Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk — 2019 Form 20-F
Reporting period: Fiscal year ended December 31, 2019; this is an annual report, not a standalone fourth-quarter filing. The audited consolidated statements are prepared under IFRS as issued by the IASB. Amounts below are in Rp billion unless stated otherwise.
Business context and key financial results
Telkom is Indonesia’s largest telecommunications provider, with mobile services operated principally through 65%-owned Telkomsel. Its businesses span mobile, consumer, enterprise, wholesale and international, and digital services. Mobile remained the largest segment, while fixed broadband and data services were key growth drivers.
| Metric | 2019 | 2018 | Change |
|---|---|---|---|
| Revenue | 135,557 | 130,788 | +3.6% |
| Operating profit | 43,994 | 38,533 | +14.2% |
| Operating margin | 32.5% | 29.5% | +3.0 percentage points |
| Profit before tax | 38,299 | 36,077 | +6.2% |
| Profit for the year | 27,860 | 26,711 | +4.3% |
| Profit attributable to parent owners | 19,068 | 17,802 | +7.1% |
| Basic earnings per share | Rp192.49 | Rp179.71 | +7.1% |
Data, internet and information technology services contributed 51.6% of revenue, up from 47.1%. Cellular internet and data revenue rose 28.8% to Rp52,858 billion; IndiHome revenue increased 27.7% to Rp16,255 billion, with subscribers growing to 7.0 million. These gains were partly offset by cellular voice revenue falling 18.7% to Rp27,907 billion and SMS revenue falling 25.2% to Rp6,954 billion. Enterprise external revenue declined 11.2% to Rp18,701 billion.
Cash flow, investment, debt and liquidity
- Net cash provided by operating activities was Rp58,966 billion, up 29.1% year over year.
- Net cash used in investing activities was Rp35,875 billion, including Rp35,302 billion of property and equipment purchases. Net cash used in financing activities was Rp22,175 billion.
- Cash and cash equivalents were Rp18,241 billion, versus Rp17,435 billion a year earlier. Net debt increased to Rp48,716 billion from Rp26,647 billion.
- Total debt and borrowings were Rp66,957 billion. Current liabilities rose 32.4% to Rp61,349 billion, while current assets fell 4.5% to Rp40,917 billion. The current ratio declined to 0.67 from 0.93; net working capital was negative Rp20,432 billion.
- Capital expenditures were Rp36,485 billion, compared with Rp33,620 billion in 2018. Contracted capital expenditure commitments totaled Rp10,648 billion. Management expected 2020 capex to be approximately 25% of revenue.
- IFRS 16 adoption resulted in year-end right-of-use assets of Rp20,893 billion and lease liabilities of Rp17,217 billion. It also shifted lease costs between operating expenses, depreciation and finance costs, limiting comparability with prior periods.
Material changes and unusual items
- Operating profit improved as revenue growth and lower operating, maintenance and telecommunications service expenses more than offset higher depreciation and amortization, which rose 26.9% to Rp27,204 billion.
- Finance costs increased 54.8% to Rp5,452 billion, alongside higher borrowings. Telkom also recorded Rp1,172 billion of impairment on its Tiphone investment and a Rp166 billion share loss from associates.
- Other comprehensive income swung from Rp4,954 billion in 2018 to a Rp2,189 billion loss in 2019, primarily reflecting Rp2,109 billion of actuarial losses on defined-benefit plans. Total comprehensive income fell 18.9% to Rp25,671 billion.
- Mitratel acquired 2,100 Indosat towers for Rp4,443.9 billion and acquired 95% of PT Persada Sokka Tama. Telkom sold 67% of Jalin Pembayaran Nusantara, retaining a 33% interest.
- The 2018 dividend, paid in 2019, was Rp163.82 per share. The 2019 dividend was to be determined at the 2020 AGM; the filing gives no declared 2019 dividend amount.
Outlook, risks and contingencies
Management anticipated continued growth in mobile data and household broadband, supported by smartphone adoption and IndiHome expansion, while expecting legacy voice and SMS revenue to keep declining. The company cited competition and price pressure, OTT substitution, substantial network investment needs, spectrum constraints, potential infrastructure-sharing requirements, and dependence on Telkomsel as important business risks.
Management said COVID-19 was expected to affect 2020 results, but the potential impact and duration were highly uncertain. It noted increased broadband use during restrictions, while also anticipating weaker economic activity and possible revenue declines across segments. Planned responses included managing network capacity, stabilizing supply chains, and supporting customers’ remote-work, learning and entertainment needs.
Other exposures include floating-rate debt, foreign-exchange movements, natural disasters and submarine-cable disruption. KPPU matters disclosed include inquiries concerning Netflix access blocking and Telkom’s IP transit business in Papua; the filing reports no final outcome for these matters. A prior SMS price-fixing case resulted in penalties paid by Telkom and Telkomsel. Telkom estimated Rp4.7 billion of damage from January 2020 flooding and had submitted an insurance claim. The 2019 Form 20-F filing was delayed because COVID-19 restrictions limited access to records and slowed audit work. The independent auditor gave an unqualified opinion on the financial statements and internal controls.
Key facts for investors to verify
- Reconcile reported 2019 debt growth, lease liabilities and near-term maturities against the company’s financing facilities and cash generation.
- Assess whether continued data and IndiHome growth can offset falling voice, SMS and enterprise revenue, and whether higher capex earns adequate returns.
- Review the Tiphone impairment assumptions and the sensitivity of pension obligations and asset useful-life estimates.
- Track the outcomes of the KPPU matters, the flood insurance claim, and the 2020 dividend decision.
- Compare future results carefully with 2018 because IFRS 16 was adopted prospectively using a modified retrospective approach, without restating comparative figures.