Earnings call transcript: Indosat Q2 2025 sees revenue dip, AI focus emphasized

Indosat Tbk, a prominent player in the Wireless Telecommunication Services industry with a market capitalization of $4.39 billion, reported its second-quarter 2025 financial results, revealing a slight decline in revenue amid challenging market conditions. Despite a 0.3% quarter-on-quarter revenue drop to 13.5 trillion IDR, the company remains optimistic about future growth, driven by its AI initiatives. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations. The stock price experienced a 1.76% decline following the announcement, closing at 2,270 IDR.

Key Takeaways

• Revenue for Q2 2025 decreased by 0.3% quarter-on-quarter.
• EBITDA increased slightly by 0.4%, with a margin of 47.6%.
• Indosat launched a sovereign AI cloud business and established an AI Centre of Excellence.
• The company revised its EBITDA guidance to low single-digit growth for 2025.

Company Performance

Indosat’s performance in Q2 2025 reflected a tough operating environment, with revenue falling 0.3% from the previous quarter. However, the company’s EBITDA showed a modest increase of 0.4%, demonstrating resilience in its core operations. The mobile customer base remained stable at 95.4 million, and the firm added 1.7 million monthly active users to its app.

Financial Highlights

• Revenue: 13.5 trillion IDR (0.3% decline quarter-on-quarter)
• EBITDA: Increased by 0.4% quarter-on-quarter
• EBITDA margin: 47.6%
• Normalized net profit: Above 1 trillion IDR (11.5% decline quarter-on-quarter)

Outlook & Guidance

Indosat revised its EBITDA growth guidance to a low single-digit range for the remainder of 2025, signaling cautious optimism about the second half of the year. The company’s financial health score of 3.19 on InvestingPro indicates GREAT overall condition, supported by strong profitability and growth metrics. The company aims to generate at least 35 million CHF in net new revenue from its AI initiatives, with a projected AI revenue of 70-75 million CHF in 2026. The AI segment is expected to achieve EBITDA margins of around 60%.

Executive Commentary

"We are expecting EBITDA growth for this year to be in the low single-digit range," stated Vikram Sinha, CEO of Indosat, emphasizing the company’s focus on steady growth. He also highlighted the potential of AI, noting, "The full year impact will be annualized around EUR 70 million minimum." Vivek Mehendirata, CMO, added, "We are moving towards a segment of n equals one," indicating a personalized approach to customer engagement.

Risks and Challenges

• Continued pressure on lower middle-class consumption could impact revenue.
• Market consolidation and rationalization efforts pose competitive challenges.
• The removal of discounts and freebies may affect customer acquisition and retention.
• Economic conditions in Indonesia remain a concern, with potential impacts on consumer spending.

Indosat’s strategic focus on AI and cost leadership, along with its efforts to stabilize the market, are central to its growth strategy as it navigates a challenging economic landscape.

Full transcript - Indosat Tbk (ISAT) Q2 2025:

Michelle, Conference Operator: Good day, and thank you for standing by. Welcome to the PT Endostat First Half 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. You will then hear an automated message advising you your hand is raised.

To withdraw your question, please press star, one, one again. Please be advised that today’s conference is being recorded. I would now like to turn the conference over to your first speaker today, Indar. Please go ahead.

Indar, Moderator/Introducer, PT Endostat: Thank you, Michelle. Good afternoon, everyone, and thanks for joining us today. With us on the call today, we have Pav Vikram Sinha, our Chief Executive Officer Panikki Lee, our Chief Financial Officer and Pav Vivek Mehendirata, our Chief Marketing Officer. I will now hand over the call to Parvikram for his opening remarks. Over to you, sir.

Vikram Sinha, Chief Executive Officer, PT Endostat: Thanks, Indur, and good afternoon, everyone. Let me start my presentation by sharing with you the highlight of our quarter two performance. Despite a challenging market environment continuing in the second quarter of the year, We managed a solid set of number for the quarter with our focus on customer engagement and profitability. Our customer number remained steady at close to 96,000,000 despite the SIM price increase, while we saw an increase in our own app users, which is evidence of the success of digital engagement strategy. This quarter was tough in terms of seasonality, being the post Labyrinth festival season.

