Good day, thank you for standing by. Welcome to Telkom Earnings Call, first half of 2023 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 one on your telephone. Please be advised that today's conference is being recorded. I'd 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, sir. Thank you, Operator. Ladies and gentlemen, welcome to PT Telkom Indonesia conference call for the first half of 2023 results. There will be an overview from our CEO followed with the Q&A after the session. Before we start, let me remind you that today's call and the responses to the questions may contain forward-looking statements within the meaning of safe harbor. Actual results could differ materially from projections or estimations and may involve risk and uncertainty that may cause actual results to be different from what we discuss today. Ladies and gentlemen, it's my pleasure now to introduce Telkom 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. Herlan Wijanarko as Network and IT Solution Director. Mr. Bogi Witjaksono as Wholesale and International Service Director. Ms. Venusiana as Consumer Business Director and Enterprise and Business Service Acting Director. Mr. Budi Setyawan Wijaya as Strategic Portfolio Director. Mr. Muhamad Fajrin Rasyid as Digital Business Director, and Mr. Afriwandi as Human Capital Management 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 now hand over the call to our CEO, Mr. Ririek Adriansyah, for his overview. Mr. Ririek. Thank you, Andy. Good afternoon, ladies and gentlemen. Welcome to our conference call for the First half of 2022 result. We appreciate your participation in this call. Ladies and gentlemen, currently, Telkom still continues its transformation journey from telco into digital telco company and materialize important projects as implementation of our Five Bold Moves strategy. We strive to enhance our competitive advantage, increase value creation for stakeholders, and satisfy customer experience and needs. Telkom just launched second international communication gateway in Manado, connecting eastern part of Indonesia directly with North America. Such a gateway enables the people from eastern part of the nation, including new energy capital city, to enjoy wider internet access, as well as better connectivity quality. Moreover, we successfully completed phase I of Hyperscale Data Center or (HDC) and further tower consolidation within the group. In the first half of 2022, Telkom still maintain growth in revenue, EBITDA, and net income, which increased respectively by 3.6%, 4.5%, and 6.9% year-on-year. Digital business continues to become our engine of growth and significantly offsets legacy revenue decline. We are of the view that we are on the right track in digitalization journey to a digital telco company. During first half of 2022, Telkomsel enjoyed data price increase supported by the holy month of Ramadan and Eid al-Fitr traffic. Telkomsel still maintain healthy EBITDA margin of 57.1%, while net income margin stay at 26.2%. With regards to equity investment in GoTo's share, recorded unrealized gain of IDR 305 billion. Ladies and gentlemen, IndiHome's contribution to the consolidated Telkom's revenue has been steadily increased, supported by additional 288,000 customers to become 8.9 million customers. IndiHome revenue reached 13.8 trillion, with a blended ARPU of IDR 270,000. Enterprise segment contributed IDR 8.7 trillion in revenue, with B2B IT Service and enterprise connectivity solution as the biggest contributors. Wide opportunities, especially in cloud businesses by making strategic partnership with global tech player, could be enterprise segment opportunity to grow and leverage our capability to deliver digital solution to our customers. Wholesale segment posted IDR 7.9 trillion in revenue and significantly increased by 14.6% year-on-year. Under this segment, we continue to strengthen our network infrastructure as we launch second gateway for Indonesia in Manado that was launched on July 20, 2022. We are also in the process of developing submarine cables, namely Bifrost and SJC2, which are expected to be completed in 2024 and 2025 respectively. This is what will strengthen international data traffic to give better experience for our customers and to support future business digitalization needs. Our Five Bold Moves strategy continued to intensify its effect with some material implementations. Telkom is enhancing data center business with the completion of the first stage Hyperscale Data Center. Our competitive advantage over the competitor is that our main data centers are seamlessly integrated to neuCentrIX as edge data center and are also connected to global submarine cable networks. With our integrated network, we are able to accommodate wide variety of customer feature business digitization needs, such as edge computing, transit services, blockchain and other digital solutions. In an effort to co-foster our ESG strategy, such as reducing carbon dioxide emissions, our Hyperscale Data Center is equipped by gas-fired power plants and solar panel for public areas and office complex. Fixed- mobile convergence or FMC continued to be explored to give better customer experience, provide more efficient CapEx, and also to create data integration. In the FMC products and features, currently we have Orbit and Smooa, in which Orbit is positioned as IndiHome's complementary product using fixed wireless technology. Orbit is very fast deployed Internet connection to cater densely populated area in which fiber optic connection is difficult and costly to penetrate. Orbit could also be used in scale area with a good future prospects. Currently, Orbit has 464,000 users and continue to serve and grow all over the nation. Meanwhile, smooth features such as capabilities in integrating fixed and mobile network. We continue tower consolidation whereby Mitratel