Good day. Thank you for standing by. Welcome to the PT Indosat Tbk first quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising 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'd like to hand the conference over to your host today, Pak Indar Dhaliwal. Please go ahead, sir. Thank you. Good afternoon, everyone, and welcome to the call today. With us on the call, we have Pak Vikram Sinha, our CEO, and Pak Nicky Lee, our CFO. I will now hand the call over to Pak Vikram. Over to you, sir. Thanks, Indar. Good afternoon, everyone, thanks for joining the call today. We had a great start to the year, with double-digit year-on-year in both revenue and EBITDA, which grew 10% and 22% year-on-year, respectively. We are especially happy that our EBITDA grew 2x of our revenue, which is the result of merger synergy, cost optimization that we have been doing. I want to call out the focus on execution, which we have brought to this merger, is helping us both on revenue and synergy values. We also recorded another consecutive quarter of organic net profit with our normalized net profit of IDR 287 billion this quarter as we continue to deliver value to our shareholders. The next slide shows some of the highlight of quarter one 2023. I won't go into too much of detail, but the trends are moving positively in the right direction for us. Allow me to take you through our integration update. We have completed our network integration in 5 quarters, which is ahead of our earlier planned timeline. MOCN integration is done across our 46,000 sites, physical sites. This is one of the fastest integration that we have seen across merger in telco space, and it was made possible with the support of our network partner. The next phase is our core integration, which will focus on further optimization and improvement of our network to deliver the best experience for our customer. There are also longer tail projects that we are working on, including especially the IT side and the business process improvement. We remain on track to deliver the higher end of annualized synergy that we have promised, which is close to $400 million in approximately 3-year post-merger. If you recall in the last quarter, we talked about our move towards improving industry dynamic, where we raised the minimum price of our starter pack to IDR 25,000. I want to again call out we did this with also ensuring that there is no increase on data quota, 3 GB and IDR 25,000 price. This is to move out of the segment of the market that buy and throw SIM card per month, which is creating unnecessary wastage in the industry. Again, this is one important move which we took to ensure that by design we come out of a segment where we don't entertain customers who are coming in the market to buy cheap data GB, and they do it with the SIM because it is not a good thing for us. We also see this in not going in the right direction for the industry. By design, by putting the right pricing and the right incentive to our distributor and channel partner, we have completely vacated this space, and it has shown us early good trend. While it is still early days, we are seeing positive sign in our underlying number. We are seeing that our base, which has been with us for more than 90 days, continue to increase quarter on quarter, which indicate that the healthy part of our base is growing. This means we are adding serious customer and not the non-profitable rotational churner. As a result, the underlying profitability is also improving with our EBITDA margin increasing quarter-on-quarter. Our CSAT score have increased quarter-on-quarter which is a positive indicator that customer trust in our continues to increase as a result of a positive benefit of network integration and the market move which we are making. Finally, we have completed our tower sale this quarter to Mitratel and the IBS to dhost where we have monetized our asset base to create value for, from our balance sheet. I will now hand over to Nicky for more detail on financial presentation. Over to you, Nicky. Thank you, Pak Indar, Good afternoon, everybody. Delighted to report that we started the year with a set of strong results for the first quarter. This is the first time for us to provide you with year-on-year comparison with the inclusion of Tri results in both sets of numbers. As you can see, our overall revenue grew 9.9% or IDR 1 trillion- IDR 11.9 trillion. This growth is coming along as all three business segments is growing and is underpinned by enlarged customer base as well as strong uptick of data services. EBITDA improved by 21.7% as it reflects the benefits of both the top line expansion and better cost efficiencies as we are able to keep the overall cost to stay at pretty much the same level a year ago. The improved profitability is highlighted as EBITDA margin percentage increased by 4.3 percentage points to 44.6% from 14.3% year ago. Our normalized net profit uplifted from IDR 44 billion- IDR 287 billion, thanks to our better top line and higher EBITDA. On the balance sheet side, we continue to generate cash from operations and from our asset sale transactions, enabling us to cut net debt to EBITDA ratio from 1.13x to a very comfortable 0.33 x. If we move on to look at our key financial performance numbers on a quarter-on-quarter basis. Total revenues dropped by 2.3% comparing