As a result, we saw a moderate decrease in revenue and ARPU. But overall, both are still holding up well. Importantly, our EBITDA increased by 0.4% quarter on quarter and EBITA margin was also higher to 47.6% as part of our focus of making sure we deliver on profitability. If you look at the next slide, the first half of the year was important to establish more rational behavior in

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Vikram Sinha, Chief Executive Officer, PT Endostat: market with several market correction measures. These include rising of the SIM price, removal of freebies and discount, which our CMO, Vivek, will talk in greater detail in his presentation. Market consolidation is also a positive and helping to promote more rational behavior. Finally, for IOH, we are seeing that our AI engine is powering our growth with better customer engagement and optimization. All these factors will drive our growth in 2025.

If you go to the next slide, we continue to play our role in shaping Indonesia future in connectivity and AI. Thus far this year, we have spent USD 400,000,000 in CapEx, adding more than 20,000 BTS till date. This has also been recognized by external parties such as OpenSignals, where we have scored well on experience metrics as part of our mantra on an experience first approach. Our role as the key part of the AI ecosystem for Indonesia continues with the establishment of Indonesia AI Centre of Excellence in collaboration with Comdigi, NVIDIA and Cisco, in line with our commitment to develop AI in Indonesia. Looking at the next slide.

Continuing the theme of AI, we are seeing strong momentum on our AI driven tech co, which continued to gain traction in the market. We are on track to deliver 35,000,000 in net new revenue for 2025, which will meaningfully contribute from 2025. Our GB200 Blackwell are now operational and we are one of the first to go live in Asia on GB200. We now have more than 20 customers on our sovereign AI cloud business. Everything that is connected must be protected, and hence, we have built a security operations center along with Cisco, which will add to our security stack.

That ends my introduction, and I’ll now hand over to Niki for more detailed financial presentation. Over to you, Nikky.

Niki Lee, Chief Financial Officer, PT Endostat: Thank you, Perfect Quan. I am delighted to report a solid set of numbers for the first half given the challenging market environment so far in 2025. If we move on to our financial performance slide. Overall revenue for quarter two remained resilient at GBP 13,500,000,000,000.0, small decline by 0.3% due to lower spending post laborer period. We have sustained our cost leadership strategy to drive growth and enhance profitability, achieving a 1% quarter on quarter reduction in total cost of sales and OpEx.

This helped to uplift EBITDA by 0.4% and EBITDA margin by 0.4 percentage point quarter on quarter. If we move down to net profit, we deliver a normalized net profit above 1,000,000,000,000. This was 11.5% lower quarter on quarter due to one offs operational other income of 180,000,000,000 in Q1, which stemmed largely from disposal of dismantled assets and early site terminations. If we would exclude this non recurring item, net profit would have been higher by approximately 5% on a quarter on quarter basis. The final line on this slide, net debt to EBITDA ratio increased by 0.13x to become 0.49x, primarily driven by continued CapEx investments to deliver mid to long term growth.

Let’s move on to the next slide. As highlighted earlier, in the first half of this year, reported revenue declined by 3.1 year on year, reflecting a challenging market environment so far this year. This revenue contraction contributed to a 4.2% year on year reduction in EBITDA. As a result, EBITDA margin dropped 0.5% to 47.4%. The margin decline was partially offset by ongoing cost leadership assets, which help preserve profitability amid top line headwinds.

The bottom line reflected a similar trend, with reported net profit declining by 14.6% Y o Y to 2,300,000,000,000.0. This again was largely the impact coming from softer revenue and a small increase in depreciation and amortization expense during the period. Moving on to cost. In the second quarter twenty twenty five, we further sharpened our focus on cost leadership to support growth, resulting in improved spending discipline across most cost categories. This led to a 1% Q o Q reduction in total costs.

On a Y o Y basis, total cost of services and operating expenses declined by 2% compared to the 2024, underscoring our continued commitment to cost discipline and prudent cost management. We also benefited from operational one off for vendor credit notes, uncertain cost reversals. On cost of sales, we experienced a 2% Q o Q increase, primarily due to increased installation and partnership costs linked to median VAS revenue performance. On a year on year basis, the cost of sales saw a 4% increase, mainly due to higher partnership costs associated with wholesale business, international SM A2P content provider cost and installation cost, which were in line with the corresponding revenue movements. Personnel cost reduced by 14%, mainly driven by lower bonus and incentives.

