---
endpoint: analytics
pattern: Telecoms
status: done
latency_ms: 241509
conversation_id: ececf22e-6fc2-4c51-afbc-8a4813a30f00
citations: 16
created: 2026-05-31 22:06:42Z
---

# What is Telkom’s core business franchise and the key components of its operating model?

# Telkom Indonesia (TLKM IJ) — Core Business Franchise & Operating Model

*Synthesis based on CLSA's TLKM-primary coverage, most recently the 21-Apr-2025 "Returning cash" note, the 14-Aug-2024 "Data centre ambitions" note, and the 11-Jul-2024 "A new page" note. Latest published_date in the matched CLSA set: 22-Jun-2025 (Indonesia TMT weekly).*

---

## 1. Franchise Identity — Indonesia's State-Controlled Integrated Telco

**Telekomunikasi Indonesia (Persero) Tbk (TLKM IJ / TLKM.JK / TLK.N)** is Indonesia's incumbent integrated telecommunications operator and an SOE, with the **Republic of Indonesia holding a 53.7% controlling stake**; foreign shareholding sits at ~20% and free float at ~46.3% (market cap ~US$15.2bn priced 21-Apr-2025) [1]. The "Persero" suffix denotes its status as a state-owned enterprise — a structural feature that creates both a regulatory tailwind (sector primacy) and a governance overhang (potential government interference greater than for non-SOE peers) [14].

Group financials anchor the franchise: **revenue ~Rp150trn (≈US$9.5bn) in FY24, group EBITDA margin ~50%, and ROE ~20%** with dividend yield historically around 5% [13].

---

## 2. The Operating Model — Five Business Pillars in an SOTP Construct

CLSA values Telkom on a **sum-of-the-parts** basis because the group is a portfolio of operationally distinct businesses with materially different growth, margin, and capital intensity profiles. The pillars (with FY25CL contribution to SOTP value of Rp2,900/share) are [2]:

| # | Pillar | Stake | Valuation Basis | Value (Rpbn) | % of SOTP |
|---|---|---|---|---|---|
| 1 | **Telkomsel** (mobile/cellular + IndiHome FBB) | 70% | 11x 25CL PE | **201,418** | ~71% |
| 2 | **Mitratel (MTEL)** — tower co. | 70% | Market cap (not rated) | 46,500 | ~16% |
| 3 | **Data centres, wholesale & others** (incl. Telin, NeutraDC) | 100% | 3x EV/EBITDA | 47,782 | ~17% |
| 4 | **MDI Ventures** — corporate VC | 100% | US$500m AUM at book | 7,250 | ~3% |
| 5 | **Gojek-Tokopedia (GOTO)** stake | minority | Latest market value | 979 | <1% |
|  | Group net debt (ex-Telkomsel portion) |  |  | (19,560) |  |
|  | **Total / SOTP per share** |  |  | **284,368 / Rp2,900** | 100% |

Source: CLSA SOTP, Apr 2025 [2]. The previous (Jul-2024) SOTP carried Telkomsel at 15x PE and broke out **IndiHome fixed broadband separately at 7x EV/EBITDA**, reflecting Indihome's "dominant market position and healthy growth rate" — but by the 2025 update CLSA folded IndiHome back into the consolidated Telkomsel valuation following the legal-entity merger [15].

### Pillar 1 — Telkomsel: The Mobile + Fixed Convergence Engine

Telkomsel is the dominant revenue and earnings driver, generating **Rp113.3trn revenue in FY24 (~75% of group)** with **Rp51.3trn EBITDA (45% margin)**. Within Telkomsel [3]:

- **Mobile data**: Rp78.3trn (largest single line); 159.4m subscribers; ARPU Rp44k; data yield Rp3.6/MB (down 22% YoY on competition); data traffic 20.4 exabytes (+14% YoY).
- **Legacy (voice/SMS)**: Rp8.4trn — in structural decline (-21% YoY); legacy/data mix has shifted from 20%/80% in 1Q22 to ~8%/92% by 2Q24, with management guiding legacy to taper to ~5-6% of mix [4].
- **IndiHome (fixed broadband)**: Rp26.6trn — consolidated into Telkomsel via the FMC (fixed-mobile convergence) merger; revenues doubled YoY in FY24 due to consolidation accounting.

**Market positioning**: Telkomsel held ~51% mobile revenue share in 1Q24 (vs. 62% in 4Q19), having ceded share to Indosat (ISAT) which sits at ~28%. Management's stated strategy is to **avoid a price war and defend share through customer value management (individualised offerings) and the Telkomsel Lite sub-brand** rather than blanket price cuts [10].

