Good day, thank you for standing by. Welcome to the Telkom earnings call on first quarter of 2022 results. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mr. Andi Setiawan, Vice President of Investor Relations. Thank you. Please go ahead. Thank you, Desmond. Ladies and gentlemen, welcome to PT Telkom Indonesia conference call for the first quarter of 2022 results. There will be an overview from our CEO, followed by Q&A session. Before we start, let me remind you that today's call and responses to questions may contain forward-looking statements within the meaning of safe harbor. Actual results may differ materially from projections or estimates and may involve risks and uncertainty that may cause actual results to differ from what we discuss today. Ladies and gentlemen, it's my pleasure to introduce Telkom's board of directors who are joining with us today. Mr. Ririek Adriansyah as President Director and CEO, Mr. Heri Supriadi as Finance and Risk Management Director, Mr. Edi Witjara as Enterprise and Business Service Director, Ms. Venusiana as Consumer Service Director, Mr. Budi Setyawan Wijaya as Strategic Portfolio Director, and Mr. Muhamad Fajrin Rasyid as Digital Business Director. Also present are the board of directors of Telkomsel. Mr. Hendri Mulya Syam as President Director, Mr. Mohamad Ramzy as Finance and Risk Management Director, and Mr. Derrick Heng as Marketing Director. I will now hand over the call to our CEO, Mr. Ririek Adriansyah, for his overview. Please start, Ririek. Thank you, Andi. Good afternoon, ladies and gentlemen. Welcome to our conference call for the first quarter of 2022 results. We appreciate your participation in this call. Before we start, please allow us to wish you a very happy Eid Mubarak to all of you who celebrated this holy festival. In order to guarantee continuous telecommunication network and services while enhancing customer satisfaction during holy Ramadan and Eid holidays, Telkom assigned a task force to monitor our service. Ladies and gentlemen, in the first quarter of 2022, Telkom maintained growth in revenue, EBITDA, and net income, which increased by 3.7%, 3.1%, and 1.7% year-on-year, respectively. Slower growth of bottom line profitability was mainly contributed by unrealized loss from investment in GoTo. IndiHome's contribution to Telkom's consolidated total revenue has steadily increased. During first quarter 2022, IndiHome's contribution was 19.5%, up from 18.7% in the same period last year. With the additional intake of 136,000 new customers, IndiHome has successfully maintained EBITDA margin at around 50%. On the mobile side, amidst continued competition, Telkomsel has maintained modest revenue growth of 0.2% while earning a healthy EBITDA margin of 27.7%. Telkomsel continues to establish a digital ecosystem to pursue rapid growth in beyond connectivity mobile business. Growing digital business revenue has steadily offset declines in legacy product revenue. Digital business revenue constitutes almost 80% of Telkomsel's total revenue in first quarter 2022. Enterprise business saw positive growth as COVID-19 in Indonesia has become less contagious. This brings positive effect to the country, the economy. On the enterprise business, with COVID-19 subsiding has led to increased business activities. This segment also saw positive growth by recording a slight revenue increase of 1.9%. Enterprise business growth is from B2B IT services and enterprise digital solution. On wholesale and international business, the ever-growing tower business and international wholesale voice were the largest contributors to this stunning revenue performance by posting 16% growth year-on-year. Our strategy into increased competitiveness and sustainability among competition known as Five Bold Moves continue to intensify its effect by reinforcing significant business operations and consolidation, both internally and externally. In order to cater vast opportunity for business to business IT service, Telkom already conducted subsidiary alignment by raising the status of PT Sigma Cipta Caraka or Telkomsigma to be a direct subsidiary of Telkom. This strategic alignment enables the Telkom group to consolidate the B2B IT services under one roof. Just recently, in April of 2022, Telkom and Microsoft signed a strategic partnership agreement that aims to accelerate innovation and strengthen digital system, strengthen the country's intelligent infrastructure, and enable the internal digital transformation of the Telkom group to become the first choices of digital teleco. This is one of the infrastructure initiatives to establish strategic partnership with several global tech companies that would have a positive impact on Telkom business development, especially in the digital platform and telco service domains. That is the end of my remarks, and thank you for your kind attention. Thank you, Pak Ririek. We will now begin the Q&A session. When raising your question, please speak clearly and state your name and company. Operator, may we have the first question, please? Certainly. As a reminder, to ask question, please press star one on your telephone and wait for a name to be announced. If you would like to cancel request, please press the pound or hash key. First question comes from the line of Piyush Choudhary of HSBC. Please go ahead. Yeah, hi. Good afternoon. Thanks for the call. Few queries. Firstly, on your fixed mobile convergence product, can you update us if there is any timeline for the launch, and what are the possible kind of options you're exploring? Secondly, on Telkomsel, or on the mobile side, do you think there could be possibility of further tariff hikes during 2022 with ongoing industry consolidation? Thirdly, on the dividends, when company thinks about dividend payout ratio, is it based on reported profits or normalized profits? Thank you. Okay. I think I'm going to ask Derrick to address the first two questions and then I come to the third question, Piyush, on the dividend. I think as you already addressed here, we do expect the dividend going to be paid based on the normalized