TLKM - To hold AGM

Telekomunikasi Indonesia (TLKM) is scheduled to hold annual general meeting (AGM) on May 30 on seeking approval of dividend disbursement and Indihome spin-off from TLKM. On dividends, management is previously reported to propose c. 80% dividend payout for 2022. Furthermore, TLKM is planning to spin-off its fixed broadband unit, Indihome and place it under Telkomsel as part of 5 bold transformation, which one of those is aimed to tap into FMC. (Source : Bisnis Indonesia) 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. Meanwhile on dividend, TLKM's dividend payout ratio is higher than previous year's of 65%. TLKM has been steadily disbursing large payout ratio compared to other telcos thanks to its superior cash position and manageable leverage.