---
endpoint: analytics
pattern: Telecoms
status: done
latency_ms: 281250
conversation_id: 9f9e1d7c-fe6a-4f06-bd02-fdbfdf45e230
citations: 14
created: 2026-05-31 22:07:04Z
---

# How does Telkom’s valuation compare to peers, and what justifies its premium/discount?

# Telkom Indonesia (TLKM IJ): Valuation vs. Peers and Premium/Discount Justification

**Scope note**: "Telkom" = PT Telekomunikasi Indonesia (TLKM IJ / TLK US), Indonesia's state-controlled integrated telco. Evidence base is CLSA internal research (publisher-tagged CLSA; covering analyst Nicholas Yulianto et al.) and Telkom's own 4Q24 earnings call. Latest CLSA call: 21 Apr 2025 ("Returning cash") — Outperform, TP Rp2,900, 11x 25CL Telkomsel PER on SOTP [4][5].

---

## 1. Where Telkom Trades — The Headline Setup

On the most recent CLSA marks (21 Apr 2025), Telkom screens as **deep value relative to its own history and to the regional telco peer set**, while trading at a small *premium* to the Indonesia market on PE:

| Metric | 2024A | 25CL | 26CL | 27CL |
|---|---|---|---|---|
| PE (x) | 10.6 | **9.8** | 9.1 | 8.4 |
| Dividend yield (%) | 7.4 | **8.0** | 8.6 | 9.4 |
| ROE (%) | 18.7 | **19.5** | 20.4 | 21.2 |
| Net debt/equity (%) | 27.3 | 19.6 | 12.4 | 5.8 |
| Ebitda margin (%) | 50.0 | 50.9 | 51.5 | 51.8 |

Source: CLSA model in "Returning cash" (Apr 2025) [7].

For context, in the Jul-2024 "A new page" iteration of the same model, CLSA had Telkom at **EV/Ebitda 4.5x→4.2x→3.9x (24-26CL), PE 11.5x→10.6x→9.7x, dividend yield 6.4%→7.0%→7.6%, ROE rising 21%→23%** — the multiples derated through 2H24, but the ROE/yield profile is structurally preserved [13].

---

## 2. Peer-Group Comparison (CLSA's "Telcos peers comparison", Nov 2024)

This is the most complete peers table in the internal research base — Figure 10 from CLSA's "Eyeing a mean reversion" report [8]:

| Stock | EV/Ebitda FY25 | PE FY25 | Div. Yield FY25 | ROE FY25 |
|---|---|---|---|---|
| **Telkom (TLKM IJ)** | **3.7x** | **9.2x** | **8%** | **23%** |
| XL Axiata (EXCL IJ) | 2.8x | 14.2x | 2% | 7% |
| Indosat (ISAT IJ) | 4.7x | 11.2x | 4% | 16% |
| Singtel (ST SP) | 11.4x | 18.5x | 5% | 11% |
| Axiata (AXIATA MK) | 3.0x | 20.2x | 4% | 5% |
| Telekom Malaysia (T MK) | 4.9x | 13.7x | 4% | 17% |
| Maxis (MAXIS MK) | 8.0x | 15.7x | 5% | 28% |
| PLDT (TEL PM) | 3.8x | 7.0x | 7% | 32% |
| Globe Telecom (GLO PM) | 7.2x | 12.8x | 5% | 15% |
| China Mobile (941 HK) | 2.6x | 9.7x | 8% | 10% |
| China Unicom (762 HK) | 1.1x | 7.7x | 8% | 7% |
| China Telecom (728 HK) | 1.7x | 10.5x | 7% | 8% |
| StarHub (STH SP) | 6.2x | 11.4x | 7% | 31% |
| KDDI (9433 JP) | 7.6x | 14.3x | 3% | 13% |
| Bharti Airtel (BHARTI IS) | 13.3x | 44.6x | 1% | 22% |
| Vodafone Idea (IDEA IB) | 15.0x | N/A | 0% | 23% |
| **Peer average** | **5.9x** | **14.2x** | **5%** | **17%** |

CLSA's read-through on that table: *"Telkom is now among the cheapest telco operators with one of the highest ROEs and dividend yields"* [1].