profit. As you be aware on this one, the unrealized profit can turn to the, I think, unrealized loss as we experience in the first quarter because we do the mark-to-market for our investment in GoTo. So hat's going to be a base for us. In addition, we also dividend what we see our policy we need to provide, I think, good dividend to the shareholders, which is competitive compared to other telco. When we decide, for example, to have a different figure of dividend, it is supposed to be a kind of investment emphasis purpose. It means we're going to do as we already mentioned here, Five Bold Moves that require us a lot of investment. It's going to provide us the base for future sustainability of the company. In return, I'm going to give, I think, value to the shareholders. That's about dividend for Piyush. I hope can address your question. Yeah, Pak, Derrick. Thanks a lot. Yes. Allow me to continue. For the first question on the fixed mobile convergence, currently we are looking at how from a FMC perspective we want to be relevant to our customer. We are validating with focus groups the options of relevant offers. What we want to ensure is we want to have a meaningful package that we would allow customers to enjoy our offerings both at home and on the move. When you ask about timeline, it's something that we are still calibrating. At the end of the day, we want to be meaningful and relevant to our customers. That's your first question on fixed mobile convergence. Yeah. Maybe just to add some color to some of the feedback from customers. They want us to enjoy both at home and on the move. They also appreciate control over the price offering that we offer as a family. These are some of the options that we are exploring. That's for question number one. For your question number two, currently we are still faced with very intense competition from the various operators in the market, both Java as well as outside of Central Java. Our agenda is to make sure that we drive a healthier state of business for the industry. When we say the healthier state, we believe there is room for right pricing. At the end of the day, we want to be driving relevant, customized, and personalized offers, especially targeting at our high value customer segment. This is how we wanted to make sure that we will drive relevant offers, affordable packages that are contextualized to their requirements, as well to sustain profitability, and driving healthier state of industry behavior. Got it, Pak. Thanks a lot. Thanks a lot. Thank you for the question. The next question comes from the line of Foong Choong Chen of CGS-CIMB. Please go ahead. So much for the call. Three questions from me. Firstly, I wanted to ask about the recent signing of the strategic partnership with Microsoft. In that announcement, I saw that Microsoft will be, you know, utilizing Telkom's data center. Can I ask whether Microsoft has committed to be an anchor tenant in the hyperscale data center? And if so, what capacity will it take up in the HDC? That's question number one. Number two, what is the data center revenue and also growth for Telkom in the first quarter of 2022? My third question with regards to enterprise revenue, it is down Q-on-Q, and I understand that there is some seasonality to this revenue line. But even on a year-on-year basis, it's only up about 2%. Can you sort of provide us a bit more color as to, you know, the performance of the enterprise revenue in 1Q? You know, what should we sort of expect in terms of the outlook for this revenue line for the remaining quarters of this year? Those are my three questions. Thank you. Okay. Thank you. I will answer for number one and number two. For the Microsoft strategic partnership, of course, data center is a part of our partnership scheme. We already agree also we'll put some effort to serve within the enterprise and government data center demand. Microsoft will support us with necessary core infrastructure in our data center to make the data offerings in our data center. On the data center revenue and growth in first quarter of this year. Actually, the revenue about the same that we record last year. It is because we I think sort of the capacity that which is coming to the second quarter this year, the hyperscale that we build. We do expect that beginning in the second quarter and up onward we're going to record higher revenue. That is about what? The data center revenue that we have today. The question on the enterprise revenue down on the Q-on-Q basis is because on the last quarter of last year we did record some revenue on the basis of seasonality, which is quite high because we have a lot of contracts can be completed. We have quite high season. This quarter mostly I think in progress even in our customer base in the progress of arranging and calculating the demand that they have. We do expect in the following quarter we're going to have quite better revenue. What we do expect in this enterprise revenue, at least it's going to be in line with the GDP growth this year. That's the situation that we are seeing in the enterprise side. Understood. Can I just follow up with the first question, just to clarify again, because the line wasn't entirely very clear. Did I hear it correctly that you know if Microsoft were to provide any sort of services to the enterprise or to the government sector and it requires that service to be based out of a data center, they have committed to use Telkom's data center? Did I hear that correctly? Sorry. Yes. We have agreement on this with Microsoft to serve on those matter. Basically, potential client that we have local here request us to have a data center in Indonesia that provide us also with the demand that can together with Microsoft we address. Basically, there are two parts of the cooperation between Telkom and Microsoft. One part is the potential use of Microsoft for using our data center. The second part is we're providing the IT services, including some solution to address the needs of B2B and B2G segment. Okay. Understood. Thank you so much, everyone. Thank you for the questions. Next