Contact Our Analyst

Eka Rahmawati Rahman

---

Investment Considerations

Revenue Growth Continues Despite a Softer Third Quarter

• Telkom Indonesia (TLKM) reported 3Q26 revenue of IDR37.6 trillion, increasing 2.8% YoY but declining 2.8% QoQ. This brought 9M26 revenue to IDR113.5 trillion, up 3.5% YoY and above management’s full-year revenue growth guidance of 1%–3%. Excluding legacy services, revenue increased 4.8% YoY.
• We expect continued growth in data consumption and improved monetisation to support revenue, although slower subscriber growth and pressure on ARPU remain important challenges.

Higher Operating Costs Put Pressure on Margins

• TLKM’s 9M26 EBITDA increased 2.0% YoY to IDR55.5 trillion, but EBITDA margin declined by approximately 73bps to 48.9%, as operating costs increased faster than revenue.
• Margin pressure intensified in 3Q26, with EBITDA margin declining to 47.9%.
• We remain more cautious, forecasting an EBITDA margin of 48.4% in FY2026 and 49.2% in FY2027. Our forecasts reflect higher operating costs, continued investment in network modernisation and the impact of rupiah depreciation.
• Although operational efficiency initiatives may support future margins, we expect profitability to recover gradually rather than return immediately to historical levels.

Reported Profit Declines Despite Growth in Normalised Earnings

• TLKM reported 3Q26 net profit of IDR3.82 trillion, declining 21.0% YoY and 39.1% QoQ. The weaker result reflected investment valuation losses and higher financing costs.
• However, normalised net profit increased 3.9% YoY to IDR16.53 trillion, after adjusting for investment valuation losses, additional depreciation arising from revised asset useful lives, advisory costs and tax effects associated with the InfraNexia restructuring.
• The distinction between reported and normalised earnings is important. While underlying operating performance remains relatively resilient, non-operating investment losses and higher depreciation continue to weigh on reported profitability.

Portfolio Restructuring and Capital Allocation Support Longer-Term Value

• TLKM continues to simplify its corporate structure and pursue asset monetisation opportunities.
• The company has sold, closed or merged 15 entities, including the GSDM conditional sale and purchase agreement signed in October. Phase 2 of the InfraNexia asset transfer has also been completed.
• Capital expenditure declined by IDR1.3 trillion YoY to IDR15.7 trillion in 9M26, equivalent to 13.8% of revenue. We forecast a full-year capex-to-revenue ratio of 16.5%, below management’s guidance of 17%–19%.
• Capital expenditure is expected to increase in 2027–2028 as the company accelerates network modernisation.
• TLKM continues to return capital to shareholders through dividends and its ongoing IDR4 trillion share buyback programme. Cash generation remains an important strength, although future distributions must be assessed alongside rising investment requirements..

Valuation: Maintain BUY, Lower to TP IDR2,340 (+17% Upside)

• We maintain our BUY recommendation for TLKM but lower our 12-month target price to IDR2,340 per share, representing approximately 17% upside from the reference share price of IDR1,990.

Disclaimer:
PT Binaartha Sekuritas has compiled this report in good faith, using information believed to be reliable. PT Binaartha Sekuritas and its analyst take no responsibility for the accuracy of the information contained in this report. This report has been produced for distribution to clients of PT Binaartha Sekuritas only. This report is not an invitation to buy or sell any security. PT Binaartha Sekuritas may have used the information in this report prior to publication. The company or its clients may have positions in or may from time to time buy or sell the securities mentioned in this report or other related securities.