13th August 2026

BUY, 53% upside

Price Rp 2590

Target price Rp3950

Investment Considerations

Mobile ARPU Improvement continues in 2Q26

• PT Telkom Indonesia (Persero) Tbk (TLKM) reported revenue growth of 6.4% YoY to IDR38.7 trillion in 2Q26, bringing 1H26 revenue to IDR75.8 trillion, up 4.0% YoY. Performance was supported by improving mobile monetization, disciplined cost management, and more selective capital expenditure.
• The B2C segment continued to lead the Group’s external revenue growth. Data, Internet & IT Services revenue increased 12.6% YoY to IDR38.5 trillion in 1H26, including strong growth of 20.0% YoY to IDR26.3 trillion in 2Q26. The improvement reflected stronger pricing discipline, product simplification, and customer value management.
• Mobile ARPU increased 2.0% QoQ and 9.0% YoY to IDR46,000 in 2Q26. Data consumption remained resilient at 11,525 petabytes, increasing 0.7% YoY. However, Telkomsel’s mobile subscriber base declined 3.1% YoY to 153.5 million, reflecting the company’s continued focus on subscriber quality and monetization rather than headline customer growth.
• IndiHome revenue declined 3.4% YoY to IDR12.8 trillion in 1H26, reflecting intensified competition and Telkomsel’s strategic recalibration of its fixed broadband customer base. Fixed broadband ARPU remained 5.9% below the prior-year level, although it improved 3.4% QoQ.
• Sequentially, IndiHome showed early signs of stabilization, with revenue increasing 0.7% QoQ to IDR6.4 trillion in 2Q26. The company is shifting its fixed broadband strategy away from subscriber volume-led expansion toward a quality-focused model based on customer verification, reuse of existing network ports, network modernization, premiumization, and fixed-mobile convergence.
• The convergence ratio improved further to 65% in 1H26, compared with 59% in 1Q26 and 55% in 1H25, indicating continued progress in integrating mobile and fixed broadband services.
• Overall, TLKM’s 1H26 revenue performance remained broadly in line with management’s FY2026 growth guidance of 1%–3%..

Further streamlining Initiatives in 2026

• TLKM continued to implement its TLKM30 transformation program, with portfolio rationalization remaining a key component of the strategy. The initiatives include the divestment of 17 entities, closure of 12 entities, and merger or transfer of five businesses.
• Following the completion of the AdMedika and TelkoMedika divestments in June 2026, TLKM continued to simplify its corporate structure. Phase 1 of the Infranexia asset transfer was completed in December 2025, while Phase 2 was completed on 7 August 2026.
• TLKM has also closed several non-core businesses, including Media Nusantara Data Global, Sigma AIT Bhd., Napsindo, PT Alam Pesona Wisata, Pointer, Telin Australia, PT Omni Inovasi Indonesia, and CSM Satellite & Terrestrial Network. In addition, selected Mitratel subsidiaries, including UMT and Persada Sokka, were merged as part of the broader restructuring process.
• These initiatives are expected to simplify the Group’s organizational structure, improve capital allocation, and support greater operating efficiency over the medium term.

Q2 2026 Results: Earnings and Margins Improve

• TLKM recorded net profit of IDR6.28 trillion in 2Q26, increasing 22.3% YoY and 44.5% QoQ. Net profit margin improved to 16.2%, reflecting stronger quarterly profitability.
• Core profit increased 9.9% YoY and 20.1% QoQ to IDR6.16 trillion in 2Q26. For 1H26, core profit reached IDR11.3 trillion, representing growth of 1.4% YoY.
• Core profit excludes several accounting, valuation, tax, and transaction-related items, including IDR867 billion of additional depreciation resulting from revised network asset useful lives, a IDR429 billion gain from the AdMedika divestment, IDR235 billion of unrealized losses on Telkomsel’s investment in GoTo, and IDR50 billion of transformation advisory expenses.
• The improvement in underlying earnings indicates that TLKM’s operational performance strengthened in 2Q26 despite the continuing impact of transformation-related and non-cash items.
• Cost discipline remains a key management priority, supported by continued subsidiary streamlining and further optimization of both capital expenditure and operating expenditure.

Valuation: Maintain BUY, TP IDR 3,950 (+53% Upside)

• We maintain our BUY recommendation on TLKM with a 12-month target price of IDR3,950, implying 53% upside from the current share price.
• Our valuation is based on a 16x forward P/E multiple, supported by continued mobile ARPU recovery, improving industry pricing discipline, ongoing portfolio streamlining, and potential value realization from strategic partnerships.