Market Competition and By.U’s Position in the Youth Segment

Competition in the Indonesian telecommunications industry in the fourth quarter of 2024 is still relatively stable, with market dynamics improving. In Java, the market share of telecommunication operators is quite balanced, while outside Java, Telkomsel remains dominant.

To maintain market balance, Telkomsel implemented a gradual price adjustment. This strategy aims to increase affordability without disrupting competitive stability.

By.U, which was originally a digital-only brand, has now ventured into the offline market since 2023. Although its expansion is getting wider, the brand still focuses on the young segment, especially in schools and universities. Its contribution to Telkomsel’s revenue is still relatively small, around 5% of total revenue, including Tsel Lite and Tsel Prebayar services.

To attract the middle to lower segment, By.U introduced a starter pack for IDR 10,000. However, the impact on ARPU is expected to be minimal, considering that Telkomsel’s main users come from the premium segment.

ARPU Growth and Price Optimization Strategy

Entering 2025, Telkomsel plans to increase service rates while maintaining the affordability of starter packs. The increase in ARPU is expected to be in line with inflation and driven by increased spending by existing customers, which account for 95% of total revenue.

• ARPU shows an upward trend, while the number of subscribers is relatively stable.
• Data consumption per user continues to increase, driving positive traffic growth.
• Marketing and sales costs are expected to remain stable, although overall margins may decline as a result of early retirement plans.
• The capex (CAPEX-to-Revenue) ratio is targeted to gradually decline to the range of 17-19% by 2028.

Fixed Broadband Expansion and Spectrum Strategy

In the fixed broadband (FBB) sector, Telkomsel remains the dominant player with a market share of 70-75%, reaching around 450-500 cities. Even though the competition is getting tighter, Telkomsel’s position is still strong thanks to its price and service differentiation strategy.

To address the issue of affordability, the company introduced EzNet, a broadband service at a more affordable price. However, the main focus remains on premium customers to maintain service quality and prevent pressure on ARPU.

In terms of spectrum, Telkomsel is evaluating its participation in the 1.4GHz spectrum auction with an approach that takes into account cost-effectiveness as well as long-term strategic benefits. In addition, the company is also exploring Fixed Wireless Access (FWA) solutions to expand the coverage of home broadband services.

TLKM’s Growth Roadmap in 2025

For 2025, Telkomsel targets several key achievements:

• Addition of fixed broadband subscribers: 800 thousand – 1 million users.
• Total home broadband subscribers (2024): ~10 million.
• ARPU: ~Rp240,000, with a focus on premium customer growth.
• Gradual reduction of the CAPEX-to-Revenue ratio until 2028.

Conclusion: Are TLKM Stocks Still Attractive?

Telkom Indonesia continues to demonstrate a solid business strategy with a combination of ARPU growth, broadband expansion, and promising cost efficiency. With strong market dominance and service innovation, TLKM shares remain attractive to long-term investors.

For investors looking for stocks with strong fundamentals with stable growth prospects, TLKM is still the top choice. However, challenges such as industry competition and margin pressures remain to be considered.

References ((Telkom Indonesia))