Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Deep Dive

Telkom Indonesia (TLK / TLKM): Deep-Dive Research Report

Reporting-period check: Telkom's fiscal year ends in December and it reports every quarter. Its nine-month (9M26) results were due in late October or early November 2026. They were released around 30 October to 2 November 2026, with the call transcript published 3 November. 9M26 is therefore the latest period used in this report.

1. What the Company Does

Telkom Indonesia is the state-controlled phone company of the world's fourth-most-populous country. It sells three main things:

• Mobile phone service. Most of the money comes from mobile data sold through Telkomsel, a subsidiary Telkom owns 69.9% of. Its ownership is divided between Telkom Indonesia (69.9%) and Singtel (30.1%), and it has served as Telkom's consumer services arm since 1 July 2023, when it took over management of IndiHome.
• Home broadband. IndiHome brings fibre internet into about ten million homes.
• Infrastructure rented to others. This includes fibre backbone, towers, data centres, satellites and undersea cables. Many other operators rent these assets, including the rival mobile networks.

Telkom is unusual among telcos because it is both Indonesia's largest consumer brand in connectivity and its largest wholesale landlord.

History. The company is older than most nation-states. On October 23, 1856, the Dutch colonial government deployed the first electromagnetic telegraph in Indonesia, connecting Batavia (Jakarta) with Buitenzorg (Bogor). The modern company took shape through a series of state reorganisations:

• In 1974, PN Telekomunikasi was split into PT INTI, which manufactured telecommunications equipment, and Perumtel, which supplied domestic and international telecommunication services.
• In 1991, Perumtel was incorporated as a state-owned limited liability company and renamed Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia, or Telkom.
• 1995 was the decisive year. Per the company's own filings, it held its Initial Public Offering on November 14, 1995 on the Jakarta Stock Exchange and the Surabaya Stock Exchange, and on May 26, 1995 it established Telkomsel, its cellular business subsidiary. The listing also included New York, which explains the TLK ADR and the US regulatory exposure covered later.

For two decades after that, Telkom was a fixed-line incumbent whose mobile child outgrew it. Three later decisions reshaped the business you see today:

1. IndiHome (2015). The fibre home brand was launched in 2015 to replace Speedy, the old copper DSL product.
2. IndiHome moved into Telkomsel (2023). Telkom put IndiHome inside Telkomsel to sell fixed and mobile together. The company describes this as integrating IndiHome into Telkomsel, an essential step in the Fixed Mobile Convergence (FMC) initiative. The side effect: Singtel now owns 30% of Indonesia's dominant home-broadband business as well as its mobile business.
3. TLKM30 (2025-26). The current transformation programme turns the listed parent from an operator into a holding company. The stated aims are transitioning from an Operating to a Strategic Holding setup to optimize Value Creation and Total Shareholder Return, and pivoting from legacy telco to digital telco. In practice, the fibre network has moved into a subsidiary called InfraNexia, the data-centre unit is up for a partial sale, and small subsidiaries are being sold, merged or shut.

What problem it solves. Telkom solves geography. Indonesia is thousands of islands with most of its people outside the Jakarta region. Few companies have the capital, spectrum and patience to put signal into remote districts and then wait years for low-income users to grow into it. For a household in eastern Indonesia, Telkomsel is often the only network that works reliably. For a rival operator wanting coverage there, renting a Telkom tower or fibre route is usually cheaper than building one. For the government, Telkom is the default contractor when something has to reach everywhere.

Why it is hard to replicate. Four things would each take decades and political sanction to rebuild:

• licensed spectrum
• a national fibre backbone that includes thousands of kilometres of domestic undersea cable
• the largest tower portfolio in Southeast Asia
• satellites for places neither fibre nor towers can economically reach

The operating detail is in Section 3.

A concrete example. A family in a provincial town signs up for an IndiHome-plus-Telkomsel bundle:

• A Telkom technician runs a drop cable from a street distribution point to the house.
• That access network, and the backbone behind it, is now owned by InfraNexia.
• The family's phones attach to Telkomsel radio equipment, often on a Mitratel tower fed by Telkom fibre.
• Their video traffic may be served from content cached in a Telkom data centre or carried abroad on a Telin undersea cable.

Every layer in that chain is a Telkom group entity. Each layer bills the next one internally, which is why internal transfers dwarf external revenue in some segments (Section 2).

2. Business Segments

Telkom reports five segments: B2C, B2B ICT, B2B Infra, International, and Others. In the FY2025 annual report, the B2C segment generated the highest revenue at Rp105.9 trillion, representing approximately 72% of TelkomGroup's total revenue. The B2B ICT segment followed with Rp15.3 trillion (10%); the International segment contributed Rp10.7 trillion (7%); the B2B Infra segment recorded Rp8.9 trillion (6%); and other segments accounted for Rp5.9 trillion (4%). These shares are of external revenue. The real economic weight of B2B Infra is far larger than 6%, as explained below.

B2C (Telkomsel and IndiHome)

What it does. This is prepaid and postpaid mobile service, sold mainly as data packages, plus fibre home broadband sold under IndiHome and increasingly bundled with mobile. Customers are individuals and households, overwhelmingly prepaid, across the whole archipelago. Data has become almost the entire mobile business:

• Through 9M26, Telkomsel revenue grew 1.8% YoY to Rp82.9 trillion, driven mainly by its digital business, which grew 7.7% YoY to Rp60.7 trillion.
• Old voice and SMS keep shrinking. In 1Q26, broker data showed legacy revenue at 4.8% of mobile revenue, down from 9.7% a year earlier.

Core capability. Coverage depth outside Java plus a distribution system that sells top-ups in tiny denominations through hundreds of thousands of outlets. Converging IndiHome into Telkomsel adds a household relationship that pure mobile rivals lack.

Why it is separate. Telkomsel is a joint venture with Singtel and carries its own licences. IndiHome was moved inside it in 2023 specifically to sell fixed and mobile together.