acquired another 6,000 towers from Telkomsel. Following the acquisition, we expect Mitratel could strengthen its position as the largest tower provider in Indonesia. Telkomsel, on the other hand, could focus on its core services and continue its dominance in mobile business. That is ending my remark, and thank you for your kind attention. Thank you. We will now begin Q&A session. When making a comment, please state your name and your company. Operator, may we have the first question, please? Thank you. Our first question comes from the line of Arthur Pineda from Citi. Arthur, please ask your question. This is Arthur from Citi. Two questions, please. Firstly, on the mobile side, can you clarify what's driving the reduction in the mobile base? It seems to have contracted a fair bit. It seems that you lost some market share and revenue share here. What's driving the divergence, and what can be done to close the gap? The second question I had is with regard to the broadband momentum. It seems to be slowing quite a bit as well in terms of growth. Why is this the case? Is there a structural issue now with competition or industry saturation? Can we see CapEx being throttled down given the slower growth? Thank you. Yes. I could take this question. Your view on market share, right? From the declining subscriber base Q-on-Q, to us it is mostly due to rotational churners, and we were doing a number consolidation in the prepaid post festive season and increased mobility. Telkomsel initiative is to maintain our leadership and high value customers. We want to make sure that there is healthy conduct, and we want to focus on renewal, and initiatives through price rationalization to drive healthier growth and to lead data monetization. On the CapEx side, I will take it on the mobile. Actually, Telkomsel also remain the CapEx ratio at around 13%-14% of the revenue, which include on the network deployment, as well as to support some of the 5G deployment specifically in certain areas. Hi, Louis. Ferry of Telkom here. Regarding the IndiHome customer base, actually, yes, competition is there, strengthened from time to time. Actually, why we are a bit slowing down in the additional customer base that we have, actually more to the our strategy to focus on the high value customer, the quality of sales, and also to prevent from the future churn. This involving some of initiative, for example, asking new subscriber to have about one year at least for the, I think, contract and so on. This to ensure that our base becoming healthier. I think the more tight competition happen in the low end of market. It is, I think, customer potential with below 20 Mbps of speed of the services. We have the, as mentioned by our CEO, we have a complementary product for that one. We have Orbit as our solution also. Basically, what we see actually our position still very strong. What we expect, we continue to do our investment to ensure this healthier business practice to continue and to ensure the profitability also still intact. That from our side, for Arthur Pineda. Understood. Thank you. Bye. Thank you. Arthur Pineda, if you wish to ask a question, please press star one one now. All right. While waiting for Arthur Pineda to press star one will take the next question from Chong King Fung from CGS-CIMB. Please go ahead. Thank you so much for this call. Three questions from me. Firstly, I wanted to ask about the. It was mentioned that there was a moderation in the O&M cost due to lower content costs. Can you share with us what is the total content cost, I think especially at Telkomsel? And what drove the cost lower, and what would be the content strategy going forward? That's question number one. Number two, I did see quite a big increase in your staff costs Q on Q. Were there any one-off there? And my third question also related to cost is with relation to the inflation that we are seeing in Indonesia right now. Do we see any cost pressures going into the second half of the year? Yes. Those are my three questions. Thank you. Okay. I will take the question on the cost side. Actually, on the O&M cost, our growth already related with the mostly related with the cost of services that we provide some content to our customer, which related with Disney content as well as the Netflix and also the solution of the Zoom that we already have with our partners. That the cost. But on the other hand, we still manage on the O&M cost, which was only about 2.3%, mostly related with the spectrum. The spectrum that we acquired last year. That's on the cost side. In the second half, I think we still manage our cost transformation and do the cost very effectively to support our customer experience as well as supporting our strategy to have a more healthier industry and a healthier customer. That's on the cost side. This increase. Yeah. On the second half of cost pressure, additional input that we can give to you. Most of our network, especially in the power cost, already using power coming from the electrical company. This is related to the tariff that they apply. So far what we see the impact is quite minimal. While other costs, including the inflation and so on, we try to manage with, I think some initiative that we ensure that the cost that we have, as of first half, going to be the outlook for the entire year. To add on the staff cost activity, it's also related with our establishment of new company INDICO. That also drive the additional FTEs to operate the company, which include their subsidiaries, Kuncie and also Majimojo under gaming. This is Derrick from Telkomsel. I will take the question on inflation. From our perspective, the competition in Indonesia is starting to be more rational. We see healthier conduct, and we all are aiming for profitability and long-term sustainability. We will continue to lead this healthy conduct and consistently drive the ideal