to Q4 of last year. That is due to two less days in first quarter against last quarter. If you look at the revenue on a same number of day basis, they are actually pretty much similar. Despite fourth quarter is the highest season of the year, whereas first quarter is the lowest. EBITDA dropped by 1% from fourth quarter because of the same reason I mentioned earlier. It has actually grown 1% again on same number of day basis. The improved EBITDA led to another quarter-on-quarter EBITDA margin improvement by 0.6 percentage points. For net profit, the first quarter profit is much better than the same quarter last year due to much improved EBITDA as well as the booking of power sale gain in Q one this year. Our normalized net profit from Q4 dropped due to the receipt of dividend income of around IDR 240 billion in last quarter. Also, FX movement in favor of Q4, around $170 billion on our US dollar cash reserves. Escalated interest rate has also has an impact on this. The difference in the reported net profit between the two quarters is much smaller due to a one-off booking of tax charge of IDR 340 billion in 4th quarter last year. As I mentioned earlier, all three business segments are growing very well, and you can see the performance in this chart. Cellular achieved a year-on-year growth of 9.4% and 1% on quarter-on-quarter gain on the same number of day basis. Immediately, year-on-year, 11.2% expansion and revenue reduced by 10.7% quarter-on-quarter due to seasonality reason. For fixed telecom revenue, both on a year-on-year and quarter-on-quarter basis, you are seeing over 20% of revenue growth. Moving on to cost. Total OpEx is higher by 2% from first quarter of last year, mostly due to some reversal of cost provision last year, consolidation of other JASA, and more provision for performance-related payment in first quarter this year. From quarter four to quarter one, overall OpEx dropped by 3% as there were more marketing activities for the festive season and World Cup promotion last year. Other operating income represent mostly one-off transactions which are highlighted in the footnote. For Q4, there was a gain of IDR 995 billion relating to restructuring of our associate at JASA, whereas tower sale gave rise to profit of IDR 722 billion in this quarter. There was no one-off transaction in 1Q. Moving on to our CapEx. As reported in our previous meeting, there was a sizable catch-up in our CapEx booking in Q4 of last year, and spending came down to the same level, pretty much same level as 1Q of last year. Again, we expect CapEx to catch up in the later part of 2023 in a fashion similar to what we experienced in 2022. With a positive cash flow generated from operation, next slide. Tower sale, our net debt declined from 2.4- 2.1 further, from IDR 11.8 billion-IDR 6.8 billion. This helps to compress further our net debt to EBITDA to just 0.23x, as mentioned earlier. That is a quick summary of our financial highlights. I'll pass the time back to Dr. Vikram. Thanks, Nicky. Allow me to just wrap up before we proceed to Q&A. Our operational indicators are all trending in the right direction, with growth in customer, 4G data users, data traffic, ARPU year- on- year. Network integration, as I mentioned earlier, is complete, and our 4G site, 4G BTS are now 152,000, while our 3G shutdown has progressed very well. There are snapshot of some of the prestigious awards that we have achieved in 2022, and we remain committed to continue to deliver world-class digital experience to every Indonesian, especially through our spirit of Gotong Royong. With this, I want to thank all of you, and let's move on to Q&A session. Thank you. We will now begin the question-and-answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Once again, that's star one one for questions. Our first question comes from the line of Piyush Choudhary from HSBC. Please ask your question, Piyush. Yeah. Hi. Good afternoon. Congratulations to the management team on strong growth. Several questions. Maybe I'll start with 3. Could you give some color on what is driving decline in subscribers and ARPU quarter on quarter? Is this implementation of minimum, you know, kind of starter pack, leading to a churn of rotational subs? If you can provide some color on the competitive intensity, you know, and how it is trending in the second quarter. Second question is on the margin outlook. Like, what percentage of your overlapping sites are now closed, like shut down or relocated? How much more cost savings is coming from there? Lastly, you know, we saw that there is an increase in your upfront discount and customer loyalty within the financials. What is driving that? Is competition heating up or I'm reading too much into it? Thank you. Hi, Piyush, this is Vikram. Let me start by answering your first question. I think, you know, the move which we made in January, again, I spoke about it. We see some very good early trend. Two, three things which is happening. One, greater than 90-day base, we have seen the growth on that on quarter-over-quarter. In less than 90, which is driven by gross add, you know, we dropped our gross add by around 4 million, which is reflecting in our base also. You know, these were the guys who were coming in the market to buy data, not SIM, and they used to get data on a cheaper price than rebuy, and they