ISAT - Plans to develop FMC services

ISAT - Plans to develop FMC services Indosat Ooredoo Hutchison (ISAT) is planning to further develop fixed mobile convergence (FMC) in line with its expansion of fiber optic through Indosat HiFi. The company is targeting to attain 1.5 mn homepasses. Indosat HiFi has been prensent in top-tier cities, including Jabodetabek, Bandung, Surabaya, Semarang and Yogyakarta. The company is planning to earmark IDR13 tn in capital expenditure this year especially for infrastructure and network in Eastern Indonesia. (Source : Bisnis Indonesia) Comment : ISAT's plan to expand FMC service puts the company in FMC competition, along with TLKM with Telkomsel One and EXCL with XL Satu. We believe FMC should bring improved efficiency on synergy, strengthen customers loyalty and bolster profitability of the players as long as it does not lead to another price wars. On the other hand, FMC adoption could also lead to faster 5G implementation should the technology be deemed ready for roll out as it needs strong broadband to reduce latency. We retain our BUY call on ISAT with a target price of IDR10,075 per share, representing EV/EBITDA ‘23 of 4.1x, or still lower than 3 year-multiple of 4.4x