state for our industry with the right pricing strategies. We will keep our eyes and ears on the ground to make sure that we continue to be relevant to our customers in terms of needs as well as network capacity. From a product perspective, you know, we are providing a wide variety of products in our portfolio. From the sachet packages to the weekly offerings to even the thirty-day package. We will want to make sure that from a portfolio perspective, there is an offering that would be relevant to different needs of our customers. Our next strategy is to focus on value creation for customers and to engage them with more relevant, digital lifestyle, solutions. Understood. Thank you so much, everyone. Thank you. Thank you. Thank you very much. As a reminder, to ask a question, you will need to press star one one on your telephone. Our next question comes from the line of Hussaini Saifee from UBS. Hussaini, your line is open. Please ask your question. Yeah. Hi. Good afternoon, and thanks for the call. A few questions from me. First on Telkomsel. How should we see Telkomsel mobile growth going forward, given multiple price increases industry has undertaken? Is it still a low single digit growth outlook, or we expect to see it accelerating to mid-single digit growth in the coming quarters? That's question number one. Second question is on the data center side. Any update on the data center revenue growth? And what is the timeline of data center IPO? Is it still the first half of next year? Thank you. Okay. I will take the question on the mobile growth, going forward. From our strategy, we will want to defend market share, both Java and Outside Java. We want to focus on targeted CVM to maintain competitiveness. We want to drive personalized offering and protect high value customers, to cater for increasing productivity from our existing base. We want to make sure that we prioritize and deliver differentiated experience, for our crème de la crème customers, both from a service perspective as well as the network perspective. For example, the service differentiation, they will be able to enjoy a better service at our touch points, be it at our GraPARI stores or the digital channels. We want to make sure that we accelerate the network leadership and experience, and we want to maximize digital service to support and complement all forms of connectivity, be it games, video and music, et cetera. This is our answer. Thank you. On the data center, what we have the growth of today is around 4.5% year-on-year. The growth looks low because actually the capacity almost fully utilized, compared to last year. Our Hyperscale Data Center just finished by last month. So that mean we are going to have additional new subscriber coming to our data center around third and fourth quarter of the year. When about the timeline of the IPO, actually what we plan to do is, we're going to have additional data center, maybe with cooperation with Singtel. In addition to that, we're also going to build another two hyperscaler data center that we do expect going to complete it by the end of next year. Whether we're going to IPO or we're going to have a strategic investor, that's going to be, I think, a choice whenever that is coming to the scale that we felt ready for the basically exit strategy. I understood. Thank you. If I can ask one more follow-up question on IndiHome. Is the first half total net adds of around 288,000 what should be or what is your target for the full year? If I understand correctly, it was around 600,000-700,000. Is that target still achievable? Based on the current situation, actually we already are adding around 288 thousand of new subscribers with the remaining of the time and also the condition of the environment much better right now. We believe we can have the around 600-700 thousand of new additional line this year. Understood. This is very clear. Thank you very much, Mark. Thank you. Thank you. Thank you very much. Next question comes from the line of Ranjan Sharma from J.P. Morgan. Ranjan, your line is open. Please ask your question. Hi, good afternoon, and thank you for the call. Two questions from my side. Firstly, if you can provide some color on the tariff hikes that you've seen in the market by yourself and also by the peers, and then what is the impact that you're seeing on industry revenues? The second question is in the same vein, like how should we think of industry revenue growth over the next few quarters? Thank you. Yeah. My answer to your question from a tariff perspective, we want to make sure that we will focus on improvement on usage, consumption, and productivity of customers, which will drive the stabilization of ARPU. We want to optimize our monetization efforts to taper off the declining rate in the RPMB. Our context on tariff is we want to balance between profitability as well as market share. From a competition perspective, we realize that the competition in Java continues to be intense as all of us try to defend our share in the Java area. Telkomsel strategy is to remain competitive with a variety of products and offerings while maintaining network quality. Outside Java, we will want to make sure that we continue to dominate by protecting the existing customer with optimized CVM offering, distribution channel, and network quality. Overall, we want to make sure that we achieve stability both in Java as well as outside Java. Thank you. Thank you. On the wireless revenue strength for the industry? Sorry, could you Yeah, sorry. With the changes that you're seeing in the competitive environment, Oh, okay. How do you think? Yes. Well, I think competition to us is starting to be more rational. We have seen a healthier conduct, and we are driving for profitability. When we look at, for example, XL, they have stopped- Through unlimited. They've also now looked at a more tempered FUP. We have