Role in the group. This is the earnings engine, and in practice the management team's main lever is pricing. The "market repair" theme that runs through every recent call is about B2C (Sections 7 and 9).

Main rivals: Indosat Ooredoo Hutchison and XLSmart in mobile; ICON+, MyRepublic, Biznet, XLSmart and Starlink in home broadband.

B2B ICT (Enterprise and Government)

What it does. It delivers enterprise connectivity, enterprise digital solutions, digital IT services, and other digital solutions for corporate and institutional clients. Enterprise connectivity includes fixed broadband, Wi-Fi, Ethernet, data communication including Metro Ethernet and VPN-IP, high-capacity point-to-point connections, and fixed voice.

• Customers are ministries and regional governments, state-owned enterprises, large private groups, and small businesses served through the IndiBiz brand.
• Connectivity, not software, is still the bulk of this segment.

Core capability. Long-standing relationships inside the Indonesian state and its enterprises, plus the ability to bundle national network reach with managed services.

Why it is separate. The buyers, contracts and sales cycles are completely different from consumer sales. The segment is also the one that was cluttered with dozens of subsidiaries now being collapsed into one operating company. In FY25 the segment was undergoing restructuring resulting in a more selective approach, and management blamed weaker demand partly on state spending cuts: government efficiency policy reduced demand for corporate solutions, dominated by government, large corporate, private and SME customers.

Role in the group. A turnaround and a strategic option. Management has framed the enterprise opportunity against global peers: enterprise currently contributes less than 15% of Telkom's revenue, while at a number of global telecom companies enterprise has reached 20-40% of group revenue.

Main rivals: Indosat and XLSmart enterprise units, Lintasarta, global cloud providers, and local systems integrators.

B2B Infra (Mitratel, InfraNexia, NeutraDC)

What it does. The group's physical assets, rented both to Telkomsel and to outside operators:

• Mitratel (separately listed as MTEL): towers.
• InfraNexia: fibre backbone and access network, recently spun out.
• NeutraDC (legal name PT Telkom Data Ekosistem): data centres.

Why the 6% share misleads. The FY25 segment table shows external revenues of Rp8,929 billion against inter-segment revenues of Rp47,661 billion, for total segment revenues of Rp56,590 billion. More than four-fifths of what this segment bills goes to sister companies. This is the core of the investment debate around monetisation: an asset that serves mostly captive demand is worth what a third party will pay for the contracts.

Core capability. National physical reach that rivals cannot duplicate at reasonable cost.

Why it is separate. Towers, fibre and data centres have long-dated contract economics that infrastructure investors value differently from a telco. Separate legal entities make stake sales possible.

Role in the group. The "unlock value" pillar of TLKM30. FY25 growth here came from higher interconnection revenue from increased international wholesale voice traffic and domestic interconnection services, as well as a rise in data, internet, and IT revenue from data center colocation, IP transit, and Telkom Metro Ethernet.

Main rivals: Sarana Menara and Tower Bersama in towers; DCI Indonesia, Princeton Digital Group, BDx, Digital Edge and EDGNEX in data centres.

International (Telin)

What it does. International wholesale voice and data, subsea-cable capacity, and overseas operations. Founded in 2007, Telin's infrastructure spans more than 300,000km of subsea fiber across 27 global networks.

Why it matters. Customers are foreign carriers, content companies and hyperscalers buying capacity into and out of Indonesia. Much of the data-centre opportunity in Batam depends on Telin cable landings.

Recent trend. Revenue is roughly flat because old businesses shrink as new ones grow. FY25 international revenue decreased by 2.3% YoY to Rp 9.0tn, primarily driven by international SMS hubbing at Telin despite growth in the international wholesale business (this figure is on a narrower definition than the segment external total).

Main rivals: Singtel, NTT and regional cable consortia.

Others

Satellites (Telkomsat), property and land, and assorted digital or ancillary units. Much of this is what TLKM30 is selling or closing. The satellite business is losing money: throughout 2025, Telkomsat reported revenue of Rp1,844.4 billion, EBITDA of Rp556.7 billion, and a net loss of Rp249.5 billion, marking a decline compared to the previous year.

Geographic Mix

Telkom is essentially a single-country business. Nearly all group revenue comes from Indonesian customers. The International segment (about 7% of external revenue) is the only material non-domestic exposure. It operates from hubs including Singapore, Hong Kong, Malaysia and the US, where the parent also holds buildings ((SG, HK, MY, US)).

Inside Indonesia, the important split is Java versus everywhere else:

• Telkomsel's coverage advantage is largest off-Java.
• Rivals concentrate on the richer western provinces.
• One industry review notes that the ARPU battle is fought in the 10 provinces led by Indosat and XLSmart, which account for approximately 62% of Indonesia's total telecommunications revenue despite representing only 26% of the total province count.

Telkom has had a long international presence (overseas wholesale and cable consortia), but it has never been a meaningful exporter. International is a connectivity extension of the domestic franchise, not a second home market.

3. Products and Operations

Mobile (Telkomsel)

The product. Mostly prepaid data packages sold under several brands, including the main Telkomsel brand and the digital-only by.U. Revenue per user is low by global standards, which is both the problem and the opportunity.

Market repair (2025). A large part of 2025 was spent cleaning up a product catalogue that had become a discounting tool. Broker notes after the 1H25 call described starter pack repricing (old products were largely absorbed by Jun25, according to mgmt), product simplification (SKUs reduced from 6,000 to ~400, with a 200 target), and bonus quota rationalization.

Trading quality for quantity (2026). Telkomsel then deliberately shed low-value subscribers. In 1Q26 it delivered ARPU improvement to Rp45.1k (+0.2% qoq) predominantly driven by the deliberate exit of low-value subscribers (-2.4mn qoq). By 2Q26 the quality-led strategy lifted mobile ARPU to IDR 46.0k in 2Q26 (+9% YoY), even as the subscriber base was deliberately trimmed to 153.5mn.

