/Indosat (ISAT) Stock Analysis: 2025 Prospects in the Midst of Competitive Challenges
Stock ISATFebruary 25, 2025

Indosat (ISAT) Stock Analysis: 2025 Prospects in the Midst of Competitive Challenges

Indosat Ooredoo Hutchison (ISAT) has just released its financial performance report for 2024, which shows revenue growth but faces pressure from increasingly fierce industry competition. With the current share price at the level of IDR1,730, is ISAT stock still worth collecting? Let’s dissect more deeply the performance, challenges, and future prospects.

FY24 Financial Performance: Revenue Rises, Profit Falls Short of Expectations

ISAT recorded revenue of IDR55.9 trillion in FY24, growing 9.1% YoY. The main contribution came from the cellular services and MIDI (Multimedia, Internet, Data) segments, increasing by 1.9% QoQ and 7.5% QoQ, respectively. However, on the other hand, the company lost about 4 million subscribers in the last quarter of the year, bringing the total subscribers down to 94.7 million (-4.1% YoY).

Despite the decrease in customer numbers, ARPU (Average Revenue Per User) increased to IDR38.9K (+4.6% QoQ, +1.0% YoY), driven by increased data consumption. EBITDA for 4Q24 fell to IDR6.4 trillion (-3.2% QoQ), but throughout FY24 it continued to grow by 10.2% YoY to IDR26.4 trillion. Unfortunately, ISAT’s net profit in 4Q24 fell 39.9% YoY due to the absence of one-time revenue from tower sales as in 4Q23.

ISAT’s Strategy Faces Stiff Competition

In the last quarter of 2024, ISAT faces severe challenges due to aggressive competitors lowering the price of the starter package. To maintain market share, ISAT launched a variety of more focused promotions.

  • Pricing strategy: Incremental price adjustments while maintaining a healthy ARPU.
  • Operational efficiency: Reduce inactive customers or contribute only a small amount to revenue.
  • Infrastructure expansion: Increasing the number of BTS to 250,300 units to expand network coverage, especially outside Java.

ISAT also strengthens its presence in the fixed broadband segment by offering high-quality services at competitive prices. The company is targeting EBITDA growth of more than 10% in FY25, driven by the expansion of its ARPU and GPU-as-a-service business, which is projected to generate revenue of USD35-45 million with an EBITDA margin of around 60%.

2025 Prospects: Optimism in the Midst of Challenges

ISAT remains optimistic about the growth of the telecommunications industry in 2025, with an estimated revenue growth of 4%-5%, higher than 2%-3% in 2024. The company also plans to increase its dividend payout ratio to 70% by 2026, which means shareholders can anticipate dividends of around IDR3.8 trillion with a dividend yield of around 7%.

Risks to Watch Out for

Despite the optimism, investors need to pay attention to several risks that could hinder ISAT’s growth:

  • Pressure on ARPU and traffic growth due to price competition.
  • The rise of illegal internet packages at cheaper prices that can disrupt the market ecosystem.
  • Reliance on massive investments in AI infrastructure and technology that takes time to deliver maximum results.

Conclusion: Are ISAT Shares Worth Collecting?

Although ISAT faces major challenges in 2024, the company’s fundamentals remain solid with a clear strategy for 2025. With our latest price target of IDR2,500, the stock still offers a potential upside of 44.5% from its current price. However, investors still need to pay close attention to industry developments, especially price competition and customer acquisition strategies.

Bagi investor jangka panjang yang mencari saham dengan prospek pertumbuhan, dividen menarik, serta eksposur ke sektor telekomunikasi yang terus berkembang, ISAT tetap menjadi pilihan yang layak dipertimbangkan.

Referensi: Indosat

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