TLKM - Reinforcing grand strategy
Tuesday, 12 September 2023
TLKM - Reinforcing Grand Strategy
(Maintain BUY; TP: IDR4,420)
Management reemphasized focus for ongoing progress of grand strategy of 5 bold moves which is aimed at strengthening its B2B segments to address the challenge of telco industry. On FMC, management is seeking for value creation through synergies, while striving to encourage healthier customers with high productivity.
On InfraCo-Fiber, TLKM is planning to establish an entity to consolidate its fiber assets and telco infrastructures including tower. The company also should gain better opportunity through potential active sharing for 5G network deployment with potential market size of IDR2.3 tn by 2028.
Ongoing consolidation of data center has become central theme of its grand strategy of 5 bold moves to cater growing digital economy, robust social media users, and needs for low latency data and transformation in enterprise. Data center demand in Indonesia is projected to reach 1,256MW by 2031E compared to 98MW in 2022.
TLKM through NeutraDC that currently controls 40% of market share will be able to leverage its value preposition as digital ecosystem, including HDCs and Edge DCs thanks to its position as market leaders for mobile and fixed broadband.
Reiterate our BUY call with a target price of IDR4,420, implying 5.6x '23F EV/EBITDA, while currently is trading at 4.6x forward EV/EBITDA rather undemanding at below -1SD 5-year mean.
Devi Harjoto –KBVS Research Team