Network

• 5G is being built quickly from a low base: the number of 5G BTS increased by around 400% in 2025.
• Spectrum was topped up in 2026. In the national auction, Telkomsel obtained one of the two remaining 2 × 10 MHz blocks at a price of Rp32.125 billion per MHz, corresponding to a total bid of Rp642.5 billion. The 700 MHz band matters because low-frequency spectrum carries far and penetrates buildings. That is exactly the coverage economics Telkomsel trades on outside cities.

Home Broadband (IndiHome)

Footprint. Fibre-to-the-home with optional TV and fixed voice. Telkomsel remains the national fixed broadband leader, serving 10.3 million subscribers as of December 2025 through the integration of IndiHome for B2C customers. The copper legacy is largely gone: by 2025, it will have upgraded its copper network to fiber in 459 cities and regencies. There is also a low-price flanker brand: Telkom is expanding its market reach with EZnet, an affordable fixed broadband product.

2026 pricing pivot. Management cut unprofitable entry-level plans and pushed speed upgrades. 1Q26 showed the subscriber base up 10% YoY to 10.06 million, while ARPU declined 8.9% YoY to IDR220,300 amid intense competition and continued optimization of entry-level packages. The 2Q26 "cleansing" of non-paying or low-value lines is one cause of the margin miss discussed in Section 9. Management's plan is to reuse released ports from cleansed customers and lock in households through fixed-mobile convergence offers (Maximize Existing Network Assets (Reuse released ports from cleansed customers) Lock-In Through Convergence).

The drop-cable restatement. The physical last metres of IndiHome sit at the centre of Telkom's accounting restatement. Drop cable ("last mile to customer") was reclassified as a separate asset component (from access network), and its useful life was changed from 25 to 5 years, treated as a change in accounting policy applied retrospectively, with restatement of 2023-2024 financials. Operationally, this is an admission that the wire into each home wears out, gets replaced on churn, and was being depreciated as if it were backbone.

Fibre Backbone and Access (InfraNexia)

Telkom moved its wholesale fibre business into a subsidiary in two steps:

After the transfer, InfraNexia owns more than 90% of Telkom's total network assets and manages around 112,000 kilometers of fiber optic networks, including 26,000km of domestic submarine cable communication systems (SKKL) spanning Indonesia.

Why it was done. The stated rationale is utilisation. Telkom's wholesale fiber capacity is currently only about 40% utilized, primarily by its mobile division, Telkomsel. The business is meant to run as a carrier-neutral and open-access model.

External revenue is still small. In 1H26 InfraNexia recorded Rp7.7 trillion in revenue, while revenue from external customers rose 31% year over year to Rp939 billion. About an eighth of its revenue comes from outside the group.

Ownership. Telkom keeps 99.9% ownership of InfraNexia, maintaining strategic control.

Towers (Mitratel)

Mitratel is the independent tower company: listed separately, majority owned by Telkom. At 9M26 it reported:

• 40,704 · 65,037 · 61,496 Towers · Total tenants · Physical fiber km
• Tenant growth outpaced tower expansion, while billable fiber increased 13.3% YoY

Adding tenants to existing towers is how tower economics compound. The new tenants are disproportionately outside Java: Mitratel says 70% of 1Q26 new colocation are deployed in ex-Java, the new areas of growth. It grew partly by buying towers from operators, including acquisitions of towers from other operators such as Telkomsel and Indosat Ooredoo Hutchison.

Data Centres (NeutraDC)

Telkom calls this Indonesia's 3rd largest Data Center Business with an Opportunity to Unlock Value & Monetize through Strategic Partnership. The key sites:

Partners and customers

• Batam is a joint venture with Singtel's data-centre arm. At a May 2026 customer signing, the investors listed included Singtel Digital InfraCo & Nxera (Investor, NeutraDC).
• That signing was with Nasdaq-listed Gorilla Technology, which secured an initial allocation of approximately 5.5MW of capacity, expected to scale to approximately 18MW by November 2026.

Subsea Cables and Satellites

Cables. Telin is building fresh Batam-Singapore routes. In July 2026, Telin, BW Digital and Nongsa Digital Park announced the landing of the Nongsa Changi Cable (NCC) at NDP, Batam. The cable spans around 50km and offers 24 fiber pairs, linking Batam to Changi in Singapore. A second Batam-Singapore system, INSICA, has an RFS target 1Q28.

Satellites. Telkomsat runs Merah Putih and Merah Putih-2, the latter using High Throughput Satellite (HTS) technology with a capacity of up to 32 Gbps, to serve places fibre cannot reach.

How It Is Built and Funded

The operating model is a capex machine directed at the core. In 1H26, Telkom Group realized capex of Rp 10.8tn; the majority (>94%) was allocated to core businesses (B2C and B2B Infra) to expand digital connectivity capabilities, including fiber-optic network, towers, and subsea cables.

The holding-company end state has an operating company for each pillar:

• Telkomsel (B2C)
• Mitratel, InfraNexia and NeutraDC (B2B Infra)
• Telin (International)
• a single enterprise operating company (B2B ICT)

The enterprise piece arrived in November 2026. Telkom took direct control of Digiserve, which became a direct subsidiary of Telkom under the legal name PT Telkom Solusi Indonesia. Management added that Digiserve provides the intended operating platform for Telkom Enterprise; the acquisition from TelkomMetra became effective 1st November 2026, and this internal transfer does not itself create additional consolidated revenue or earnings.

4. Customers

Prepaid mobile users. The largest customer group by far is Indonesian prepaid users, mostly on mid-range smartphones. They buy data packages weekly or monthly in small amounts. A national survey found that users of the three operators generally spend between Rp50,000 and Rp100,000 per month on mobile internet services.

• The buyer is the individual, and the decision is driven by coverage where they live and travel, then price per gigabyte, then promotions.
• Switching costs are low in principle. The SIM is cheap and many users carry two.
• In practice, Telkomsel's advantage in rural and outer-island coverage acts as a switching barrier, because the alternative networks are thinner where the customer lives.

