Business Context and Reporting Period
This Form 6-K filing by Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (Telkom) covers the fiscal year ended December 31, 2019, with the report signed on May 27, 2020. As Indonesia's largest state-owned telecommunications company, Telkom operates through a diversified portfolio including mobile (Telkomsel), fixed broadband (IndiHome), enterprise solutions, and wholesale/international services. The reporting period was characterized by a strategic transformation into a digital telecommunications company, navigating a competitive market, the 2019 Indonesian general election, and the onset of the COVID-19 pandemic in late 2019.
Key Financial Metrics (2019)
| Metric | 2019 Value (Rp Billion) | 2018 Value (Rp Billion) | Change (%) |
|---|---|---|---|
| Revenues | 135,567 | 130,784 | +3.7% |
| EBITDA | 64,832 | 59,181 | +9.5% |
| EBITDA Margin | 47.8% | 45.3% | +250 bps |
| Operating Profit | 42,394 | 38,845 | +9.1% |
| Net Profit (Consolidated) | 27,592 | 26,979 | +2.3% |
| Net Profit (Attributable to Parent) | 18,663 | 18,032 | +3.5% |
| Net Cash Flow from Operating Activities | 54,949 | 45,671 | +20.3% |
| Capital Expenditure (Capex) | 36,585 | 33,620 | +8.8% |
| Total Assets | 221,208 | 206,196 | +7.3% |
| Total Liabilities | 103,958 | 88,893 | +16.9% |
| Debt to Equity Ratio | 0.44x | 0.38x | - |
| Debt to EBITDA Ratio | 0.80x | 0.74x | - |
Material Changes vs. Prior Period
- Revenue Growth: Driven primarily by a 23.3% increase in cellular internet and data revenue and a 28.1% surge in IndiHome revenue. This offset a 16.8% decline in telephone revenue and a 23.1% drop in SMS revenue due to the shift to Over-The-Top (OTT) services.
- Segment Performance:
- Mobile: Revenue grew 3.0% to Rp87.9 trillion. Digital business revenue grew 23%, now accounting for 64% of total mobile revenue.
- Consumer: Revenue surged 27.5% to Rp17.7 trillion, driven by a 37.2% increase in IndiHome subscribers (reaching 7.0 million).
- Enterprise: Revenue declined 11.2% to Rp18.7 trillion as the company strategically reduced low-margin, non-recurring business lines to improve profitability.
- Infrastructure Expansion: Capex increased to Rp36.6 trillion, funding the construction of 23,162 new 4G BTS units, expansion of the fiber optic backbone, and the acquisition of 2,100 towers from Indosat and 95% of PT Persada Sokka Tama.
- Liabilities: Total liabilities rose 16.9%, primarily due to increased short-term bank loans and current maturities of long-term borrowings.
Guidance, Outlook, and Risks
- 2020 Outlook: Management expects slight positive revenue growth despite the COVID-19 pandemic. IndiHome is projected to grow double-digits, while the mobile segment is expected to grow single-digits. The Enterprise segment faces pressure. EBITDA margins are projected to decline slightly due to infrastructure investment.
- Strategic Focus: Continued investment in digital connectivity, digital platforms (data centers, cloud), and digital services. Capex is planned at approximately 25% of revenue.
- Risks and Contingencies:
- COVID-19: Identified as a non-adjusting event after the reporting date. Potential impacts include economic slowdown, disruption of business operations, and foreign exchange volatility. Management is accelerating digital sales and maintaining cost leadership.
- Regulatory: Risks related to changes in telecommunications regulations, including network sharing mandates and regional tax levies on towers.
- Competition: Intense competition in the mobile data market and the rise of OTT services cannibalizing legacy voice/SMS revenue.
- Legal: Ongoing significant legal disputes, including a case with PT Citra Sari Makmur regarding transponder services.
Key Facts for Investor Verification
- Dividend Policy: The company historically pays 60-90% of net profit as dividends. The 2019 dividend payout ratio and amount were to be determined at the 2020 AGM.
- Share Buyback: The company announced a share buyback program of up to Rp1.5 trillion to be executed between March and June 2020.
- Debt Maturities: Significant debt maturities in 2020 include the Telkom Bond II 2010 Series B (Rp1,995 billion) and various Medium Term Notes (MTN).
- Accounting Standards: Financial statements are prepared in accordance with IFRS (specifically IFRS 16 for leases, effective Jan 1, 2019), which impacts the recognition of lease liabilities and right-of-use assets.
- Ownership Structure: The Government of the Republic of Indonesia holds 52.09% of shares, maintaining control.