Business Context and Reporting Period
Company: Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (Telkom Indonesia)
Reporting Period: Six months ended June 30, 2022 (Unaudited)
Filing Date: July 29, 2022
Business Overview: Telkom Indonesia is a state-owned public limited liability company providing telecommunications networks and information services. Its primary operating segments include Mobile, Consumer, Enterprise, and Wholesale & International Business (WIB). The Group is majority-owned by the Government of the Republic of Indonesia (52.09% as of June 30, 2022).
Key Financial Metrics
| Metric (IDR Billion) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 |
|---|---|---|
| Revenues | 71,983 | 69,480 |
| Operating Profit | 22,936 | 23,615 |
| Profit Before Tax | 21,429 | 21,794 |
| Net Profit (Consolidated) | 17,555 | 16,920 |
| Net Profit (Parent Company) | 13,310 | 12,451 |
| Basic EPS (IDR) | 134.36 | 125.69 |
| Operating Cash Flow | 34,944 | 33,085 |
| Capital Expenditures | (13,495) | (11,817) |
| Total Assets | 275,272 | 277,184 |
| Total Liabilities | 134,593 | 131,785 |
| Total Equity | 140,679 | 145,399 |
| Cash and Cash Equivalents | 40,160 | 38,311 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased by 3.6% to IDR 71.98 trillion, driven primarily by growth in the Mobile segment (Cellular data and internet revenue rose to IDR 33.20 trillion) and WIB segment.
- Profitability: While Net Profit increased by 3.8% to IDR 17.56 trillion, Operating Profit decreased by 2.9% to IDR 22.94 trillion. This was largely due to a significant increase in Depreciation and Amortization expenses (up 15.6% to IDR 16.99 trillion), partly attributed to the accelerated depreciation of Multi-Service Access Node (MSAN) assets.
- Investment Gains: The Group recorded an unrealized gain of IDR 294 billion on changes in fair value of investments, primarily related to its investment in GoTo (formerly Gojek Tokopedia), compared to IDR 350 billion in the prior period.
- Dividends: The Group paid cash dividends of IDR 22.39 trillion during the period (IDR 14.86 trillion to parent shareholders and IDR 7.53 trillion to non-controlling interests), compared to no dividends paid in the first half of 2021.
- Debt Structure: Short-term bank loans increased significantly from IDR 6.68 trillion to IDR 18.95 trillion, while long-term borrowings decreased slightly. Total interest-bearing debt rose to IDR 74.17 trillion.
Guidance, Outlook, and Risks
- Management Commentary: Management highlighted continued investment in network modernization and digital transformation. The Group is actively managing capital structure to optimize the cost of capital and maintain credit ratings.
- Taxation: The Company benefits from a 3% tax rate reduction for listed companies, applying a 19% corporate income tax rate for the period. The Group is involved in ongoing tax assessments and disputes (e.g., fiscal years 2012, 2015, 2018) which are being litigated or resolved.
- Regulatory Risks: The Group is subject to Universal Service Obligation (USO) contributions (1.25% of gross revenue) and frequency usage fees. Tariffs for basic telephony services are regulated by the government.
- Financial Risks:
- Foreign Exchange: The Group has a net exposure to the U.S. Dollar and Japanese Yen. A 1% strengthening of the USD against the Rupiah would decrease equity/profit by approximately IDR 182 billion.
- Interest Rate: A significant portion of borrowings (IDR 48.39 trillion) is at variable rates. A 25 basis point increase in interest rates would decrease profit by IDR 121 billion.
- Credit Risk: Trade receivables are subject to expected credit loss provisions. As of June 30, 2022, the allowance for expected credit losses on trade receivables was IDR 8.02 trillion.
- Subsidiary IPOs: Mitratel (tower company) completed its IPO in late 2021, resulting in a non-controlling interest of 28.13%. Mitratel announced a share buyback program in June 2022.
Key Facts for Investor Verification
- Dividend Payout: Verify the sustainability of the high dividend payout (IDR 14.86 trillion to parent shareholders) relative to the net profit attributable to the parent (IDR 13.31 trillion), noting that the payout exceeded the current period's net profit due to retained earnings.
- Depreciation Impact: Confirm the impact of the accelerated depreciation of MSAN assets (IDR 1.49 trillion in H1 2022) on future operating margins and whether this is a one-time adjustment or part of a longer-term trend.
- GoTo Investment Valuation: Monitor the fair value of the investment in GoTo (IDR 14.97 trillion in long-term financial instruments), as unrealized gains/losses significantly impact reported earnings.
- Debt Covenants: Review compliance with debt covenants, specifically the Debt-to-Equity ratio (currently 28.28% net debt-to-equity) and Debt Service Coverage ratio, noting that waivers were obtained for certain subsidiaries in late 2021.
- Tax Disputes: Track the resolution of ongoing tax assessments for fiscal years 2012, 2015, and 2018, which could result in material cash outflows or adjustments to tax liabilities.