**Convergence (FMC) playbook**:
- Unified billing system integrating IndiHome + Telkomsel households was targeted for completion by end-FY24, expected to unlock **Rp1-2trn in synergy value** through cross-selling [11].
- After completion, the cheaper convergence product **EZnet** is being taken to the mass market to grow fixed broadband.
- Mobile share-loss thesis is set to reverse via FMC plus a fixed-wireless product with the cheapest price/GB in market.

### Pillar 2 — Mitratel (MTEL): Tower Infrastructure

Telkom owns 70% of Mitratel, the listed tower-leasing subsidiary. CLSA does not rate it independently and carries it at its current market cap (Rp46.5trn at the 70% stake). This is the group's pure passive-infrastructure leg.

### Pillar 3 — Telin + NeutraDC: B2B Wholesale and Data Centres

This is the group's "non-cellular" growth optionality:

- **Telin (Telekomunikasi Indonesia International)** — wholesale & trading segment. **Builds and leases subsea marine cables; Telkom owns ~250,000 km globally, the 7th largest global player** [5]. FY23 Telin revenue Rp11.4trn, EBITDA Rp1.8trn, net income Rp1.0trn — the **third-largest revenue contributor after Telkomsel and Mitratel**, with ~12% revenue CAGR since FY19 (8% of group revenue) [6]. Revenue mix: Trading Wholesale 68%, Recurring Data Connectivity 28%, Retail 4%; 85% domestic / 15% international; ~520 talents, 10 global offices, 36% non-Indonesian workforce [7]. Subsea cable economics: ~30% EBITDA margin, ~15% net margin.
- **NeutraDC** — hyperscale data-centre platform. Telkom is **expanding the DC footprint to ~500 MW by 2030**, with current hyperscale capacity at **Cikarang 120 MW + Batam 100 MW** plus a planned Singapore site participating in upcoming DC-CFA; 80 MW operating target in Indonesia & Singapore by 2025 [8]. The platform offers >5 cloud-service-provider interconnects and 250+ enterprise customers, with 100% uptime / 99.999% SLA.
- **Strategic-partner monetisation**: Management is **open to divesting ≤50% of NeutraDC** to bring in AI/hyperscale technical expertise and contracts; the precedent is **Singtel's 35% stake** at the NeutraDC level. Possible structure: 50:50 with operational control at sub-holding level, minority at holding level [9].

### Pillar 4 — MDI Ventures: Corporate VC

US$500m AUM corporate venture arm carried at book in CLSA's SOTP (Rp7.25trn). Strategic optionality more than earnings driver.

### Pillar 5 — Gojek-Tokopedia (GOTO) Stake

Legacy minority stake from the Telkomsel-Gojek transaction, carried at latest market value (Rp979bn) — small in valuation terms but a tracked overhang/option.

---

## 3. Operating-Model Levers — Capital Allocation, Margins, Returns

Three operating-model dimensions shape the equity story:

### a) Margin architecture
- Group EBITDA margin has run in the **50-52% band** for years; 2025 management guidance is the same 50-52% [12].
- Telkomsel margin compressed to ~45% in FY24 (vs 51% FY23) on price competition and IndiHome consolidation.
- Ex-Telkomsel ("ex-cellular") margin runs much higher (54-65% EBITDA) but optically because Mitratel + Telin sit there [3].
- New-vintage capex carries higher project economics (~40% project EBITDA margin, ~20% net margin) — management's defense of capital intensity [4].

### b) Capex intensity and cash returns
- 2024 capex/sales ran at **16.3%, well below the 22-23% guidance** — a structural reset [12].
- 2025 guidance: **capex/sales 17-19%** (vs. 23% in 2024) [12]. CLSA reads this as supportive of margin recovery and a **higher dividend payout (above the prior 70-80% guide)**.
- Rp3trn share buyback program in place; AGM 27-May-2025.

### c) Revenue growth and the legacy-to-data transition
- 2025 revenue guidance is low-single-digit growth [12].
- Mobile revenue YoY has been negative since 2Q24 (-5.4% YoY in 4Q24) due to ex-Java competition; ARPU declined from Rp46.6k (1Q23) to Rp44.1k (4Q24) [16].
- **Structural shift**: data has gone from 80% of mobile revenue (1Q22) to ~92% (2Q24); legacy revenue is now small enough that residual decline is approaching irrelevance to the group P&L [4].