On a Y o Y basis, personnel costs declined by 23%, reflecting the same underlying factors. On to marketing expenses, it declined by 10% Q on Q, primarily due to the seasonal impact of higher spend for Alamedaan and our brand campaigns in first quarter. Comparing to last year, our marketing spends decreased by 19%, reflecting a shift toward more targeted and cost effective digital marketing initiatives. G and A expenses reduced by quarter on quarter and year on year by 1013%, respectively, primarily due to lower professional fees and public relation expenses, again reflecting our efforts on cost control. Depreciation and amortization expenses, up by 3% quarter on quarter and year on year respectively, primarily driven by the addition of fixed assets from the network rollout.

In quarter two this year, our other income expense was a $3,000,000,000 net expense compared to a PHP $3.00 3,000,000,000 income in last quarter. This variance was primarily attributable to one off operational gain recognized in Q1 as highlighted in the previous call. On year on year basis, other operating income increases from $81,000,000,000 in 2024 to $300,000,000,000 in 2025, again, to one off prior year tax reversal and gain from early termination of site leases in the first half of the year, in the first quarter, mostly. If we now look at CapEx on the left hand side of the chart, it has gone up by 85 quarter on quarter to RMB4.8 trillion, reflecting additional investments in network quality, expansion of network and GPU infrastructure to support our strategic growth initiatives. Consequently, first half CapEx now represents 57% of our full year guidance, indicating strong execution momentum in line with our investment roadmap.

Net debt, up from GBP 9,300,000,000,000.0 to GBP 12,500,000,000,000.0 quarter on quarter basis, driven by higher CapEx investment and finance lease payments. As a result, net debt to EBITDA also up by 0.13 times, as highlighted earlier, to 0.49, still remaining in a very healthy level. That’s it for me. Now I’ll pass the time over to Vivek.

Vivek Mehendirata, Chief Marketing Officer, PT Endostat: Thank you so much, Niki. A very good afternoon to everyone on the call. Let me just walk you through the operational metrics. So as far as the trends are concerned, they continue to be healthy and much more stabler despite the seasonal headwinds. What’s important to note is that Labyrinth this year was in quarter one, and quarter two was the actually involved the post Lebanon period.

Mobile customers continue to stay flat at 95.4. We’ve seen a very healthy addition in app monthly active users. This number has moved northwards, and we’ve added around 1,700,000. And this is also translated into robust traffic growth. On the ARPU side, there’s it’s it’s ballpark in the same range as it was in the range of circa 39,000 and has been steady.

If you were to move to the next chart, this is important. Vikram spoke about it. And this chart actually talks about the market stabilization efforts that got initiated in quarter one and have flown through in 2025. Starting with starter packs. So the entry point of the starter pack has been uplifted to 35,000, and this happened in late quarter one.

Quarter two witnessed liquidation of old market stock, and the full impact of this is likely to flow in in ’25. As the acquisition market got more cleaner and better, the base pricing also saw an uplift and the entry price of the rebuy plans also moved up by approximately 10%. This was also accompanied with some sharp hyper personalization efforts, that have also, powered affirmative pricing with the removal of, those and discounts that were being extended for base engagement, at the time of the hyper competition in the acquisition market. If you were to move to the next chart, this essentially talks about how at EndoSat we’ve been able to leverage AI for ARPU enhancement and base engagement, and the time trended numbers over the past ten quarters talk about it in deep detail. The most important call out here is us bucking the seasonality post Lebron in FY ’25.

So if you were to look at previous years, the degree of slump post Lebron is much less this year. And the APU effort, in addition to hyper personalization powered by AI is also being being powered by enhanced high value focus, especially on the I m three platinum side and on the international roaming arena as well. So that’s largely, the update from my side. Handing it back to Vikram.

