TLKM - Soft 4Q earnings

TLKM's 4Q22 net profit increased 27.5% qoq to IDR4.2 tn, mostly on the back of declined non-controlling interest portion amid lower net profit of Telkomsel pertaining to unrealized loss of TO investment and higher operations and maintenance cost as part of initiatives to strengthen 4G services. This, however, brought FY2022 net profit to decline 16.2% yoy to IDR20.8 tn, arriving 82.4%/85.0% of ours/consensus. By factoring out TO’s unrealized investment loss, net profit would have been IDR25.9 tn, growing 7.7% yoy. In addition, 4Q22 EBITDA was also down -2.4% qoq to IDR19.5 tn, yet FY22 EBITDA elevated by 4.3% yoy to IDR79.0 tn, achieving 98.6%/99.6% of ours/consensus, as margin expanded to 53.6% from 52.9% in a year prior. Meanwhile, 4Q22 revenue came in at IDR38.4 tn or +4.2% qoq, propped up by wholesale segments, namely network and other telco on outperforming tower business; and interconnection amid flattish data, digital & IT. (Source : Company) Comment: While we are still waiting for management's remark during analyst call, TLKM's 4Q22 performance turned out to be soft with consumer segemnts of digital, data and IT segment and Indihome, which both have been the drivers, barely grew 1.8% qoq and 1.0% qoq, although it also recorded improvement in operational metrics such as ARPU +6.7% qoq to IDR48/sub and data yields +1.2%. This, however, came with a decline in subs by 10.9% yoy/1.9% qoq. This was in contrast with competitors where EXCL and ISAT managed to grow their subs despite having recorded lower growth rate of revenue compared to Telkomsel.