question comes from the line, Hussaini Saifee from UBS Research. Please go ahead. Hi. Good afternoon, and thanks for the opportunity. Multiple questions from me. First is on mobile competition, and I heard your earlier question of Piyush that the competition remains quite intense. Just want to understand that have you seen change in intensity of competition from the month of January to April? Has the competition remained the same pace, or we see that in by April we are seeing some improvement in competition? Second question is on IndiHome. IndiHome subscriber growth, which was slower compared to last year. Just want to understand the outlook for IndiHome net additions, subscriber net addition target for this year. Finally, on the fixed mobile convergence, have you decided on the structure between Telkomsel and IndiHome, how it will be structured? Thank you very much. Yes, I'd like to answer your first question on mobile competition. Yes, it's true, it remains intense with regards to across the operators. It's for acquisition as well as renewal packages to grab the low-end market share in the prepaid segment. However, we believe all operators are trying to start a healthier conduct by on the right pricing with regards to both acquisition as well as improving ARPU. As the market leader, Telkomsel aims to really drive the sustainable and healthier state of business. Not only we have worked on the right pricing, we have also drove the growth of existing customers, especially our high-value customers, through hyper-personalization CVM, as well as making sure that we have the right denomination for their customer. We have launched [MAXstream] to address the uptake on video consumption, especially YouTube, is to drive relevance as well as competitors in the market. Yeah. From the competition movement, what we are happy to see is our competition is also joining this whole momentum of to drive a more sustainable and healthier state of business. XL has gradually adjusted price. Indosat has also modified their price plans in terms of packages, yeah? We see this moving forward, though it remains intense, but all the operators are driving towards a more sustainable and healthier state of business. That's my answer to your question. Thanks for that. In that light, how should we see the overall industry growth, mobile industry growth for the year? Should we still expect mid-single digit kind of growth is achievable? From a momentum perspective, we have a lot of optimism with regards to the economy bouncing back. First, from a COVID situation perspective, the situation is a lot more stable in Indonesia, so we will expect more business picking up, the momentum of people moving around from point A to point B. This is what we see, the opportunity moving in the months to come. Understood. Okay. Your second question, the net additional line is lower last compared to last year in the IndiHome. We did so far more careful in sales of activities in order to ensure the lower churn rate compared to what we experience. This provide us with a base of a healthier customer base. In addition to those, actually, we also see actually in the second quarter, especially in this month and last month, it is quite also challenging as we experience [mostly invested], so many people do a lot of, I think, traveling. The construction also, I think, come to home becoming kind of challenging. In the second half of this year, we believe we can faster the speed of installation and so on. We do expect that the net additional line going to be better than last year, and then we can back to the, I think, double digit growth for the entire 2022. Hope that answered the question from you, Hussaini. Yes. This is very clear. Just a color on the last question, the fixed mobile convergence structure between IndiHome and Telkomsel. Any update on this side? I think, as we have the MOU with Singtel as well on this one to address, how is the best to run the fixed mobile convergence, for the base of Telkomsel, both shareholders, Telkom and Singtel, where they agreed to explore what is the best structure in running this business. We do expect the design of the structure going to be finalized in six months from that [MOU]. We do expect we can complete it, the final structure for IndiHome and Telkomsel. Understood. No, this is very clear. Thank you very much. You're welcome. Thank you for the questions. Next question comes from the line of Ranjan Sharma of JP Morgan. Please go ahead. Hi. Good afternoon, and thank you for the presentation. I have two questions, but let me take them one by one. Firstly, on your wireless ARPUs, I mean, you've been discussing for a while that the industry is moving in the right direction. There have been efforts to improve pricing. Tariffs have been increased. Why is the ARPUs down? This is not just Telkom specific, it's for other operators as well. Would love to hear your thoughts on why ARPUs are still declining and whether you'd expect them to turn around. I'll stop here and then take on the second question after your answer. From ARPU perspective, right, maybe I would like to recollect our Q1 environment. In Q1, there was still set of headwinds and uncertainties. If you could recall, it was really a time of uncertainty, especially with the Omicron variant. Together with that uncertainty of that Omicron variant, there were also restricted movement that is mandated by the government. With that fear factor, that drove lower purchasing power, consumer spending, household consumption, and that being at home had the Wi-Fi offset, especially in our high-value customer segment. Amidst lower than expected economic recovery, that drove some tempering in terms of the ARPU. What we see is, you know, with strong fundamentals for sustainable growth moving forward, we are seeing stable ARPU data, traffic increase, and with the right pricing. That's the momentum that we will see for months to come. As the economic situation improves, people are traveling more, plus there is the stabilization of the COVID situation in Indonesia. Great. A quick follow-up. One of your competitors today was saying that they're also facing issues on supply chain, and they were addressing some of the weakness to what's happening in Europe. Are you seeing any of that? Related to SIM card, yeah. What we are seeing with the SIM card? Yeah. Please. This one. Right? Yeah. If you are talking about the SIM card, I think we are facing currently most of the supplier, they are increasing the price for the SIM card. It's around 20%. 