Vikram Sinha, Chief Executive Officer, PT Endostat: Thanks. Thanks, Vivek. Finally, on the guidance, we have made a change to our full year EBITDA guidance recalibrated to align with market conditions. We have we are expecting EBITDA growth for this year to be in the low single digit range. This is driven by the challenging market condition, which have lasted longer than we had anticipated.

Nevertheless, we do expect to see a stronger second half of the year, which will bring growth back to the industry and for IOH. No change on revenue guidance, which is for revenue to grow better than market. This year, the CapEx guidance, which is for trillion dollars $20.25. So with this, we conclude our presentation. Thank you, and let’s proceed to Q and A session.

Michelle, Conference Operator: Thank Our first question is going to come from the line of Piyush Chaudhary with HSBC. Your line is open. Please go ahead.

Piyush Chaudhary, Analyst, HSBC: Yeah. Hi. Thanks a lot for the opportunity. Good afternoon, management team. A couple of questions.

Firstly, if you can talk about the outlook for prepaid ARPU and in particular, when these changes have been done on removing discounts or freebies? And when did you implement the 10% price up in the entry level recharge packs? Secondly, on the cost side, Niki, you briefly mentioned, but what is driving such a decline in the staff cost despite of increasing number of employees and how much is this sustainable? Secondly, within the cost of services, we saw rental and services cost was down 8% quarter on quarter. Is this any one off or is this sustainable?

Thank you.

Vivek Mehendirata, Chief Marketing Officer, PT Endostat: Okay. So let me let me start and let me hi, Piyush. Vivek, this side, so let me start with your with the first question that you’ve posed to us with respect to prepaid ARPU. So prepaid ARPU directionally, Piyush, as you’ve seen, is moving in the range of range towards 40,000, and we are more than sure footed that it’s going to get there no sooner rather than later. And the steps that have been taken are testimony of the point that I’m making.

As far as the removal of discounts and freebies are concerned, so Piyush, this is something that has been in play throughout the quarter. And this this has been done gradually and it is something that’s still still in progress and there’s always room for improvement there. But as far as the structural headline pricing is concerned, the 10% price up on the entry level plans, which is purely the entry level plans, was affected in the second fortnight of June. So impact of this is going to fully get recognized starting quarter three.

Niki Lee, Chief Financial Officer, PT Endostat: On the cost side, Piyush, essentially the movement in the staff cost is to do with bonus and incentives. So if we do better in the second half following what we expect to see, we might see the cost go up. Onto rental expenses, we we do have a bit of a discount given by our provider. So we have captured that in the second quarter. So going forward, we we do see the costs to be sustainable given the reduced cost base.

Piyush Chaudhary, Analyst, HSBC: Got it, Nikki. Thank you. And and, Vivek, just to follow-up on your response, on the entry level prices which were up 10%, how much of your revenue contribution comes from these entry level packs?

Vivek Mehendirata, Chief Marketing Officer, PT Endostat: So so, Piyush, the entry level packs contribute approximately third of our overall revenue, and the entry level prices that have been rationalized are for the monthly packs, while we maintain status quo on the the smaller ticket offerings.

Piyush Chaudhary, Analyst, HSBC: So not the entire one third of revenue will be impacted by this change which we have done?

Vivek Mehendirata, Chief Marketing Officer, PT Endostat: So so, Piyush, as far as the structural price price correction is concerned, at a headline level, it is 10%. But how much of it translates into real gains is something that will unfold as as we as as we get to see that in in in the balance part of quarter three because of of the movement of customer to different price plans.

Piyush Chaudhary, Analyst, HSBC: Got it. Thank you.

Michelle, Conference Operator: Thank you. And one moment as we move on to our next question. Our next question is going to come from the line of Sachin Mittal with DBS Bank. Your line is open. Please go ahead.

Sachin Mittal, Analyst, DBS Bank: Yeah. Thank you. Good afternoon, management. Two questions. So firstly, on the guidance that from a greater than 10% to now low single digit, is it all because of the revenue or it’s also a bit of, you know, some margin issues, you know, from some side of the business?

Because I mean, has there been a material decline in the revenue growth for this year? That’s something I want to understand. And how why it has changed in one quarter so much? The question number one. And question number two, we’re talking of 35,000,000 new AI revenue.

