PT XL Axiata Tbk (EXCL) reported (financials here) a net loss of approximately IDR 1.4 trillion in Q3 2025, a significant reversal from the net profit of IDR 292 billion in Q3 2024 and deepening the IDR 1.6 trillion loss from Q2 2025. This outcome propelled the company’s nine-month net loss for 2025 to IDR 2.6 trillion, substantially missing consensus forecasts that anticipated a full-year net loss of IDR 809 billion. The primary culprit: persistent, escalating post-merger integration expenses.
Unveiling the Q3 2025 Performance: A Margin Squeeze Under Pressure
The telecom giant’s Q3 2025 results paint a challenging picture, largely attributed to the complex financial aftermath of its recent merger. Integration costs weighed heavily on profitability, causing the gross profit margin to shrink dramatically to just 13.8%, a stark contrast to 28% in Q3 2024 and 16.7% in Q2 2025. Consequently, gross profit for the quarter declined by 10% quarter-on-quarter, indicating the profound impact of these strategic but expensive adjustments.
Post-Merger Dynamics: ARPU Ascends as Subscriber Base Rationalizes
Driving Revenue and Value: ARPU Growth Amidst Strategic Subscriber Pruning
Amidst the financial headwinds, EXCL demonstrated a strategic shift towards value creation. Following a post-merger dip, Average Revenue Per User (ARPU) rebounded robustly, climbing 9.6% quarter-on-quarter to IDR 38,900 in Q3 2025, though still down 6% year-on-year. This ARPU uplift occurred despite a 3.6% quarter-on-quarter decline in subscribers to 79.6 million, a movement management actively orchestrated by pruning low-ARPU service packages. This deliberate culling reflects XL Axiata’s intensified focus on cultivating higher value-added customer segments, a strategy clearly visible in the data yield, which rose 5.1% quarter-on-quarter to IDR 2.6 per MB.
The Cost of Synergy: Integration Expenses Weigh Heavily
Unpacking the Cost Burden: Depreciation and Operational Overheads
The net loss in Q3 2025 primarily stemmed from a notable surge in both cost of revenue (up 13% QoQ) and operational expenses (up 5% QoQ). This increase marks the full recognition of integration costs since the merger officially took effect on April 16, 2025. A significant component of the heightened cost of revenue was a 14% quarter-on-quarter rise in depreciation expenses. This acceleration reflects the early depreciation of redundant assets, including network devices related to the 900 MHz spectrum, slated for return by the close of 2026.
The Road Ahead: Integration Costs Timeline and Normalized Profit View
XL Axiata’s management projects that integration costs will persist until the process concludes, likely in Q4 2026 or Q1 2027. The company has allocated an integration budget of IDR 1.5 trillion for 2025, with approximately IDR 1 trillion already recognized in the first nine months, leaving the remainder for Q4 2025. A similar level of integration expenditure is anticipated for 2026. Critically, management emphasizes that if one-off expenses such as integration, accelerated depreciation, and impairment charges are excluded, EXCL’s normalized profit after tax for Q3 2025 would stand at a healthy ~IDR 1.2 trillion, signaling underlying business strength.
Analyst Outlook and Potential Shareholder Rewards
Navigating Consensus: Achievable Revenue Targets
Despite the substantial net losses, XL Axiata’s 9M 2025 revenue achieved 73% of the full-year 2025F consensus estimate, marginally below the 74% recorded in 9M 2024. Given the impressive quarter-on-quarter ARPU growth in Q3 2025 and management’s confidence in further ARPU expansion in upcoming quarters, analysts view the consensus revenue estimate as still achievable. The company’s focus on higher-value customer segments underpins this optimism.
A Glimmer for Investors: Proposed Additional Dividend
In a potential boon for shareholders, EXCL is exploring the distribution of an additional final dividend in 2025, sourced from its 2024 retained earnings. Management plans to seek approval for this proposal at an Extraordinary General Meeting of Shareholders (EGMS) scheduled for November 21, 2025. This move could provide a welcome signal of shareholder value commitment amidst the ongoing integration challenges.