Business context and reporting period
Telkom Indonesia is an Indonesian state-controlled telecommunications and digital services group, with a 65% interest in mobile subsidiary Telkomsel. This Form 20-F is the audited annual report for the fiscal year ended December 31, 2021—not a standalone fourth-quarter report. Financial statements are prepared under IFRS as issued by the IASB; amounts below are in Indonesian rupiah (Rp), generally billions, unless stated otherwise.
Key financial and operating metrics
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | Rp143,210 | Rp136,447 | +5.0% |
| Operating profit | Rp47,653 | Rp43,958 | +8.4% |
| Operating margin | 33.3% | 32.2% | +1.1 percentage points |
| Profit before income tax | Rp43,739 | Rp39,147 | +11.7% |
| Profit for the year | Rp34,099 | Rp29,890 | +14.1% |
| Profit attributable to parent owners | Rp24,877 | Rp21,052 | +18.2% |
| Operating cash flow | Rp68,353 | Rp65,317 | +4.6% |
| Capital expenditures | Rp30,329 | Rp29,279 | +3.6% |
Revenue growth was led by data, internet and IT services, up 8.5% to Rp82,224, and IndiHome, up 18.5% to Rp26,325. These represented 57.4% and 18.4% of consolidated revenue, respectively. Cellular voice revenue fell 24.5% to Rp14,737; fixed-line voice revenue fell 17.6% to Rp1,730; and SMS revenue declined to Rp4,754. Mobile broadband subscribers reached 120.5 million, while IndiHome fixed broadband subscribers reached 8.6 million.
Total expenses rose 2.3% to Rp95,635. Depreciation and amortization increased 9.6% to Rp31,714, and operations, maintenance and telecommunications service expenses increased 10.3% to Rp38,133. General and administrative expenses fell 23.6%, mainly because the allowance for expected credit losses declined to Rp477 from Rp2,344 in 2020.
Cash and cash equivalents were Rp38,311 at year-end, up 86.1%. Current assets were Rp61,288 and current liabilities Rp68,695, giving a current ratio of 0.89 and negative working capital of Rp7,407. Borrowings were Rp68,579 and net debt Rp30,268; net debt to equity was 0.25. The company reported a debt service coverage ratio of 1.6 times. Cash used in investing activities was Rp37,914 and cash used in financing activities was Rp12,775.
Material changes and unusual items
- Revenue growth, higher operating profit and lower credit-loss expense supported higher reported profit. Operating profit margin improved to 33.3%.
- Reported FY2021 profit included a Rp3,432 unrealized gain on changes in fair value of investments, primarily from GoTo and MDI Ventures holdings; this was Rp129 in 2020.
- Other comprehensive income was Rp1,980, compared with a Rp3,581 loss in 2020, principally reflecting a Rp1,955 actuarial gain on the defined benefit pension plan.
- Mitratel’s November 2021 IPO generated Rp18,463 of proceeds and diluted Telkom’s ownership while leaving it with control. Telkomsel also invested US$450 million in GoTo during 2020–2021, and made additional investments in digital businesses.
- Telkom paid the 2020 dividend in 2021: Rp168.01 per share, with total company dividends of Rp16,643. The 2021 dividend remained subject to the 2022 annual general meeting.
Outlook, management commentary and risks
Management expected 2022 capital expenditures to equal approximately 24%–27% of revenue, with emphasis on mobile and fixed broadband infrastructure. It cited continued digitalization and demand for connectivity, data centers and cloud services as growth opportunities, while noting that the full effects of COVID-19 and related restrictions remained uncertain. No specific revenue or earnings guidance was provided.
Key risks include intense competition and substitution of voice and SMS by over-the-top services; substantial network investment and uncertain returns; spectrum availability and potential infrastructure-sharing requirements; dependence on Telkomsel, which generated 61.0% of group revenue in 2021; government control and regulatory change; cyber threats and network outages, including cable damage and natural disasters; and foreign-exchange and floating-rate debt exposure. The filing states that 63.6% of bank borrowings were floating-rate in one section and approximately 85% in another, so the exposure is not consistently stated.
The auditor issued an unqualified opinion on the IFRS financial statements and on internal control over financial reporting. The audit identified estimated useful lives of property and equipment as a critical audit matter. Management accelerated depreciation of MSAN assets, with Rp1,603 of additional depreciation in 2021 and a further Rp1,603 estimated for 2022.
Most important facts for investors to verify
- Reconcile the filing’s different disclosures of floating-rate borrowing exposure (63.6% versus approximately 85%).
- Confirm the recurring earnings contribution excluding the Rp3,432 unrealized investment gain and assess the valuation basis and liquidity of GoTo and other investments.
- Review liquidity and refinancing needs against negative working capital, near-term debt maturities, lease obligations and planned capital spending.
- Verify the reported capital expenditure total: the narrative gives Rp30,329, while the segment reconciliation gives Rp30,321.
- Check the FY2021 dividend decision and the applicable profit basis: the filing says dividends are determined using Indonesian financial accounting standards, which differ from IFRS.