---

## 4. Risk Map (CLSA framing)

The same four risks recur across every TLKM note in scope [14]:

1. **Competition** — Indosat's ex-Java aggression and Smartfren/EXCL consolidation pressure pricing.
2. **Legacy-to-data transition execution risk** — though legacy is now ~6-8% of mobile mix and shrinking as a drag.
3. **Opacity of non-cellular businesses** — Telin, NeutraDC, MDI Ventures and others have less granular disclosure than Telkomsel, making forecasting harder.
4. **SOE governance / government interference** — affects Telkom more than its non-SOE peers (ISAT, EXCL).

---

## 5. Synthesis — How to Frame the Operating Model in One Paragraph

Telkom is a state-controlled (53.7% RoI) integrated incumbent whose **franchise value sits ~70% in Telkomsel** (mobile + IndiHome FMC), ~16% in **listed tower co Mitratel**, and ~17% in a **diversified infrastructure portfolio** — Telin (subsea cables / wholesale, 7th-largest globally at ~250k km), NeutraDC (hyperscale DC scaling to 500 MW by 2030, partner sale in motion), MDI Ventures (US$500m VC AUM), and a small Gojek-Tokopedia stake. The operating model leans on **share defence via customer-value management rather than price cutting**, structural FMC synergy (Rp1-2trn target), declining capex intensity (17-19% from 23%), and rising shareholder payout (potentially above 80%), against the backdrop of an SOE governance structure that simultaneously underpins regulatory standing and creates interference risk. The non-cellular legs are the asymmetric upside — particularly the **NeutraDC strategic-partner transaction** that could re-rate the data-centre stub from 3x EV/EBITDA toward hyperscale multiples.

---

**Sources**

[1] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF (ticker/market data block, chunk 3)
[2] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF (revised SOTP table, chunk 39)
[3] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF (Telkomsel + ex-Telkomsel operational breakdown, chunk 26)
[4] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF (data/legacy revenue mix table, chunk 34)
[5] Telkom — O-PF (Data centre ambitions) — CLSA (14 Aug 2024) — 607936311LinqAlpha.PDF (Telin description, chunk 5)
[6] Telkom — O-PF (Data centre ambitions) — CLSA (14 Aug 2024) — 607936311LinqAlpha.PDF (Telin contribution / CAGR, chunk 6)
[7] Telkom — O-PF (Data centre ambitions) — CLSA (14 Aug 2024) — 607936311LinqAlpha.PDF (Telin FY23 performance table, chunk 17)
[8] Telkom — O-PF (Data centre ambitions) — CLSA (14 Aug 2024) — 607936311LinqAlpha.PDF (NeutraDC Platform & Expansion Plan figure, chunk 19)
[9] Telkom — O-PF (Data centre ambitions) — CLSA (14 Aug 2024) — 607936311LinqAlpha.PDF (Telkom DC strategic-partner business model figure, chunk 18)
[10] Telkom — O-PF (A new page) — CLSA (11 Jul 2024) — 607933620LinqAlpha.PDF (no price war / customer value management, chunk 8)
[11] Telkom — O-PF (A new page) — CLSA (11 Jul 2024) — 607933620LinqAlpha.PDF (FMC unified-billing synergy, chunk 35)
[12] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF (2025 guidance / capex intensity, chunk 7)
[13] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF (investment thesis: 5% yield / 20% ROE, chunk 42)
[14] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF (investment risks, chunk 45)
[15] Telkom — O-PF (A new page) — CLSA (11 Jul 2024) — 607933620LinqAlpha.PDF (prior SOTP with separate IndiHome 7x EV/EBITDA, chunk 43)
[16] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF (ARPU and mobile revenue growth quarterly table, chunk 30)

## Citations

- [1] **607956442LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956442LinqAlpha.PDF>
- [2] **607956442LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956442LinqAlpha.PDF>
- [3] **607956442LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956442LinqAlpha.PDF>
- [4] **607956442LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956442LinqAlpha.PDF>
- [5] **607936311LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/08/607936311LinqAlpha.PDF>
- [6] **607936311LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/08/607936311LinqAlpha.PDF>
- [7] **607936311LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/08/607936311LinqAlpha.PDF>
- [8] **607936311LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/08/607936311LinqAlpha.PDF>
- [9] **607936311LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/08/607936311LinqAlpha.PDF>
- [10] **607933620LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/07/607933620LinqAlpha.PDF>
- [11] **607933620LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/07/607933620LinqAlpha.PDF>
- [12] **607956442LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956442LinqAlpha.PDF>
- [13] **607956442LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956442LinqAlpha.PDF>
- [14] **607956442LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956442LinqAlpha.PDF>
- [15] **607933620LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/07/607933620LinqAlpha.PDF>
- [16] **607933620LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/07/607933620LinqAlpha.PDF>