How much have we I mean, do we know how much is our first half AI revenue, if any? And is there a change, you know, is it I mean, is there a change in margin assumption of the AI revenue or something else, which is also a factor in the EBITDA, maybe we can download? Thank you.

Vikram Sinha, Chief Executive Officer, PT Endostat: Sachin. This is Vikram. I think it is mainly coming from B2C prolonged market condition because B2C, we were expecting things to pick up from overall consumption in Q2 much better in our assumptions. So that has been prolonged. Last three months, we have seen especially lower middle class still struggling optimizing.

So that has been the main driver of the guidance revision on EBITDA. All the other, more or less, we are on track, especially on the new net revenue on AI Cloud. I think only 15%, 18% have been realized in first six months. Most of them will start flowing from quarter three, and you will see quarter four also. And we will see the full impact of this starting next year for the full year impact.

So in terms of guidance, it is mainly because of the prolonged slowness in the market on B2C side.

Sachin Mittal, Analyst, DBS Bank: So got it. So when you’re talking of 35,000,000 new net revenue, which is mainly happening in 3Q and 4Q and probably more in 4Q, so we’re talking of definitely you know, maybe 70 to 100,000,000 kind of AI revenue next year. I mean, just I I know I mean, difficult to put a number, but, directionally, we’re talking of more than doubling of the AI revenue, right, next year?

Vikram Sinha, Chief Executive Officer, PT Endostat: 100%. These are annual long term contracts. So the minimum full year impact for next year will be around CHF70 million, CHF75 million positively on revenue. And these are coming with healthy EBITDA margin.

Sachin Mittal, Analyst, DBS Bank: Which is exceeding, I would say, 60% kind of, right, ballpark?

Vikram Sinha, Chief Executive Officer, PT Endostat: I think Niki can give more update on that. But as I said, one, yes, the full year impact will be annualized around EUR 70,000,000 minimum. And as we go along, there’ll be more contracts getting signed. And on EBITDA, I think Niki can add to that.

Niki Lee, Chief Financial Officer, PT Endostat: Sachin. On EBITDA margin is around 60%, as you mentioned, although the different contract services involved will give us varying level of margin, but overall, that’s the kind of EBITDA margin we’re looking at.

Sachin Mittal, Analyst, DBS Bank: Got it. Thanks, Vikram and Nikki. Thank you.

Michelle, Conference Operator: Thank you. And one moment as we move on to our next question. Our next question is going to come from the line of Arthur Pinata with Citi. Your line is open. Please go ahead.

: Hi. Thanks for the opportunity. Just wanted to ask about the consumption trends into the third quarter. Are customers actually spending upwards to match the price increases, or does it remain challenging into QQ? I understand that you raised prices on starter packs and on the top ups, but are customers actually absorbing this and actually driving up revenues based on the early months?

Thank you.

Vikram Sinha, Chief Executive Officer, PT Endostat: Arthur. We have seen some positive trends, especially starting June, mid June, and that continued in July. Vivek, you want to add anything?

Vivek Mehendirata, Chief Marketing Officer, PT Endostat: No. So Vikram, you’ve captured it well. So as far as the consumption trends are concerned, we are seeing customers moving to the higher plans. And like I had shared with Piyush, whenever there is a headline price correction, customers, there is a set that moves up and there is a set that right adjusts the spend to the lower ticket prices, which are essentially the sachet plans. So that’s that’s there, and consumption consumption has been steady.

As as far as the the early trends are concerned, this is getting absorbed really well in in the consumer base, and we can we can see it from, and it’s also evidenced in the steady consumer based numbers and also the the movement in, the AppMouse.

Ranjan Sharma, Analyst, JPMorgan: So so if we look

: at it from a revenue perspective, we should see some improvement on a quarter on quarter basis into 3Q and 4Q. How we should think about this?

Vivek Mehendirata, Chief Marketing Officer, PT Endostat: For for Okay. For sure. For sure. For sure. This is going to translate steadily into, quarter three.

: Understood. Okay. Thank you.

Michelle, Conference Operator: Thank you. And one moment for our next question. Our next question is gonna come from the line of Ranjan Sharma with JPMorgan. Your line is open. Please go ahead.