40% increasing from the SIM card supplier. Sorry, the voice is not clear. I apologize, but can you repeat that again? What happened to the SIM cards? Yes. I think we are facing a problem related to the supply of the SIM card. Most of the vendors, they are increasing the price. It's around 40% because the limited of the chipset and so on. Okay. Understood. Yeah. Yes. My last question is on the financials for the first quarter. Can you just walk us through the one-offs that you've or non-operational impact on your earnings in the first quarter? I think the non-operational impact mostly coming from the GoTo. In addition to that one, we have the old technology on the basically hybrid between copper and fiber that now we are basically accelerate the depreciation on that one. The amount is around IDR 400 billion. That also impact the bottom line. If we normalize with, I think, both factor, actually the bottom line supposed to grow at around 19%. 19%, you said? Yes, IDR 800 + IDR 432 of the accelerated depreciation. Great. Thank you so much. You're welcome. Thank you for the questions. As a reminder, if you'd like to ask a question, please press star one and wait for a name to be announced. We have a new question from the line of Arthur Pineda from Citigroup. Please go ahead. Hi. Thanks for the opportunity. Two questions, please. First, on the mobile side, can you clarify what's driving the softness in this momentum? You seem to be contracting faster than XL on a Q-on-Q basis. What's driving this differential? Second question I had is with regard to the data center business. You mentioned that you should start to see contributions in the second quarter. Just to clarify, what was the operational capacity in 1Q, and where does it go to in the second quarter? Thank you. Hi, Arthur. Perhaps I can share more color to what I discussed earlier. I think the softness is because if you look at the Q1 situation, Indonesia was still faced with a set of headwinds and uncertainties. We had the uncertainty of the Omicron variant, and that was compounded by the government mandating with movement restrictions. With that fear factor, it drove lower purchasing power, prudent consumer spending, focus on household consumption. At the same time, there was Wi-Fi offload, especially, in our high-value customer segment because they are staying at home. That softness was part of that slower than expected economic recovery in the landscape. Moving forward, we see more rebound in terms of economic activity. The markets are open, there will be more business activity, people movement as well as traveling. With that momentum in terms of healthier state of business, we will see optimism for the months to come. Understand. Maybe if I could just phrase it a bit differently. In terms of growth, for instance, it seems like the company is actually shrinking faster versus your competitor. Is it because they're expanding into your spaces, i.e., maybe they're expanding outside of Java that's taking market share? Or is it just because the kind of consumers that you have on your books are more susceptible towards offloading traffic to Wi-Fi? I'm just trying to understand why there's that differential in performance. Yeah. There are various factors. First, from a makeup of our customer segment, you could see especially in our high-value customer segment, during times of very challenged pandemic situations where they were in lockdown situations or we have restricted movement, they are a lot more predisposed to enjoy Wi-Fi at home. This is one variable that we see. The second variable that we see from a customer mix perspective is, we have a large customer segment base in terms of profile, which, from a mix perspective, there's the legacy business as well as the digital revenue drivers. This is what we are. From a challenge perspective, we are trying to decelerate the decline of our legacy revenue, but at the same time driving momentum for digital revenue. You could see a lot of focus was to drive the right digital packages for our customers, layered with the relevant digital offerings that we have in our ecosystem. Whether is it about video, whether is it about the various digital initiatives that we are pushing to be relevant to our customers. That's the momentum and opportunity that we see moving forward to be more contextually relevant to our customers. Understood. Second question was on the data center business. Okay. Thank you for Arthur. Heri here. On the capacity of the data center in which will come in the second half, it is the 22 MW which is I think ready to be marketed by June. We do expect this starting in June we are going to see additional I think tenant and revenue on that one. Of course, this going to take some time in order to full installation of the I think all the equipment needed for basically to settle all the demand that we have. That's the capacity that soon will come to the -- for us to the market. Understood. What you had around, if I'm correct, 43 MW, is that right? The, the existing. It's 43. It's like the one that just finished is 22 MW. Understood. Thank you very much. Thank you. Thank you for the questions. Once again, to ask questions, you can press star one. As there are no further questions at this time, I would like to hand the call back to Pak Andi Setiawan for closing. Thanks, Andi. Thank you everyone for participating in today's call, and we apologize for those whose questions could not be addressed here. Should you have any further questions, please don't hesitate to contact us directly. Thank you, everyone. This concludes today's conference call. Thank you for participating. You may now disconnect.