• Revenue Growth: 9.1% increase from IDR51.2 trillion in 2023 to IDR55.9 trillion in 2024.
• EBITDA Growth: 10.2% increase, adding IDR2.4 trillion year-on-year to IDR26.4 trillion.
• EBITDA Margin: Increased by 0.5 percentage points to 47.2%.
• Net Normalized Profit: 38% increase from IDR3.6 trillion to IDR4.9 trillion.
• CapEx Spending: Below guidance at IDR13 trillion, with savings of IDR1.8 trillion.
• Net Debt to EBITDA Ratio: 0.4 times.
• Subscriber Base: Decrease of 4.1 million due to removal of no-value customers.
• ARPU Increase: 6.6% growth.
• Data Traffic Growth: 12.2% year-over-year increase.
• 4G Base Stations: Increase of 17,200 stations.
• 2G Base Stations: Increase of 3,500 stations.

• Warning! GuruFocus has detected 2 Warning Signs with PTITF.

Release Date: February 10, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• PT Indosat Tbk (PTITF) reported strong financial growth in 2024, with revenue, EBITDA, and net profit increasing by 9%, 10%, and 38% respectively.
• The company achieved USD462 million in recurring synergy, surpassing the pre-merger target of USD300-400 million.
• Significant investments of over USD2.2 billion were made to enhance network experience, adding more than 9,000 tower sites and expanding coverage to over 16,000 new villages.
• The AI platform has been successfully integrated into the core business, improving efficiency and expanding enterprise services.
• PT Indosat Tbk (PTITF) secured a USD30 million multiyear contract for GPU as a service, indicating strong market demand and positioning the company as a leader in AI infrastructure in Indonesia.

Negative Points

• Mobile revenue growth was slow at only 2% year-on-year in the fourth quarter, indicating a competitive landscape.
• EBITDA margin decreased sequentially due to higher costs in sales and marketing, particularly during the festive season.
• Subscriber numbers continued to decline despite expanded coverage, raising concerns about the effectiveness of investments.
• The competitive environment remains intense, with acquisition competitiveness increasing, particularly in Java.
• The company faces challenges from low-cost broadband offerings and illegal Wi-Fi, impacting traffic growth in certain regions.

Q & A Highlights

Q: The mobile revenue growth was slow at only 2% year-on-year in the fourth quarter. Can you discuss the competitive landscape and outlook for mobile industry revenue growth and ARPU growth? Also, why are subscribers still declining despite expanding coverage? A: Ritesh Singh, Chief Commercial Officer: The market is focused on acquisitions, leading to intense competition. Many customers are opting for new SIM cards instead of recharges. The decline in subscribers is due to eliminating no-value customers. However, our VLR base and data pack purchases are stable and increasing year-on-year, indicating healthy underlying business conditions.

Q: The EBITDA margin is down sequentially. Are there any one-off costs, particularly in the cost of services? Also, can you elaborate on the dividend payout ratio, aiming for 70% by 2026? A: Chi Hung Lee, Chief Financial Officer: The margin decline is mainly due to higher costs in sales and marketing, driven by installation and wholesale business expenses. Regarding dividends, we aim for a progressive increase, but the exact amount for 2024 will be determined through our approval process.

Q: What is driving the higher CapEx year-on-year, and does it include any 5G assumptions? A: Vikram Sinha, CEO: The CapEx increase is linked to capacity expansion and AI initiatives. We are also preparing for future 5G spectrum auctions. Our AI-led capacity projections have improved efficiency, allowing us to manage CapEx effectively.

Q: With the tariff improvements in the fourth quarter, how are ARPUs trending in the first quarter of 2025? What are the drivers for the projected 10%+ EBITDA growth in 2025? A: Ritesh Singh, Chief Commercial Officer: We have implemented AI-led customer value management and adjusted monthly packs from 30 to 28 days, which should positively impact ARPU. The EBITDA growth will be driven by improving macroeconomic conditions, better ARPU, and subscriber growth, along with cost optimization.

Q: Can you provide more details on the GPU as a service, specifically the $30 million revenue expectation and associated costs? A: Vikram Sinha, CEO: The $30 million is annual revenue from multiyear contracts, with margins around 60%. We have invested approximately $60-65 million in H100, and revenue will start flowing from Q2 2025 as customer setups are completed.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.