Fixed-mobile convergence households. IndiHome households are the stickier group. The buyer is the household, the sales cycle is a technician visit, and switching means a new installation and a new router. Telkom's whole convergence strategy is to tie the household's broadband to its phones so that leaving one means leaving both. The company reports that IndiHome B2C added around 712K new subscribers by Q4 2025, bringing its total to 10.3 million, reflecting Telkomsel's household-acquisition strategy focused on convergence offerings.

Enterprise and government. Buyers are IT and procurement departments of ministries, regional governments, state-owned enterprises and large private groups, plus SMEs. Decisions run through formal tenders. Sales cycles are long and budget-driven. Telkom wins on national reach, on being a state-owned supplier to state-owned buyers, and on bundling connectivity with managed services.

This customer base exposes Telkom to fiscal policy: the 2025 slowdown was explicitly linked to government spending cuts (Section 2). It also exposes Telkom to procurement risk. A 2025 prosecutors' case concerned enterprise "projects" routed through subsidiaries that allegedly never happened (Section 8). Management's emphasis on being more selective toward this segment is partly a response to that history.

Wholesale and carrier customers. Indosat, XLSmart and smaller ISPs rent Mitratel towers, buy fibre backhaul and IP transit, and interconnect traffic. Their buying criteria are price, location availability and contract terms. Contracts are long-dated, especially tower leases, which makes this the most predictable revenue in the group. The awkward fact is that these customers are also Telkomsel's competitors. The open-access promise of InfraNexia has to be credible enough that Indosat and XLSmart will put traffic on a network owned by their largest rival.

Hyperscalers, cloud and AI tenants. NeutraDC sells multi-year capacity commitments to cloud providers, AI-compute aggregators like Gorilla Technology, and large enterprises. Buyers are infrastructure and procurement teams at global firms. They choose on power availability, delivery date, connectivity (Telin cables), and the regulatory comfort of a state-linked host for data subject to local residency rules. Contracts are typically pre-committed before launch. In June 2026 NeutraDC reported that its joint venture's planned BTM-1 hyperscale facility had secured commitments for all capacity before launch. Switching costs here are high once servers are installed.

Concentration

• Externally, low. No single outside customer is material at group level.
• Internally, high. Telkomsel is the dominant customer of InfraNexia, Mitratel and the fibre network. Internal billing explains why B2B Infra's internal revenue is several times its external revenue (Section 2).

This internal concentration is not a credit risk while the group is consolidated. It does mean any minority sale of InfraNexia or NeutraDC is really a sale of contracts with Telkomsel, so the terms of those internal agreements become a related-party question (Section 10).

Predictability. Revenue quality varies by customer type:

Prepaid seasonality is visible: management attributed the weak 3Q26 partly to the absence of a holiday tailwind (Section 9).

5. Competitive Landscape and Moat

Market structure. Indonesian mobile is now a three-player market after a decade of consolidation:

• Telkomsel: the largest, with roughly ~157 million subscribers (~49%) on one industry estimate, or 45% subscriber share on another.
• Indosat Ooredoo Hutchison: created by the 2022 Indosat-Hutchison merger, with 135 MHz and ~92 million subscribers (~28%).
• XLSmart: formed when XL Axiata completed a $6.5 billion merger with Smartfren in January 2025, forming XLSmart with 94.5 million subscribers.

Telkomsel's share is lower among actual internet users than among SIMs. An APJII user survey in early 2026 found that the percentage of people using Telkomsel reached 37.9%, Indosat 35.5%, and XL Smart 26.7%. The gap between subscriber share and user share is a reminder that Telkomsel's lead is widest in places with fewer heavy data users.

Fixed broadband is far more concentrated. The market leader in Indonesia's fixed broadband market is the incumbent Telkomsel, with a 67% market share. Behind it, Indonesia Comnets Plus (ICON+) controls nearly 9% of the fixed broadband market, MyRepublic holds around 6.5%, and XLSMART has more than 6% of Indonesia's fixed broadband subscribers.

How Telkom wins and loses against each

Against Indosat and XLSmart in mobile:

• Telkomsel wins on coverage and quality. It reaches roughly 98% of populated areas (carrier figure), leads on 5G availability, and was reported as the fastest network in both the June and December 2025 Opensignal reports.
• It loses in price-sensitive urban segments where rivals discount. Through 2024 and early 2025 that discounting pushed Telkomsel into its own cheap starter packs. A broker summarised the episode as an offering of entry-level pricing packages (e.g., by.U priced at IDR 10K, avg. industry: IDR 20-30K).
• XLSmart now has the scale and the shareholders to fight. It raised its 2026 capital expenditure guidance to IDR 20.0 trillion from IDR 15.0 trillion, and has been reporting strong ARPU growth from a lower base.

Against challenger ISPs in fixed broadband:

• IndiHome wins on footprint and the convergence bundle.
• It loses on price in dense urban areas, which is where its ARPU has been eroding (Section 3).
• Brokers expect the fixed market to open up. One sees FBB penetration could reach ~41% in FY26, underpinned by 1.4GHz FWA, challenger-led price disruption, and open-access FiberCos. Growth will come with more competitors.

Against data-centre specialists:

• NeutraDC wins with Telkom's connectivity, cable landings and state-linked trust.
• It loses on capital and hyperscaler relationships. That is precisely why management is seeking a partner.
• In scale, it trails DCI. Industry mapping puts Indonesian installed capacity at roughly 580 MW as of 1H26 with 55% still located in Jakarta, against NeutraDC's few tens of megawatts in-country.

Barriers to entry. In mobile, entry barriers are very high:

• Spectrum is scarce and auctioned.
• A credible national network costs tens of trillions of rupiah.
• The last decade's history is of exits through merger, not entries.