### Where Telkom screens *cheap* vs. peers
- **EV/Ebitda 3.7x (25CL) vs. peer avg 5.9x** — a ~37% discount to the regional average, and trades only marginally above hyper-cheap Chinese SOE peers (CT/CU at 1.1-1.7x) [8].
- **PE 9.2x (25CL) vs. peer avg 14.2x** — a ~35% discount on earnings; only PLDT (7.0x), China Unicom (7.7x), and China Mobile (9.7x) trade lower [8].
- **Dividend yield 8% vs. peer avg 5%** — among the highest in the regional peer set, alongside China Mobile (8%) and China Unicom (8%) [8].
- **ROE 23% vs. peer avg 17%** — top-quartile profitability [8]; CLSA notes Telkom's *"dividend yield has always been around 5% with 20% ROE"* historically, so the current 8% yield + 19-20% ROE combination is statistically extreme [12].

### Where Telkom trades at a *premium*
- **Vs. domestic competitor XL Axiata on EV/Ebitda** (3.7x vs. 2.8x) — but EXCL trades materially *richer* on PE (14.2x vs. 9.2x) because EXCL's ROE is 7% vs. TLKM's 23%, so XL's "cheap" EV/Ebitda reflects much lower returns on capital [8].
- **Vs. the Indonesia SE Composite Index (JCI)** — CLSA explicitly assigns Telkomsel an *"11x PE multiple that is higher than the Indonesia SE Composite Index's market consensus of 10x with higher growth than market"*, with its 5% YoY segment revenue growth forecast above Bloomberg's -2% market consensus [6].

---

## 3. Trading Range / Mean-Reversion Setup

A clean way to interpret "discount" here is against Telkom's own history, not just peers:

- The Jul-2024 note documented Telkom trading at **4.5-4.2x 24-25CL EV/Ebitda and 11.5-10.6x PE with a 6.4% dividend yield, "still close to the 10-year low" after a 15% bounce**, vs. SOTP that implied **14x 24CL PE (-1 std. dev. of Telkom's 10-year mean PE band)** [13].
- An earlier mid-2024 datapoint had Telkom's EV/Ebitda at **~4.0x — roughly -2 standard deviations below the 10-year mean of 5.3x** (+1sd = 5.95x, -1sd = 4.65x), with CLSA stating: *"Telkom's valuation is currently depressed... we expect Telkom's valuation would revert closer to the mean (now at -2 std. dev.) once competition subsided"* [10].
- By Nov 2024, CLSA said Telkom *"currently trades at 10x PER with 6.8% dividend yield and historically traded at a 5% dividend; we see scope for its valuation to improve"* [2].

So the "discount" is twofold: discount to the regional/Indonesia market average **and** ~2 standard deviations below its own 10-year EV/Ebitda mean.

---

## 4. CLSA's SOTP — How the Premium-to-Market is Justified

The target price is set bottom-up via sum-of-parts. The latest (Apr 2025) revised SOTP at **Rp2,900/share** breaks down as [9]:

| SOTP Component | Stake | Valuation Basis | Value (Rpbn) |
|---|---|---|---|
| Telkomsel (excl. Singtel 30%) | 70% | **11x 25CL PE** | 201,418 |
| Mitratel | 70% | Market cap | 46,500 |
| Data centres, wholesale, others | 100% | **3x EV/Ebitda** | 47,782 |
| Gojek | — | Latest book value | 979 |
| MDI Ventures | — | US$500m AUM | 7,250 |
| Group net debt (ex-Telkomsel) | — | — | (19,560) |
| **Total** | — | — | **284,368** |
| **SOTP per share (Rp)** | — | — | **~2,900** |