used to buy it. This is where, you know, we have vacated that space, and that has led to what we see in our gross add, has led to the drop in our base. When you look at, you know, the advantage of this, these were numbers or customers, you know, with the cost of SIM and what we were giving, we feel that it doesn't make sense for us at all. By design, we have walked out, and we see a good benefit of it. We have seen the same pattern, especially we have seen the leader here following us, and I'm sure others will also follow because, you know, very clearly we can see that it doesn't make sense, you know, for any of us to... This is a size of revenue pool which you buy at a very high cost. We have vacated that place by design. As I said, early trend, we have seen benefit of it. I'm sure, one more quarter we will see more benefit. Hope it address your question, Piyush. If you want to ask more into it, I'll happy to clarify it. On competitive intensity, you know, we see the whole industry moving in the right direction. One of the example was this whole starter pack which we have done. We see others also follow. I think, from a competition intensity, we see everyone being more logical and things moving in the right direction. On the other one, which is on margin outlook, Nicky, you wanna take this? Hi, Piyush. We have given a guidance of mid-40s in terms of our EBITDA margin outlook for this year. There is still a very significant amount of savings we will be able to achieve through the integration work. While we have completed the MOCN integration, there are quite a number of sites we are yet to complete all the related cleaning up process, maintenance work, et cetera. We'll be getting all those engineering and site work done later on in the year, and we are very hopeful that we will get most if not all of such savings into the book later on in the year. Yeah. To your last question on upfront discount on customer loyalty, I think from a customer and market angle, things are only getting better. I think some of these things, you know, last year was our first year of merger, is more of an accounting, angle. From a customer intensity or competition, I think it is all getting better, Piyush. Got it, Pak Vikram, and this is helpful. Just on the, you know, competition side, you know, can you talk a little bit about how the pricing trends are? Are you able to kind of increase the ARPUs going forward, you know, looking at how the trends were during the Ramadan season? Piyush. In fact, we see a lot of upside opportunity. I think same time next year, we feel more confident that we will be in the IDR 40,000 club on ARPU. You know, especially with integration getting completed, we are able to deliver much better indoor experience, and we have seen the benefit of it, early trends. I very strongly feel that we will get to IDR 40,000 club on ARPU within 4 more quarters. Thank you. Thank you. Our next question comes from the line of Hussaini Saifee from UBS. Please ask your question, Hussaini. Yeah. Hi, good afternoon, and thanks for the opportunity. Several questions from me. First on Pak Vikram, data traffic trend. I see the data traffic dipped a bit on a quarter-on-quarter basis. Just wanted to understand that the price increase effort, is it having any negative impact on the purchasing power or affordability, leading to a volume dip? Or is it just a seasonal effect? The second question is again linked to the that the competition remains highly rational and there is potential for price increases. Now, we are already in the one third of this year. Looking at the trend, what's your expectations for the full-year mobile revenue growth for the industry? Finally, on the network integration side, means, Indosat has done an exceptional job in terms of MOCN integration. Can you, maybe, throw some light on the core integration as highlighted in one of the slides? Like, what it entails and how much time it will take and what kind of, cost synergies it will, lead to? Thank you. Let me start with your first question. I think data traffic, if you, if you look at, on an equal day basis and all, is all holding on. In fact, you know, with what's going around us, with the pressure on inflation and all, I spoke about it earlier also. Data is becoming more primary, you know. I think now the good thing is there is a right balance between revenue growth, data revenue growth and data traffic growth. We are heading towards a more sustainable model, you know. There were days where data traffic was growing 50% and revenue is growing 5%. I think now it is getting to the right model. We don't see slowdown quarter-on-quarter. It is more of when you look at it normalized, it is holding on. The other question was on industry revenue growth. I think personally, I feel that industry should grow in line with the GDP. I think we have been playing a very constructive role on ensuring that we grow the industry. I personally feel industry growth in the range of 5%-6% for this year. I think you had a very good question on core integration. There are two angle to core integration. One is customer experience. Let me start with that. I think, you know, with our new scale and with our distributed core strategy from 4 core network which H3I had, we are moving to 36 core. The latency will significantly improve. You know, we will be able