The plausible "entrant" threats are lateral: satellite broadband in rural areas, and fixed-wireless or open-access fibre in cities. In data centres, barriers are lower. Capital, power and land are available to global builders, and the pipeline is enormous (Section 6).

Structural shifts

• Consolidation has made pricing more rational.
• New rules may cut both ways (Section 6).
• Telkom's own open-access fibre plan is a two-edged sword. Opening InfraNexia to rivals monetises idle capacity but also gives competitors cheaper access to the backbone that partly explains Telkomsel's coverage lead.

Moat: Narrow - efficient scale, intangible assets (spectrum licences and state backing), scale / cost advantage

Evidence. Telkomsel kept market leadership and IndiHome kept two-thirds of fixed broadband through the 2024-25 price war and two rival mergers (Section 4 explains why rural and household customers are sticky). Its coverage advantage outside Java is hard to replicate. But leadership was held at the cost of ARPU, subscribers and margin, and the company had to match rivals' low-end pricing rather than ignore it. That is not the behaviour of a business with a wide moat.

Most likely to erode the moat: cheaper access to backbone and last-mile infrastructure for rivals, through open-access fibre (including Telkom's own InfraNexia), fixed-wireless and satellite. This would narrow the coverage gap that is Telkomsel's core advantage.

6. Industry

What drives demand. Indonesian telecom demand is driven by:

• a young, mobile-first population
• growth in data use per person
• rising (but still low) fixed broadband penetration
• digitisation of government and enterprise
• most recently, data-centre and AI capacity

Internet use is already broad but uneven. One overview cites internet penetration of 80.66% in 2025, with 229 million users online (APJII, 2025), with a sharp urban-rural divide.

Size and growth. By the most commonly cited estimate, the mobile operator market is mature and slow-growing: worth USD 14.42 billion in 2026, growing at a CAGR of 4.95% to reach USD 18.37 billion by 2031. Growth now comes from price per gigabyte and per household rather than new users.

Fixed broadband is earlier in its curve. Penetration was just over 20% as of June 2025, due to Indonesia's unique geographic characteristics, with a population spread across a vast archipelago, posing a significant challenge to the rapid growth of fixed broadband services.

Data centres are the fastest-growing piece, but estimates of current and future capacity vary widely:

• One broker puts installed capacity at 580 MW and projected to reach 3.5GW by 2030.
• Savills counts 683.1 MW existing in Greater Jakarta and Batam as of June 2026.
• Pipelines are far larger than what is live. In Jakarta, Cushman & Wakefield data show 322 MW of operational capacity in the first half of 2026, with another 395 MW under construction and 1,699 MW in the planned pipeline.

Where Telkom sits in the supply chain. Telkom buys radio, fibre and data-centre equipment from global vendors and builds and operates the networks. It does not make equipment. In the regional data-centre chain, Indonesia is a spillover market from capacity-constrained Singapore. Batam's appeal is explicitly its proximity: it offers 100% foreign ownership, lower import duties inside its SEZ, and sub-5 ms latency to Singapore. This is where Telin's new Batam-Singapore cables and NeutraDC's Batam campus meet.

Regulation. Regulation shapes this industry more than economics in some years. Four recent rules matter:

1. Spectrum. Auctions in 2026 for the 700 MHz and 2.6 GHz bands (Section 3) shape network costs and 5G timing.
2. Data-quota rollover. The Constitutional Court ruled that paid-for data cannot be forfeited. The ruling, case Number 273/PUU-XXIII/2025, was announced on Thursday, July 23, 2026, and the ministry followed with a circular. The provision is outlined under the Circular Letter issued by the Minister of Communication and Digital (Komdigi) on Friday, August 28, 2026, adopted following the Constitutional Court ruling in July that prohibits telecom operators from forfeiting unused internet data. Expiring quota was a quiet source of revenue for every prepaid operator (Section 8).
3. SIM registration. As of Ministerial Regulation No. 7 of 2026, every SIM card in Indonesia is now shipped inactive and only turned on after an identity check: a passport for foreign visitors, or NIK plus facial recognition for Indonesian citizens. Stricter SIM activation reduces the churn-and-replace "starter pack" behaviour that fuelled price wars. That should favour the operator with the most loyal base.
4. State ownership and fiscal policy. Government austerity hit enterprise ICT demand in 2025 (Section 2). The state's sovereign fund, Danantara, now directs portfolio decisions across state companies (Section 10).

Cyclicality. Telecom is defensive in volume: people do not cancel data in a downturn. It is cyclical in price and mix: consumers trade down to cheaper packages, and competitors chase share. Management repeatedly cited a cautious consumer backdrop in 2026. Enterprise demand follows government budgets. Data-centre demand follows global hyperscaler capex, which is booming but lumpy.

Tailwinds

• A three-player structure that has shown pricing discipline since mid-2025.
• Low fixed broadband penetration.
• Stricter SIM rules.
• Data-centre demand spilling over from Singapore and AI.

Headwinds

• The quota-rollover ruling.
• Price-led fixed-broadband challengers.
• Satellite broadband.
• A spectrum shortfall relative to peers: only 360 MHz of mid-band spectrum has been assigned for mobile use - less than half the APAC average of 850 MHz (GSMA, 2025).
• Capital-market turmoil around Indonesia's MSCI status, which raises the cost of equity for everyone (Section 8).

7. Growth Triggers

Ranked by potential impact on the business. Sources are the six results events listed in Section 9, plus formal company announcements where noted.

• Telkomsel network monetisation and Q4 2026 pricing. On the 9M26 call (early Nov 2026), Telkomsel's marketing director said ARPU should improve in quarter 4 on a sequential basis, citing seasonality, market repair and network monetisation. Management added that quarter 4 will be the quarter where we really move much more aggressive in terms of network monetization, as we have been recently focused in terms of network capacity improvements and also 5G expansion. Market repair has been the headline theme at every call since 1H25 (Aug 5, 2025). At 1Q26 (results May 29, 2026), management disclosed a March exit ARPU at Rp47k. Repeated across all six periods.