also seen our competition of Indosat increasing price. That, to us, is really a concerted effort to drive the right pricing in our industry. From a Telkomsel angle, we want to make sure that we continue to be relevant to our customers by prioritizing the best of our experience at our touchpoints as well as the network perspective. Thank you. Thank you. My question is on industry revenues growth that you're expecting over the next few quarters? The next few quarters. I think from an industry perspective, we see that there is an opportunity for recovery momentum on the back of better competition as well as, our agenda for the right pricing. However, we'll be monitoring the development in the market, including the macro condition and inflation rate. Thank you. Thank you. Right. Thank you. Our next follow-up question comes from the line of Husni Selfi. Husni, your line is open. Please ask your question. Sorry. All my questions have been answered. Thank you. Thank you. Our next question is a follow-up question from the line of Chong King Fung from CGS-CIMB. Please ask your question. Hi. Yeah. Thanks for the opportunity. Two follow-up questions. Firstly, for Heri Supriadi. Just now you mentioned on the data center that you'll be building another 2 Hyperscale Data Centers to be completed by the end of next year, end of 2023. Are you referring to phase two and phase three of the Cikarang- Yeah. Hyperscale Data Center or are you talking about new data center entirely? Also you- Yes. mentioned that the plan is to have additional data center with Singtel. Are these going to be greenfield or just an injection of data centers from their side? Actually, first on the one from Singtel, it is greenfield that we plan to have new data center in Batam. We're going to use more energy-friendly. We are now in the process of basically talking further on this one to supply for the market in Singapore. The first one, the data center that I'm in, is actually the second and the third data center in Cikarang, because we still have land banking in Cikarang and also some infrastructure relating to the power and so on already been there. We do expect this going to be optimized all the capacity and also all the common cost that we already put. Understood. Heri Supriadi, on the greenfield data center in Batam, can you share what the megawatt capacity is and the timeline to complete that? No, Bogi Witjaksono. Okay. For the first phase, we will build 10 MW and the maximum capacity will be 80 MW. Okay. Phase I. The timeline. Will be completed by when? Yeah. Sorry. Yes. Please. Yeah. The timeline. Yeah. Phase 1 will be starting. The timeline will be starting on the beginning of the next year. And completed by- Completed, it takes 1.5 Year. Yeah. of the following date. Okay. Subsequent capacity expansion to the 80-megawatt maximum capacity will be dependent on demand. Is that right? Or do you already have a- Yeah. Yeah. a planned expansion? Depending on the demand. Depending on the demand, not only in the one basically Singapore, but also can be in our side as well. Okay. Understood. One last question. Do you have an update for us on the fixed mobile convergence strategy that you were talking about earlier in the year with regards to consolidating IndiHome assets within Telkomsel? Any progress then and what that picture might look like once we complete that exercise? Bogi Witjaksono, can you answer? The progress of FMC. For the FMC actually we already completed what we call the Sprint 1. Sprint 1 is more elaborate what kind of the customer demand and then what is the operating model and also the product that's suitable to the customer. It's already done. We already set up also the team to follow up the result of the Sprint 1 to be implemented later on. We will started to talk what we call Sprint 2 is about the possibility of the injection of IndiHome to Telkomsel with Singtel. It is already started today. The Sprint 1, the result is quite good actually. If we look on the response of the customer based on the benchmark is above the average benchmark actually. The challenge actually how we deliver those service in the right momentum to the customer, so we don't lose the opportunity for the customer who interest to use our FMC product. Thank you. When it comes down to the, you mentioned the injection of IndiHome into Telkomsel, right? Does that include any fiber assets, the last mile or maybe even the trunk network? Is it just mainly the customers? Yes, under discussion. Ah. We are under discussion about this asset because the asset is also opportunity for us also to monetizing in the future. That's why we are on the process of the discussion also for this asset. Thank you. Yeah. Basically, what we are doing right now to determine what is the right operating model with regard to how we run the FMC. Regarding who going to manage the asset, where we put the asset going to be also under discussion. In addition to this, actually we see that the fiber that we have actually can also serve the industry in the future. I think this also a kind of potential that we need to see in order to basically unlock the valuation and to be at a substantial player or leading player here. Okay. Understood. Thank you so much, Heri Supriadi and everyone. Thank you. Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. Once again, ladies and gentlemen. Later, I think there is no. Please continue. Yeah. I think if there is no more questions, we can conclude the discussion, yeah. There is no more questions, so I'll now turn the call back to Mr. Andi Setiawan for closing remarks. Well, thank you everyone for participating in today's call. We apologize for those whose question could not be addressed yet. Should you have any further questions, please don't hesitate to contact us directly. Thank you, everyone. Right. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.