Business Context and Reporting Period
Company: Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (Telkom Indonesia)
Filing Type: Form 6-K (Reporting the 2016 Annual Report)
Reporting Period: Fiscal Year ended December 31, 2016
Filing Date: March 30, 2017
Telkom Indonesia is a state-owned public limited liability company and the leading telecommunications provider in Indonesia. The company operates through four main segments: Corporate, Home, Personal (Mobile), and Other. The 2016 reporting period focused on the company's transformation into a "Digital Telco," emphasizing broadband connectivity, digital mediation platforms, and digital services to support Indonesia's digital economy.
Key Financial Metrics (2016 vs. 2015)
| Metric | 2016 (Rp Billion) | 2015 (Rp Billion) | Change (%) |
|---|---|---|---|
| Total Revenues | 116,333 | 102,470 | +13.5% |
| EBITDA | 59,498 | 51,415 | +15.7% |
| Operating Profit | 39,195 | 32,418 | +20.9% |
| Net Profit (Total) | 29,172 | 23,317 | +25.1% |
| Net Profit (Attributable to Parent) | 19,352 | 15,489 | +24.9% |
| Total Assets | 179,611 | 166,173 | +8.1% |
| Total Liabilities | 74,067 | 72,745 | +1.8% |
| Capital Expenditure (Capex) | 29,199 | 26,401 | +10.6% |
Key Ratios (2016)
- EBITDA Margin: 51.1% (Increased from 50.2% in 2015)
- Operating Profit Margin: 33.7% (Increased from 31.6% in 2015)
- Return on Equity (ROE): 22.9%
- Debt to Equity Ratio: 30.1%
- Debt to EBITDA Ratio: 53.4%
- Current Ratio: 120.0%
Material Changes and Operational Highlights
- Revenue Growth Drivers: Revenue growth was primarily driven by the "Data, Internet, and Information Technology" segment, which grew by 23.3% to Rp58.9 trillion, accounting for 50.6% of total revenue. This was fueled by a 43.9% increase in cellular internet and data revenues.
- Subscriber Growth:
- Mobile Broadband: Reached 60.0 million subscribers (+37.1% YoY), driving data traffic to 958.7 Petabytes (+94.8%).
- Fixed Broadband (IndiHome): Reached 1.6 million triple-play subscribers, contributing to a total fixed broadband base of 4.3 million.
- Cellular: Total cellular subscribers reached 173.9 million (+13.9% YoY).
- Infrastructure Expansion:
- Completed the Sulawesi-Maluku-Papua Cable System (SMPCS) and the SEA-ME-WE 5 submarine cable (20,000 km).
- Expanded fiber backbone to 106,000 km and achieved 16.4 million homes-passed.
- Launched the Telkom-3S satellite in February 2017 (post-year-end) to enhance capacity and coverage.
- Cost Management: Total expenses increased by 8.9%, which was lower than the revenue growth rate, leading to improved margins. Operational costs were controlled despite significant infrastructure investments.
Guidance, Outlook, and Risks
Management Commentary and Outlook
Management expects the Indonesian macroeconomic environment to remain solid in 2017, supported by household consumption and government infrastructure spending. The company anticipates continued growth in the telecommunications industry, driven by increasing smartphone penetration and data consumption.
2017 Targets:
- Revenue Growth: Targeted to grow above the industry average.
- Margins: EBITDA and Net Income margins are projected to slightly decline due to the increasing portion of digital business revenue and the decrease in legacy service (voice/SMS) revenue.
- Capital Expenditure: Planned at 23%-25% of revenue, focusing on broadband infrastructure for both mobile and fixed segments.
Risks and Contingencies
- Regulatory and Political: Potential policy changes following the 2017 regional elections (Pilkada) and global geopolitical uncertainties (e.g., Brexit, US election outcomes).
- Competition: Intense competition in the mobile and fixed broadband sectors, including from Over-The-Top (OTT) players substituting legacy voice and SMS services.
- Technology and Infrastructure: Risks related to the rapid pace of technological change, spectrum availability, and the high cost of infrastructure deployment in remote areas.
- Legal Disputes: In 2016, the company faced fines totaling Rp43 billion related to competition law violations (KPPU decisions regarding monopoly and SMS cartel practices), which were accepted and paid.
Important Facts for Investor Verification
- Dividend Policy: The company has a history of paying dividends. The 2016 dividend policy (60% payout ratio) was approved at the 2017 AGM. An interim cash dividend of Rp19,379 per share was paid in December 2016.
- Debt Structure: The company maintains a strong credit rating (id AAA). Significant bond issuances include the "Sustainable Bond I" issued in 2015 with maturities ranging from 7 to 30 years.
- Share Buyback: In June 2016, the company sold back 172.8 million treasury shares (864 million shares) as part of Phase IV of its buyback program, generating proceeds of approximately Rp3.26 trillion.
- Government Ownership: The Government of the Republic of Indonesia holds a controlling stake of 52.09% as of February 28, 2017.
- Accounting Standards: Financial statements are prepared in accordance with Indonesian Financial Accounting Standards (PSAK) and International Financial Reporting Standards (IFRS) for NYSE reporting.