• NeutraDC strategic partner plus capacity build-out. At the Public Expose (Sep 7, 2026), the Wholesale and International director said the process has entered the binding offer evaluation stage, and there is a possibility that it could involve the divestment of a majority stake. On the 9M26 call, management said we will be a little bit more aggressive in term of the investment on the data center, looking at all the demand and the funnel that currently we already have. Scheduled capacity: Batam 6 MW in Q4 2026 rising to 18 MW in Q1 2027, and Cikarang phase 2 starting 2027 (Section 3). Repeated at FY25, 1H26 and 9M26.

• InfraNexia: absorb other state fibre, then sell a stake. On the 9M26 call, management said it would look at opportunities to try to consolidate that first in 2026, before pushing in 2027 to move forward with any type of strategic partnership on the fiber side of things at the InfraNexia level. Fibre monetisation has been on every roadshow since 9M25. The spin-off itself is complete (Section 9 judges its timing).

• Network modernisation capex step-up in 2027-28. Management flagged at FY25 (May 2026) and repeated at 9M26 that capital intensity will rise. On the 9M26 call: We will likely see higher CapEx in 2027 and 2028, as Bapak Budi mentioned, primarily towards network modernization that we have talked about since the full year 2025 results. Repeated.

• Rebuilt enterprise arm (Telkom Solusi Indonesia / Digiserve). Effective Nov 1, 2026, the consolidated enterprise operating company is the vehicle for raising enterprise from under 15% of revenue toward the 20-40% management cites at global peers (Section 2). Discussed on the 9M26 call and at the Sep 7, 2026 Public Expose.

• Further streamlining in Q4 2026 and January 2027. On the 9M26 call: in October, we signed a CSPA to sell GSDM to a hotel subsidiary of Danantara, increasing the streamlined business total to 15, with potentially a number of others to come in fourth quarter 2026. The 9M26 presentation also details a merger of Telkominfra into Telkom Akses, with shareholder meetings and merger-deed signing scheduled for 30 November 2026, with effectiveness targeted for 1 January 2027. Streamlining has been reported at every call since FY25.

• New Batam-Singapore subsea capacity. The NCC cable landed in Batam in July 2026, and INSICA's ready-for-service target is 1Q28 (9M26 presentation). This strengthens Batam as a data-centre location and Telin's wholesale offer.

8. Key Risks

8.1 Mobile pricing discipline breaks

• Mechanism. The 2025-26 recovery rests on all three operators keeping prices up. Telkomsel's 3Q26 showed how quickly that can wobble. A broker summary noted 3Q26 ARPU fell 2.4% qoq to Rp44.9k and data yield declined 4.0% qoq, pulling mobile revenue down 3.3% qoq, which it attributed to softer spending, seasonality and tactical competition.
• What could trigger it. XLSmart is spending heavily post-merger. Indosat has historically used low-end promotions to take share.
• Calibration. High probability of periodic skirmishes; moderate drag. A full return to the 2024 price war is lower probability, because all three operators are now under return-focused owners. But Telkomsel has the most to lose, because it has the most revenue at today's prices.

8.2 Regulation transfers value from operators to consumers

• Mechanism. The quota-rollover ruling (Section 6) removes revenue from data that customers paid for but never used. It also lets customers stretch purchases further, which slows top-up frequency. In the Court's words:

"Unused data must remain protected as the property of telecommunications users or remain available for use until exhausted"

• Mitigants. Operators already offered rollover on selected plans and can redesign packages (shorter validity, smaller bundles).
• Calibration. High probability of some revenue leakage; impact uncertain until package redesigns settle. The same consumer-protection impulse could extend to tariff scrutiny. That matters for a state-controlled company whose 2026 plan depends on raising prices (8.1).

8.3 Accounting, controls and legal investigations

• Restatement and material weakness. Telkom restated 2023-24 for the drop-cable change (Section 3) and disclosed a material weakness in internal control. In March 2026 it told the SEC that the asset classification of "last mile to the customers" should have been considered non-network assets and therefore depreciated over a shorter useful life. The FY25 annual filing was late as a result: on April 30, 2026, Telkom disclosed to Indonesia's Financial Services Authority that it would delay filing its 2025 annual report and its consolidated first-quarter 2026 financial statements.
• US investigations. The FY25 Form 20-F discloses ongoing SEC and DOJ investigations. The internal investigation also focused on the review of approximately 140 transactions originating from 2014 through 2021, and has since expanded to include accounting and disclosure issues relating to revenue recognition, financial reporting practices, and ICFR. The filing states that SEC's and DOJ's investigations remain ongoing, and we continue to cooperate fully with the SEC and DOJ. It also notes that the DOJ and SEC informed our Company of an indefinite pause on the FCPA-related aspects of their investigations.
• Domestic prosecution. Jakarta prosecutors pursued a dugaan korupsi pembiayaan fiktif senilai Rp 431 miliar (alleged fictitious-financing corruption worth Rp431bn) involving four subsidiaries. Telkom says the case grew out of its own internal audit.
• Calibration. Moderate probability of further penalties or remediation cost; low probability of operational disruption. The real risk is credibility. Deal partners for InfraNexia and NeutraDC will price in governance risk.

8.4 Tax disputes over the restructuring itself

• The IndiHome assessment. The tax office has challenged the book-value treatment of Telkom's internal transfers. For the 2023 IndiHome transfer, on October 3, 2025, the Tax Authority issued a Tax Underpayment Assessment Letter ("SKPKB") to Telkomsel for VAT, Article 23 Income Tax, and Corporate Income Tax for the 2023 fiscal year, with a total tax underpayment amounting to Rp14,566 billion (including penalties). Telkom notes the tax authority had itself approved book value for that deal.
• The InfraNexia rejection. The InfraNexia spin-off faces a similar fight. The 9M26 filing describes litigation against the rejection of the Company's application to apply the book value method for the transfer of assets in the context of the business spin-off from the Company to TIF.
• Calibration. Low-to-moderate probability of a full adverse outcome; potentially large cash cost. The precedent matters for every future carve-out the TLKM30 plan depends on.

