TLKM - Set to hold AGM on Indihome spin off

Telekomunikasi Indonesia (TLKM) will carry out annual general shareholders meeting (AGM) on approval of Indihome spin-off. After the spin-off, Indihome whose estimated value at IDR58.2tn will be integrated under Telkomsel, valued at IDR319.4 tn. As part of the scheme, Telkomsel is set to issue new shares that will be fully absorbed by TLKM with converted value per share at IDR1.74 bn apiece. In addition, Singtel as a shareholder of Telkomsel will also inject IDR2.7 tn to retain its stakes in the company. This will make Singtel to hold 30.1% of shares while Telkom will be 69.9% stakes. (Source: Company, Bisnis) Comment : The Indihome spin-off will mark a milestone for Telkomsel to become the largest FMC player as it will integrate c. 9mn fixed broadband customers and 750K Telkomsel Orbit customers. With this integration, management expects a IDR5 tn in EBITDA addition on the synergy, while it also will be able to reduce IDR300 bn in capex annually. On top of that, converged products are expected to improve customer loyalty and stickiness, thus improving ARPU given high possibility of cross-selling hybrid products that solidify Indihome and Telkomsel premiums. Aside from FMC, we remain positive with TLKM on the back of improved mobile data pricing as major MNOs expressed strong willingness for price repair. In addition, we like TLKM’s B/S which has become its key distinctive advantage to its competitors.