Ranjan Sharma, Analyst, JPMorgan: Hi. Good evening, and thank you for the presentation. Two questions from my side. Maybe I could take them one by one.

Sachin Mittal, Analyst, DBS Bank: If I look at your EBITDA

Ranjan Sharma, Analyst, JPMorgan: guidance, UNIFI assumed UNIFI assumed 2% growth in EBITDA, I still come to a quarterly run rate for EBITDA of around 7,000,000,000,000 in the third and fourth quarter versus 6.4 quarter $66,400,000,000,000.0 in the first and second quarter. So that’s about a 10% jump in EBITDA. Is that is the math correct? Is that is that the level of jump you’re seeing in EBITDA in the coming quarters?

Vikram Sinha, Chief Executive Officer, PT Endostat: Yes, yes, Ranjan. Directionally, your math numbers are correct. It is supported by two things. One, the trend which we are seeing building up on B2C side, we will we are seeing quarter on quarter growth on revenue on B2C, which is extremely important and supported by all the net new revenue on AI cloud, which I spoke about. So overall, your math is directionally correct.

Ranjan Sharma, Analyst, JPMorgan: Okay. That’s clear, Shneur. The second question is on the investment that you’re making on the network, I still see that a lot of base stations are create getting created for two g. Why would that be the case that you still need to make two g investments? I mean, most a lot of countries are now moving to shut off two g and three g.

Vikram Sinha, Chief Executive Officer, PT Endostat: Yes. So two gs comes free with four gs nowadays. We are not we have shut down three gs completely. But two gs, we have not shut down to support there are a lot of handsets which come with two slots, and one slot is two gs. So still in a country like Indonesia, the handset play there is significant number of handsets.

But more important, we are not investing on two gs. We are investing on four gs and upgrading to five two gs comes as a package free of cost. Whatever is the current investment historically, we are just leveraging on that.

Ranjan Sharma, Analyst, JPMorgan: All right, got it. Got it. Thank you so much.

Michelle, Conference Operator: Thank you. And one moment for our next question. Our next question comes from the line of Raymond Koshy with Verhana Sarikis. Your line is open. Please go ahead.

Raymond Koshy, Analyst, Verhana Sarikis: Yeah. Thank you, management, for the call. I have a couple of questions. First one is, since the market repair that has taken place since end of first quarter, can you give us a color about your current July prepaid ARPU is running? I just want to get a sense how much it has improved.

Second question is, at least as part of the market repair, which is can be very, very complex. We think product simplification is very important. So can you just give us a color how much simplification you guys have done? I don’t need the exact number. Let’s say, if you have 200 at the beginning of the year, how much the product has CV five, maybe say 50% or 30%.

I just want to get a sense where we are in terms of the product simplifications. Third questions. Can you give us an update about your FTTH business? And then the last two is status of your fiber sales as well as the last question is the monthly active users for your apps is only roughly 50%. Yeah.

This, in my opinion, is below what I have that you do doing to increase the apps. That’s it for me. Thank you.

Vikram Sinha, Chief Executive Officer, PT Endostat: Hi, Parimand. This is Vikram. Let me start with FTTH and fiber sale, and then I will request Vivek to build on some of the ARPU and simplification. On FTTH business, Pareeman, I think last quarter was the first quarter we saw our base going up. We have been stagnant on this because of our IT integration, billing integration.

So from here, you will see a better momentum on net add and steady momentum on net add. I think Q2 was the first quarter where not a big number, but we were around positive by close to 20,000 on new net customer added. And that trajectory will continue. On fiber sale, as we said earlier, we had seen very good response and we have zeroed down to two shortlisted parties and we are working on all the other terms and conditions so that we conclude it in the best interest of IOH. So maybe if everything goes well, we should be able to close this in quarter three.

Vivek, you want to give more color on some of these repair and product simplification?

Vivek Mehendirata, Chief Marketing Officer, PT Endostat: For sure, Vikram, and good afternoon, Parimon. So I’ll first take the question on market repair that has taken place since ’1 and how is it how is it unfolding now? So ’1, just just to give some color and put things in perspective, ’1, we started with the the acquisition repair, and the the own waste repair started around July June, which is ’2 in the in the in the second fortnight of that. And so far, it’s holding up very well. And as far as the July numbers are concerned, we are moving it’s yet to get closer.

