Business Context and Reporting Period
Company: Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (Telkom Indonesia)
Reporting Period: Six months ended June 30, 2020 (Unaudited)
Filing Date: August 10, 2020
Business Overview: The Company is Indonesia's leading telecommunications provider, offering mobile, fixed-line, internet, and enterprise solutions. It operates through four primary segments: Mobile, Consumer, Enterprise, and Wholesale & International Business (WIB). The Group is majority-owned by the Government of the Republic of Indonesia (52.09%).
Key Financial Metrics (in billions of Indonesian Rupiah)
| Metric | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 |
|---|---|---|
| Total Revenues | 66,856 | 69,345 |
| Operating Profit | 22,253 | 22,210 |
| Profit Before Tax | 20,015 | 20,838 |
| Net Profit (Profit for the Year) | 15,433 | 15,498 |
| Net Profit Attributable to Parent | 10,989 | 11,078 |
| Basic EPS (Rp) | 110.93 | 111.83 |
| Net Cash from Operating Activities | 34,171 | 27,702 |
| Net Cash Used in Investing Activities | (15,937) | (16,340) |
| Net Cash Used in Financing Activities | (8,304) | (11,673) |
| Cash and Cash Equivalents (End of Period) | 28,238 | 17,075 |
| Total Assets | 246,351 | 221,208 |
| Total Liabilities | 136,066 | 103,958 |
| Total Equity | 110,285 | 117,250 |
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased by 3.6% (Rp2,489 billion) compared to the prior year, primarily driven by a decline in the Mobile segment (Telephone revenues dropped from Rp12,815 billion to Rp9,309 billion) and Enterprise segment revenues.
- Stable Operating Profit: Despite lower revenue, Operating Profit remained stable at Rp22,253 billion, supported by a significant reduction in Operation, Maintenance, and Telecommunication Service expenses (down 25.5% to Rp16,227 billion).
- Increased Depreciation: Depreciation and amortization expenses increased by 21.5% to Rp13,927 billion, reflecting continued capital investment and asset additions.
- Investment Impairment: The Group recorded an impairment loss on investments of Rp342 billion, primarily related to the associated company Tiphone, compared to no impairment in the prior period.
- Balance Sheet Expansion: Total assets increased by 11.4% to Rp246,351 billion. This was largely due to the adoption of PSAK 73 (Leases), which recognized Right-of-Use assets of Rp18,024 billion and corresponding lease liabilities.
- Dividend Payment: The Company paid cash dividends of Rp15,262 billion in the current period (for the 2019 financial year), compared to Rp16,229 billion in the prior period.
Guidance, Outlook, Risks, and Unusual Items
- Accounting Standard Changes: The financial statements reflect the adoption of PSAK 71 (Financial Instruments), PSAK 72 (Revenue from Contracts with Customers), and PSAK 73 (Leases) effective January 1, 2020. These changes significantly altered the presentation of assets, liabilities, and equity but did not materially alter the underlying economic performance.
- Taxation Risks: The Company is involved in ongoing tax disputes and assessments regarding VAT and income tax for fiscal years 2007 through 2018. While the Company has received favorable verdicts from the Supreme Court on several major VAT cases (e.g., international incoming call interconnection), some appeals and assessments remain in process. Management believes provisions are adequate.
- COVID-19 Impact: While not explicitly quantified as a separate line item, the filing notes the adoption of practical expedients under PSAK 73 regarding lease concessions related to COVID-19. The Group's cash flow from operations increased significantly, suggesting resilience in core business operations despite the pandemic environment.
- Capital Expenditures: The Group continues to invest heavily in network infrastructure. Capital expenditures for the period were approximately Rp12,010 billion (including non-cash additions). Significant commitments remain for submarine cable systems and network expansion.
- Debt Covenants: The Group has complied with all financial covenants (Debt-to-Equity, EBITDA-to-Interest, Debt Service Coverage) as of June 30, 2020, although waivers were obtained for certain loans in the prior year regarding current ratios.
Key Facts for Investor Verification
- Revenue Mix Shift: Verify the sustainability of the revenue decline in the Mobile segment and the growth trajectory of the Consumer (Indihome) and Enterprise segments.
- Impairment Charges: Review the specific details of the Rp342 billion impairment on the Tiphone investment and assess if further impairments are likely given the market conditions.
- Lease Liability Impact: Understand the impact of the new lease standard (PSAK 73) on the balance sheet, which added over Rp13 trillion in lease liabilities, affecting leverage ratios.
- Tax Litigation Status: Monitor the status of ongoing tax assessments, particularly for fiscal years 2012 and 2015, which involve significant potential liabilities or refunds.
- Dividend Policy: Confirm the payout ratio and future dividend expectations, noting the recent payment of Rp15,262 billion for the 2019 fiscal year.
- Foreign Exchange Exposure: The Group has a net foreign currency liability exposure of approximately Rp3.5 trillion (primarily in Japanese Yen), which poses a risk if the Rupiah weakens further.