, that will benefit more rebuys. So overall, that will help move industry in the right direction. Second, just building on what Ritesh said, your observation is right, there was no headline price increase, but there are are a

: lot of

Vikram Sinha, Chief Executive Officer, Indosat: rationalization on how to optimize if you are giving something which you can manage it better, you know, it is getting more scientific at least in our case. So that is what we see now. And as I said, we have to be cautiously optimistic. We see that, you know, industry, at least March onwards, is moving in the right direction.

Arthur Beneda, Analyst, Citi: Understood. Thank you very much.

Conference Operator: Thank you for the questions. We have come to the end of the question and answer session. I would like to hand the call back to management for closing.

Bae Inder, Moderator/Investor Relations, Indosat: Okay. Thank you, Desmond. Thank you, everyone, for joining us on the call today. As always, if you need any further information, please reach out to myself. Otherwise, we’ll speak to you very soon.

Thank you very much, and have a good day. Bye.

Conference Operator: That does conclude today’s conference call. Thank you for your participation. You may now disconnect your lines.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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