8.5 State direction of capital allocation

• Mechanism. Strategic choices are increasingly made in coordination with Danantara (Section 10). Examples:
  • consolidating other state companies' fibre into InfraNexia before seeking a partner (Section 7)
  • selling hotels and a property unit to Danantara-linked entities
  • a dividend paying out more than earnings while capex is guided up (Section 10)
• Calibration. Each decision may be defensible on its own. The pattern means minority shareholders' returns depend on policy priorities that are set elsewhere. On the 9M26 call, management acknowledged a big focus from Danantara on streamlining through the end of this year.
• The specific danger. InfraNexia is told to absorb weaker state fibre assets on terms that dilute its quality before a partner is found. That would be moderate probability with moderate impact on value creation.

8.6 Indonesia's index status and foreign-capital flight

• Mechanism. Telkom's register is heavily foreign: 80.1% of the free float, per its 9M26 presentation. MSCI's review of Indonesia's investability is a business risk as well as a stock risk, because it raises the cost and reduces the availability of capital just as Telkom wants to sell infrastructure stakes and raise capex.
• Context. Bloomberg reported that the MSCI Indonesia Index has plunged over 40% since January when the index compiler first warned of downgrading the Southeast Asian market, and shares of PT Telkom Indonesia Persero have nearly halved in this period. On the 9M26 call, management was candid about its limited control:

"I do not know that there is a lot that we can do to impact the MSCI situation"

• Calibration. Already happening. A formal downgrade would be the next step.

8.7 Asset-monetisation execution

• Mechanism. TLKM30's value thesis depends on bringing in partners at InfraNexia and NeutraDC. Data-centre sale efforts have repeatedly stalled. One trade report noted this would be Telkomsel's fifth attempt to sell its data center unit. On the 9M26 call, management's emphasis shifted toward building aggressively on its own (Section 7).
• Calibration. Moderate probability of further delay. That would leave Telkom funding a capital-hungry data-centre build alongside a network-modernisation step-up, with a dividend paying out more than earnings.

9. Walk the Talk

Six results events used:

For FY25 and 1Q26, the record relies on the company presentations, annual report and broker summaries, since full call transcripts were not located. 9M26 is within 90 days of today.

The 2025 guidance: optimistic, then reactive. Management began 2025 guiding to growth and a margin range, and cut both twice as the price war played out. The direction of each cut was right, but each came a quarter after the market could see the problem. The 1H25 presentation shows the original guidance of Low single digit revenue growth sitting beside the revised figure. A management team that sees its own pricing data weekly should have known earlier.

The 2026 margin target: holding a number that the year is not delivering. After 1H26, management told investors the margin squeeze was temporary. At 9M26 it pointed back to that promise:

"As we noted on our last call, the margin pressure should alleviate in fourth quarter 2026"

On the same call it summarised the year this way:

"our revenue and CapEx guidance is well within our forecast, while our EBITDA margin is slightly low."

What happened. Two points:

• Capex "within" means under. Moments later, management conceded that capex intensity is below our 17%-19% guidance. Revenue is ahead, margin is behind, and capex is underspent. Underspending flatters cash flow this year but feeds directly into the 2027-28 step-up (Section 7).
• The margin miss has identifiable causes. IndiHome cleansing and ERP costs. Management kept the target by leaning on a few one-off items and an expected stronger fourth quarter 2026 at Telkomsel. Relying on one-offs to hit a margin guide is a yellow flag about how the target is managed.

The 2025 buyback: announced, barely used. A programme authorised to buy up to 10% of the company ran for a year and bought a sliver. It was replaced in 2026 by a larger authority that management now says it will "accelerate" (Section 10). Shareholders should judge the 2026 programme by shares retired, not by the size of the authority.

Assessment. On structural actions, this management has delivered roughly what and when it said: the spin-offs, streamlining and ARPU repair. On numerical guidance, it has been consistently optimistic at the start of the year and slow to revise. The result is two downgrades in 2025 and a margin target in 2026 that rests on Q4 and one-offs. The CEO change in September 2026 (Section 10) means the incoming leader inherits these promises rather than having made them.

10. Ownership, Governance and Shareholder Friendliness

Ownership and control. Telkom is a state company.

On the golden share, Telkom disclosed in January 2026 that the Republic of Indonesia remains the controlling shareholder (Ultimate Beneficial Owner) through BP BUMN's direct ownership of one Series A Dwiwarna share with special rights and 516,023,535 Series B shares, and through DAM's 51,086,330,024 Series B shares consolidated under BPI Danantara. The Dwiwarna share gives the state special rights over key decisions regardless of its economic stake.

What this means structurally for a minority holder:

• Board appointments, dividends and major transactions are effectively decided by the state.
• Value inside Telkomsel is shared with Singtel at the subsidiary level (30.1%).
• InfraNexia, NeutraDC and Mitratel deals are related-party in substance, because Telkomsel is their dominant customer.

Governance flags

Board and management turnover.

• The Board of Commissioners has eight members, four designated independent, per the June 2026 AGM list. Komisaris Utama: Angga Raka Prabowo Komisaris Independen: Deswandhy Agusman Komisaris Independen: Anthony Leong Komisaris Independen: Ira Noviarti Komisaris Independen: Rofikoh Rokhim Komisaris: Rizal Mallarangeng Komisaris: Edwin Hidayat Abdullah Komisaris: Ossy Dermawan. The chair is not independent.
• CEO turnover has been fast. Dian Siswarini took the role at the 27 May 2025 AGM. At an extraordinary meeting on 30 September 2026, the EGM appointed Nanang Hendarno as president director, replacing Dian Siswarini, who had served since the 27 May 2025 AGM. Per the company's profile as reported by Antara, Nanang is an alumnus of Delft University of Technology in Space System Engineering (1997), and was CEO of PT Infrastruktur Telekomunikasi Indonesia in 2022-2025, Chief of Technology of PT Telekomunikasi Indonesia International in 2016-2022, and Executive General Manager of the Service Operation Division in 2015-2016. He was Director of Network immediately before.

