ISAT - Driving fixed broadband growth

ISAT - Driving fixed broadband growth Indosat Ooredoo Hutchison (ISAT) 9M23 results were relatively in-line with EBITDA represented 77.4%/75.0% of ours/consensus despite flattish margin on a jump in marketing costs for distribution channel as part of Eastern Indonesia's expansion plan. Meanwhile, ISAT clocked in a flat revenue growth of 0.5% qoq in 3Q23 to IDR12.8 tn that brought 9M23 achieving 75.5%/73.9% of ours/consensus, driven mainly by improvement in data yield. ISAT's key operational metric showed encouraging signs, with ARPU creeping up to IDR35.37K in 9M23 coupled with data yield +7.4% qoq. Yet, subscribers inched down by 0.6% qoq due to shifting focus on customer's experience. Management has been in a deal talks with MNC Play, exploring FTTH asset purchase as it expects to capture 10% of market share in three years. (Source: Company) Comment: We have made a slight tweak to our ISAT's EBITDA '23 and '24 forecasts by 3.1-3.9% higher than our previous forecasts given better cost efficiency coupled with healthier market conduct. We maintain our BUY call with upgraded target price to IDR11,860 (previously: IDR10,075) as we rolled forward our EV/EBITDA '24 at 4.1x. Note that at current price, ISAT is trading at 3.4 ’24 EV/EBITDA.