TLKM - Telin to improve connectivity for DC

TLKM - Telin to improve connectivity for DC Telekomunikasi Indonesia (TLKM) through subsidiary Telin aims to improve its competitiveness on digital ecosystem business in Asia, especially connectivity and data center. As many as seven fiber optic initiatives are currently underway that is projected to support its hyperscale data centers. The subsidiary also engages in cyber security, cloud and communication platform. (Source : Investor Daily) Comment : In order to strengthen position on data center business, it is important for TLKM to improve its backbone capability especially fiber optic. DC Co has become the next priority under its five bold moves. On the other hand, data center is still considered to be untapped business given its low penetration of 12% of population, yet the demand is projected to grow four-times by 2030. The demand for data center is driven by growing digitalization, lower latency, and higher concern for data security and Indonesia’s abundant energy sources. We retain our BUY call on TLKM with target price of IDR4,420, mplying 5.6x '23F EV/EBITDA, while currently is trading at 4.6x forward EV/EBITDA rather undemanding at below -1SD 5-year mean.