Commissioner disclosure. On 4 June 2026, Telkom filed a material-fact disclosure regarding media reports on the naming as a suspect of the Deputy Minister of Immigration and Corrections, who also serves as a Commissioner of PT Telkom Indonesia. The filing is cited by role only.

Related-party transactions with the controlling holder. The October 2026 agreement to sell GSDM to a Danantara hotel subsidiary, and planned hotel sales to Hotel Indonesia Natour, are transactions with entities under common state control.

Audit and controls. The late FY25 filing, the 2023-24 restatement, the material weakness and the SEC/DOJ investigations are covered in Section 8.3. The FY25 accounts themselves carry an unqualified audit opinion, per the summary of the filing.

Executive pay. How executive pay is linked to performance could not be verified from documents read for this report.

Capital returns: dividends. Telkom's stated policy is cash dividends to shareholders with a payout ratio ranging from 60% to 90%. Actual payments have exceeded that policy recently:

The FY2025 payout ratio was 123.5%. Dividends have risen each year, and the latest exceeded earnings: a cash dividend equal to 123% of 2025 net profit, or Rp21.9 trillion, with about Rp4.2 trillion taken from prior-year retained earnings. Management told the 9M26 call that we do still anticipate that we can pay out an elevated dividend for 2026 for the full year. The above-100% payout partly reflects the drop-cable restatement, which cut reported profit without cutting cash.

Capital returns: buybacks

On 20 October 2026 the CEO said the company would accelerate the Rp4tn programme. As of 19 October 2026, the remaining approved buyback allocation was still more than Rp3 trillion.

Net share count. Issued shares remain 99.062.216.600 lembar (99,062,216,600 shares). Treasury purchases over three years have been far too small to move the count. The share count is effectively flat.

Verdict: Returns Capital. Dividends have grown every year and the latest exceeded earnings. Buybacks so far have been more announced than executed.

11. Insider Activities

Since March 2026, Telkom's directors and commissioners have filed US Section 16 ownership reports via SEC EDGAR, alongside Indonesian disclosures. No primary-source purchases or sales by any director or commissioner were found in the last 12 months.

The filings located are initial Form 3 statements of holdings, not trades:

• President Director Dian Siswarini: 203,000 Series B Shares as of March 18, 2026 (Form 3, filed 2026-04-24)
• Commissioner Rizal Mallarangeng: 3,240,600 Series B Shares (Form 3, 2026-04-21)
• Silmy Karim: 1,344,700 Series B Shares (Form 3, 2026-04-21)
• Independent commissioner Anthony Leong: no beneficial ownership (Form 3, signed 2026-08-07)

The only material shareholder activity in the window came from the state:

• In January 2026, DAM transferred 516,023,535 shares to BP BUMN. This is a legally required intra-state transfer, not a market trade (IDX disclosure / SEC 6-K, 2026-01-07).
• Between 30 September and 30 October 2026, DAM added about 582.5 million shares, lifting its stake to 52.16% (KSEI monthly holdings data, 2026-10-30). Press reports describe these as purchases made while Danantara was supporting the market after the MSCI-driven selloff. Bareksa cautions that the data indicate a change in ownership position, but do not confirm that all additions came from regular-market purchases.

Read: neutral. The state's buying is policy-driven market support rather than an informed insider's bet. No individual executive has bought or sold.

12. Scenarios

Bull case. Telkomsel's Q4 2026 repricing holds. Stricter SIM registration and a rational three-player market let ARPU keep rising through 2027, without Indosat or XLSmart breaking ranks. Package redesigns absorb most of the quota-rollover hit. IndiHome's cleansing finishes, and the household base starts growing again on convergence bundles. NeutraDC closes a partnership with a global operator that brings hyperscaler relationships and capital, so Cikarang phase 2 and Batam are funded off Telkom's balance sheet. InfraNexia absorbs other state fibre on sensible terms, then sells a minority stake to an infrastructure fund in 2027 at a price that validates the carve-out. The SEC/DOJ matters close quietly, and the tax court upholds book-value treatment. In two to three years Telkom looks like a clean holding company: a repriced mobile and broadband leader, plus infrastructure stakes with outside partners whose contracts set a public mark.

Base case. Telkomsel ARPU edges up in good quarters and gives some back in soft ones. Revenue growth stays in low single digits, roughly as guided. The margin target is met in some years and missed in others because transformation costs keep recurring. One of the two big monetisations (most likely NeutraDC) closes in 2027, later than planned. InfraNexia's partnership slips as it first absorbs other state fibre. Capex rises as flagged for 2027-28, which squeezes free cash flow just as the dividend is expected to stay high. Some of the generous payout therefore gives way to a more ordinary ratio. Management keeps delivering structural milestones roughly on schedule and keeps guiding optimistically on numbers, as in Section 9. The tax and US investigations drag on without resolution.

Bear case. Risks 8.1 and 8.2 compound. XLSmart's heavier capex and Indosat's promotions restart low-end discounting just as quota rollover cuts top-up frequency, so ARPU gains reverse and Telkomsel matches prices again. Risk 8.4 crystallises: an adverse ruling on IndiHome or InfraNexia book-value treatment brings a large cash tax bill and chills future carve-outs. That combines with 8.7, as NeutraDC's sixth sale attempt stalls and Telkom funds data centres alone during a network-modernisation step-up. Under 8.5, the state's priorities (absorbing other companies' fibre, sustaining dividends, supporting the market) take precedence over returns on the fibre business. Under 8.6, a formal MSCI downgrade pushes up the cost of capital and narrows the pool of partners. The result is a company that has done the restructuring work but cannot show the value, with a dividend it can no longer cover.