to serve the customer in that specific region and island. It will give a significant improvement to latency, and we are expecting to complete it in next 3- 4 quarter. In terms of financial benefit, for sure it will bring, you know, some saving, but the bigger benefit is on customer experience. That's right. This is very clear. Thank you. I will get back to you into the queue. Thank you. Our next question comes from the line of Arthur Pineda from Citi. Please ask your question, Arthur. Hi. Hi, thanks for the opportunity. Several questions. Firstly, can I just clarify the trends on your financing charges versus your debt? Financing seems to be up materially quarter-over-quarter, which is contrary to your decline in debt levels. What's driving this considering that you should have seen lower D&A and interest given the renewals on the towers are probably much cheaper than what it was in the past. Second question I had is with regard to competition. Are you seeing better cooperation across all the players in the space? Like have the two other competitors followed suit or are there outliers where there's little cooperation? Thank you. Hi, Arthur. This is Nicky. Let me start with the finance interest charge question. The driver for this number one would be the interest rate hike in the market. Secondly, it is related to the timing of the cash flow. If you look at our net debt movement, we get a significant cash inflow towards the end of the quarter through tower sale. While you see a significant drop in our net debt, but it may not be able to give us interest savings right away. On the industry, this is Vikram. I see a lot more constructive behavior from everyone, you know? I think the industry is moving in the right direction. Thanks. Sorry, if I just can clarify with Nicky. With regard to the gain on sale of towers, IDR 0.6 trillion, is that fully done or is there any residual booking in the subsequent quarters? It's fully done. We got all the cash in Q1 and also the gain is also fully reflected in the current quarter. Understood. Okay. Thank you very much. Yes. Next, we have follow-up question from the line of Piyush Choudhary from HSBC. Please go ahead, Piyush. Yeah, hi. Thanks for the opportunity again. I wanted to check on your cash balance on the balance sheet is rising, right? You have received proceeds from sale of towers also. How are we thinking about capital allocation? Would you be using the capital to repay high cost debt or there could be, you know, possibility of dividends? Secondly, you know, we observed there was an increase in your 2G BTS quarter-on-quarter. Can you clarify, would that be a reflection of expansion of your network coverage post completion of integration? Thank you. Is a transcript of the podcast, "The Daily," from The New York Times. **Speaker 1:** From The New York Times, I'm Michael Barbaro. This is The Daily. **Speaker 2:** Today, the story of a small town in rural America that has been transformed by a new industry, and the people who are fighting to keep it from changing their way of life. **Speaker 1:** We're going to hear about the rise of a new kind of farming, one that's not about crops or livestock, but about data. **Speaker 2:** It's a story about the future of work, the future of our food, and the future of our planet. **Speaker 1:** We'll be right back. **Speaker 2:** Support for The Daily comes from... **Speaker 1:** So, Sarah, tell me about this town. Where is it? What's it like? **Speaker 3:** So, Michael, this town is called Rockdale, Texas. It's a small town, about 5,000 people, in Central Texas. It's a pretty typical rural Texas town. It's got a main street with a few shops, a couple of churches, a high school. It's surrounded by farmland and ranches. And for a long time, its main industry was a huge aluminum smelter. **Speaker 1:** An aluminum smelter. So, a big industry. Hi, Piyush. On the cash balance, yes, it has gone up, but some of it is to do with timing. We are facing hefty payment, lumpy payment, for tower repayment as well as some loan repayment in quarter two. Most likely in the second end of second quarter you will see cash wouldn't be as big as what we have. In terms of dividend, we haven't resolved to decided to pay any dividend. We'll continue to look into it. For dividends, you'll have to wait for the AGM, which is 15th May, you know. You'll have to wait for that to listen what it is. Got it. Thanks a lot. Thank you. Our next follow-up question comes from the line of Hussaini Saifee from UBS. Please go ahead. Thanks, once again. Just a couple of questions. First is any color on spectrum auction, any timeline linked to that? The second question is that if we see your competitors are trying to make inroads or trying to differentiate themselves through converge services, what is Indosat's strategy over there? Are there ways and means for Indosat to play in the space, not just on the FTTH side, but through fixed wireless means? Just wanted to get some color on that side. Yeah. Hi, Hussaini. This is Vikram. I think, this fixed mobile convergence, if you look at Indosat, we have all kind of license. I think Indosat is one of the company, we have fixed license, we have mobile license, we have mobile money license, we have Artajasa, we have Lintasarta. You know, we are in a very good place. With our home broadband