We are moving in the right direction, closer to our stated ambition. And all I can share with you is that it’s it’s looking healthier than quarter two. So that’s that’s on the question on ARPU. As far as product simplification is concerned, extremely valid call out. This is something that’s ongoing exercise.

It’s it’s constantly in play. It’s also our endeavor to rationalize the listed price packages, and a lot of work is is happening on this front. But at the same time, what’s also worthy of mention is our entire endeavor and play for hyper personalization. So where where AI is powering our our entire CVM practice, and we are we are moving towards a segment of n equals one. So so there there’s a very judicious balance that’s that’s being worked out between between these two, and that’s that’s largely what it is.

As far as the last question that you have is on the AppMouse. So my comment here would be, if if you were to refer to the presentation, we are moving northwards. We are getting better every quarter. That’s what we are obsessed about. How do we beat our previous quarter number?

And to improve this, there’s there’s a lot of work that’s happening on the simplification of journeys, the simplify simplification of the product portfolio, the entire look and feel, and how do we power power our customer journeys through hyper personalization, which which eventually is going to lead to more engagement and make our apps, both my I m three as well as the BEMA app, the most preferred home for for customers.

Michelle, Conference Operator: Thank you. And one moment as Sorry. We move Go ahead.

Indar, Moderator/Introducer, PT Endostat: Sorry, Raymond. Hope that answers your question.

Raymond Koshy, Analyst, Verhana Sarikis: Thank you. Yes.

Indar, Moderator/Introducer, PT Endostat: Thank you. Thank you, Raymond.

Michelle, Conference Operator: Thank you. One moment for our next question. Our next question comes from the line of Sukiti Benzow with Bank of America. Three

Indar, Moderator/Introducer, PT Endostat0: quick questions from my side. Thank you, management, for the call. Firstly, on the older starter packs, they’ve now is it right to assume completely been cleaned out, and we’ve completely moved on to the new starter packs at the 35,000 IDR level? And if you could also quickly touch upon what’s the latest on competition, if not on the starter packs, on the overall rebuy packs. And from the macro side, of course, you mentioned that the lower middle class was still struggling a little bit in even in two q.

Has how has that changed, and how do you see that changing going forward? The second question on fiber broadband, can you quickly update what are some of the key things we’re looking to achieve? Are there any numbers that you can share on where we intend to be in the next by the end of this year, next two to three years? And last question is on the auctions. Any update and any thoughts on how we are looking at them?

Vikram Sinha, Chief Executive Officer, PT Endostat: This is Vikram. On Starter Pack, I think what we see, not only us as an industry, 75% old stock have been liquidated. Still there are 15% to 25%, which we feel will get liquidated in quarter three. So that is the status. Overall, I think the overall competitive environment is moving in the right direction.

We see more rational work and I highlighted in my presentation also, we see the right initiatives getting initiated by all other two operator to ensure that the health industry move in a more healthy loan. So positive traction we are seeing. On the consumption, again, early days, I will not say we have recovered fully, but we have seen some positive tractions. We have seen in June onwards, government budgets are also getting relieved because Indonesia, 55% is domestic and lot of government spend driven. So again, early trend, we are very watchful of that.

I’ll say we are cautiously optimistic, but we need to watch out that space little more. On FTTH, we want to get to 400,000 customer by end of this year. And in next two to three years, our stated ambition is to come closer to 8% kind of market share. And then especially our fiber project, which we are doing, that should help us on this ambition. But by end of this year, streamline our operation, we want to make sure that our billing system and all those things are fully integrated.

On spectrum auction, I think PharmDigi has come up with a road map. We are expecting in next twelve months, 1,400,000,000.0 and then again 700,000,900 million euros 2,600 million euros all these spectrum. But we need more clarity on the date. But what we see is if what has been stated by the minister, they execute it as per their plan, some of these spectrum will come in next twelve to fifteen months.