Key insight on the premium/discount logic *within* the SOTP [3][6][9]:
- **Telkomsel at 11x 25CL PE** — a deliberate *premium* to JCI's 10x market consensus, justified by +5% YoY segment revenue growth vs. Bloomberg's -2% market growth expectation. Telkomsel contributes **~80% of overall valuation** [6].
- **DC / wholesale at 3x EV/Ebitda** — was 4x previously; cut alongside lower global DC multiples [3].
- **Mitratel at market cap** — passes through observed market discount on Indonesian tower co's.
- The TP was cut from Rp3,500 to Rp2,900 — entirely driven by *reducing the Telkomsel target multiple from 13x to 11x* "in line with lower market multiple YTD" — not by any deterioration in earnings power [5][9].

---

## 5. What Justifies the Discount (the Bear-Case Drivers)

The discount has identifiable structural reasons rather than being purely market noise:

1. **Mobile market-share erosion / legacy revenue drag.** *"Telkom has struggled to grow in recent years as it lost market share in the mobile segment and the sector did not raise prices in unison in 1H24"* [12]. Management itself acknowledged in the 4Q24 call that "legacy revenue headwinds persist" and guided only *low single-digit revenue growth* for 2025 [14].
2. **Margin compression / one-offs.** 2024 normalized EBITDA fell 1.8% YoY; reported EBITDA -3.3% YoY, with EBITDA margin at 50.0% — at the bottom of guidance. CLSA models 50.9% for 25CL — still below the 53.6% peak in 2022 [7].
3. **High capex intensity legacy.** Telkom averaged 22-26% capex/sales from 2018-2023, well above mature telcos. This drained FCF and weighed on the multiple [11].
4. **SOE governance overhang.** Telkom is part of the new SOE reshuffle under Danantara — political-risk discount persists, similar to other Indonesian SOEs.
5. **Indonesia equity risk premium.** JCI itself has derated; CLSA explicitly attributes the multiple cut to *"lower market multiple since the market correction in 4Q24"* [3].

---

## 6. What Justifies the (Modest) Premium / Re-Rating Catalysts

Despite the headline discount, CLSA argues Telkom *deserves* to trade above the JCI average, and the discount should narrow:

1. **Capex intensity inflection.** Capex/sales dropped to 17.5% in 2024 (from 22.5% in 2023) and management guided 17-19% for 2025-2028 vs. ~22% historical — structurally higher FCF [11][4].
2. **Higher dividend payout signal.** 2024 payout went to 78.5%; CLSA models 78.5% sustained through 27CL [7]. Management *"shared its dividend payout ratio could be higher than the 70%-80% that it guided for before"* [4]. With CapEx falling and payout rising, the yield itself becomes a structural support — 7.5-8% on an 80% payout, with room for higher [4].
3. **Sector pricing normalization.** Industry consolidation (Indosat-Tri, EXCL-Smartfren) and rational pricing should let Telkomsel resume ARPU growth [14].
4. **Best-in-class ROE / scale moat.** ROE 19-21% in CLSA's forecast window, vs. peer-set avg 17%, with the highest revenue base in the Indonesian telco market [8].
5. **Optionality from data centres and FMC.** Lower CapEx but rising data-centre Ebitda support a longer-term multiple expansion.
6. **Buyback signal.** Rp3tn buyback program in place [5].

Note from the latest call: CLSA's overall TMT pecking order is *"GoTo first, followed by the telco operators... we do not have strong preference among Telkom, IOH, or XL"* — i.e., the Outperform is more about *cheap-valuation mean reversion* than fundamental conviction over peers [1].