strategy, we will make sure that we are able to give a seamless fixed mobile convergence experience to our customer, you know, we are getting ready for that. On the 3G, sorry, on the overall, especially spectrum, you are talking about 5G, you know. I think, let's see. The way we look at it, we think that next year there might be 5G. Overall, you know, the ecosystem is getting ready, and we are also getting ready. We are not in a hurry for that. Understood. Just going back to the, you know, the response to Fixed Mobile Convergence. Is Indosat going to roll out its own network on the FTTH side? I mean, what's the strategy over there? Yes, we have launched out our brand, you know, which is Hi-5. We were very happy. We were one of the fastest to get to first 10,000 customer. We are doing it through a asset-light model, where we have an opportunity to create home pass by leveraging on our existing fiber footprint. We have close to 80,000 km of fiber, you know, going around connecting all our sites, which we have built over a period of years. We are also working with all the partners, you know. Our strategy is asset-light for the home broadband, and then we are getting very good interest from many of the partner. The journey has already started. Understood. This is very clear. Thank you very much. Thank you. Our next question comes from the line of Aurellia Setiabudi from BNI Sekuritas. Please ask your question, Aurellia. Hi. Thank you. Hi, Pak Nicky and Vikram. A couple questions from my end. I would like to ask regarding the pricing. Can you please give some color relating to the pricing? When is the timeline that you may administer another price increase for mobile? For that, also maybe on the longer term, if we can, you know, please give some color for 2024, how should we perceive Indosat EBITDA margin outlook in the medium term? On my second question for continuing the topic on FMC, do you hear or see that, you know, customers are reducing their mobile data consumption due to switch to the fixed broadband? Are you seeing this already and maybe impacting to the mobile data consumption? Thank you. Let me start with your last one, you know, on customer switching consumption. I think we have not seen any such thing. Please understand, Indonesia home broadband penetration is only 13%-14%. You know, we have not seen anything like that. We very strongly feel that the ARPU will grow for us. We have an upside. Talking about EBITDA margin, I think we are in a very unique position. We are currently at a level of, you know, Nicky spoke about in our guidance, you know, mid-40s, which we are very confident. From a 2024 outlook or a little longer-term outlook, we have already said that our synergy value will be able to deliver it in a shorter term and at a higher number. If you do your maths, you can understand we are heading towards 50% EBITDA margin. It's just a matter of time. You know, you can do your maths and look at it by when, but this is where directly we are heading towards. On pricing, I think Indonesia continues to be among the bottom, not only in the region, but across the world, if you look at it. The current level of yield and also ARPU is in the bottom. There is an upside opportunity. We want to make sure we are very transparent to our customer, and we are very consistent. We have a strategy of simplicity, keeping things simple. We have been reducing our pricing plan. You know, we used to have more than 250. We have brought it down to less than 30, 40. We want to even bring it down. We want to make sure that we have a simple and transparent product. We want to reduce complication. What I can tell you is we feel more confident at same time next year, from a level of IDR 34,000-IDR 35,000 ARPU, we will get to IDR 40,000. This is where we are. Note it. Thank you so much, Pak Vikram. Next, we have a follow-up question from the line of Arthur Pineda from Citi. Please go ahead, Arthur. Hi. Sorry, just one follow-up, please. just to loop back to the question on fiber, are you able to share any targets that you have, on the fiber side? Who are you dealing with in terms of infrastructure? As I understand, XL has actually signed exclusive agreements with FiberStar. Are there any other fiber providers that you're dealing with? Thank you. We are getting a lot of interest, you know, I'll not be able to tell you the names. We have everyone on our table, and everyone is very keen to work with us. All the existing guys you know, there are new guys also who are very serious on the Indonesia potential. There are a lot of PE guys who are ready to put more money on fiber. That gives us a lot of confidence that, you know, we want to get to 10% market share on home broadband by 2026. Understood. Thank you very much. As a reminder, to ask a question, please press star one one on your telephone. Quick reminder, to ask a question, please press star one one on your telephone. Right. I'm showing no further question. I'll now like to turn the conference back to Indar for closing remarks. Okay. Thank you everyone for joining us this quarter. As always, if you have further questions or you need further details, please feel free to reach out to us, and we'll speak to you guys again next quarter. Thank you very much. This concludes today's conference call. Thank you for participating. You may now disconnect.