Indar, Moderator/Introducer, PT Endostat0: Thank you, Vikram. Can I just quickly follow-up with one quick question on the margins? If if I remember correctly, we, in the past, stated that we’ll try to get our EBITDA margins closer to the 50% mark. In light of the current environment, does it has that baseline changed now, at least in the near term?

Vikram Sinha, Chief Executive Officer, PT Endostat: I think we are getting there. If you look at quarter two, we are at 47.6%. So I think we are getting there. We will see more progressive quarter as we close this year and when we get into next year.

Indar, Moderator/Introducer, PT Endostat0: Understood. Thank you.

Michelle, Conference Operator: Thank you. Our next question is a follow-up question from Pishu Chaudhary with HSBC. Your line is open. Please go ahead.

Piyush Chaudhary, Analyst, HSBC: Yeah. Hi. Thanks for the opportunity again. I have one more question on your mobile side. We saw a very healthy postpaid ARPU increase of 17% quarter on quarter.

Just want to understand what has led to such an increase? What are we doing over there? And in terms of outlook, how should we think about postpaid ARPU? And also, I forgot to ask in the first you know, the previous question on the prepaid side, if you can tell us on the VAS side, value added services side, how is the trend or outlook on the ARPU? Thank you.

Vivek Mehendirata, Chief Marketing Officer, PT Endostat: So hi hi, Poosh. Vivek, this side. So as far as postpaid is concerned, last year, quarter four, we started and almost reinvented our postpaid offering, and we came up with I m three platinum, where where we’ve been distinguishing ourselves and discriminating ourselves in the market in terms of platinum services and and platinum platinum plans. And that’s been at the core of the steady growth that we’ve been seeing on the postpaid side. As far as the ARPU is concerned, for for the for the quarter that went by, a part of it was also powered by international roaming roaming growth.

But even at the underlying level, the ARPU continues to stay healthy and the category continues to stay stay very steady and robust for us and growing for us. Secondly, as far as the prepaid VAS side is concerned, here also the trends on the VAS ARPU continue to be to be steady. And as more and more digital engagement increases and as was exhibited in our in our monthly active user uplift, this is also going to be be continue to stay steady.

Piyush Chaudhary, Analyst, HSBC: Okay. Thanks, Vivek. Can you share some examples of what you’re doing on the you know, to drive up engagement and increase the vast ARPU contribution on prepaid? And on the international roaming, what what has changed? Like, was, like, in in terms of your approach to the customer or the sales approach has changed?

Like, what has changed to drive up kind of adoption of international roaming packs?

Vivek Mehendirata, Chief Marketing Officer, PT Endostat: So international roaming, Piyush, this is this is a category that has that has been strongly growth hacked, and and we’ve very, very nicely sweated out the the Hajj period that’s that’s been there, and it was a combination of, both online as well as, some steady offline GTM that has that has been that has been done. So, that’s that’s on the international roaming side. And, obviously, as more and more customers become active and digitally savvy on on their own apps, the engagement’s bound to go up. So that’s that’s very, very commonsensical and intuitive. As far as the engagement, what what was the next question?

On on the

Piyush Chaudhary, Analyst, HSBC: Just on the VAS side.

Vivek Mehendirata, Chief Marketing Officer, PT Endostat: On the VAS side.

Ranjan Sharma, Analyst, JPMorgan: On

Vivek Mehendirata, Chief Marketing Officer, PT Endostat: the VAS side. So Piyush, you heard me speak about how the AI practice is powering our hyper personalization. So that’s that’s something that’s helping us look at customers through sharper lenses of persona. And, accordingly, the most relevant propositions are are being extended. So that’s that’s the sum and substance of how this entire entire thing is playing out for us.

Piyush Chaudhary, Analyst, HSBC: Excellent. Thanks a lot. Thanks for the color.

Michelle, Conference Operator: Thank you. And I’m showing no further questions at this time. And I would like to hand the conference back over to Indar for closing remarks.

Indar, Moderator/Introducer, PT Endostat: Thank you, Michelle. Thank you, everyone. Hope you found today’s session very informative. As always, do get back to us if you have any additional questions. Otherwise, we will speak to you next quarter.

Thank you. Have a good day.

Michelle, Conference Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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