---

## 7. Synthesis — Premium or Discount?

| Frame of Reference | Telkom's Position | Magnitude |
|---|---|---|
| Regional telco peers (EV/Ebitda) | **Discount** | ~37% (3.7x vs. 5.9x peer avg) |
| Regional telco peers (PE) | **Discount** | ~35% (9.2x vs. 14.2x peer avg) |
| Regional telco peers (Div yield) | **Premium** (higher yield) | 8% vs. 5% peer avg |
| Indonesia JCI market PE | **Modest premium** (target multiple) | 11x target vs. 10x JCI |
| Telkom's own 10-yr EV/Ebitda mean | **Deep discount** | ~ -2 standard deviations |
| Telkom's own 10-yr PE mean | **Discount** | -1 std. dev. (per CLSA SOTP-implied 14x mean) |

**Bottom line on justification:**
- The **peer discount** is justified by Telkom's slower top-line (low-single-digit) vs. higher-growth peers like Bharti, Indosat, Maxis — and by the Indonesian-market and SOE governance risk premium.
- The **modest premium to JCI** is justified by Telkom's above-market growth (+5% YoY in Telkomsel segment revenue vs. -2% market expectation) and best-in-class ROE.
- The **discount to own history** is the part CLSA argues is unjustified — driven by 2H24 market correction and competition fears now largely priced in. The bull case is mean reversion: cheaper valuation + higher payout + lower CapEx + sector consolidation = expansion back toward 10-year mean multiples, delivering re-rating plus a high carry yield in the interim [10][2].

---

**Sources**
[1] Telekomunikasi Indonesia (Persero) Tbk — O-PF (Eyeing a mean reversion) — CLSA (27 Nov 2024) — 607945601LinqAlpha.PDF
[2] Telekomunikasi Indonesia (Persero) Tbk — O-PF (Eyeing a mean reversion) — CLSA (27 Nov 2024) — 607945601LinqAlpha.PDF
[3] Telekomunikasi Indonesia (Persero) Tbk — O-PF (Eyeing a mean reversion) — CLSA (27 Nov 2024) — 607945601LinqAlpha.PDF
[4] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF
[5] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF
[6] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF
[7] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — Financials table — 607956442LinqAlpha.PDF
[8] Telekomunikasi Indonesia (Persero) Tbk — O-PF (Eyeing a mean reversion) — CLSA (27 Nov 2024) — Figure 10 Telco peers comparison — 607945601LinqAlpha.PDF
[9] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — Figure 18 revised SOTP — 607956442LinqAlpha.PDF
[10] Telkom — O-PF (A new page) — CLSA (11 Jul 2024) — Ev/ebitda band — 607933620LinqAlpha.PDF
[11] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — Capex/sales history — 607956442LinqAlpha.PDF
[12] Telkom — O-PF (Returning cash) — CLSA (21 Apr 2025) — Investment thesis — 607956442LinqAlpha.PDF
[13] Telkom — O-PF (A new page) — CLSA (11 Jul 2024) — Financials snapshot — 607933620LinqAlpha.PDF
[14] Q4 2024 Earnings Call — PT Telekomunikasi Indonesia (TLKM) — Management 2025 guidance commentary

## Citations

- [1] **607945601LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/11/607945601LinqAlpha.PDF>
- [2] **607945601LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/11/607945601LinqAlpha.PDF>
- [3] **607945601LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/11/607945601LinqAlpha.PDF>
- [4] **607956442LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956442LinqAlpha.PDF>
- [5] **607956442LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956442LinqAlpha.PDF>
- [6] **607956442LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956442LinqAlpha.PDF>
- [7] **607956442LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956442LinqAlpha.PDF>
- [8] **607945601LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/11/607945601LinqAlpha.PDF>
- [9] **607956442LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956442LinqAlpha.PDF>
- [10] **607933620LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/07/607933620LinqAlpha.PDF>
- [11] **607956442LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956442LinqAlpha.PDF>
- [12] **607956442LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607956442LinqAlpha.PDF>
- [13] **607933620LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/07/607933620LinqAlpha.PDF>
- [14] **Q4 2024 Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk** · external

