---
endpoint: analytics
pattern: Telecoms
status: done
latency_ms: 218766
conversation_id: 08b81acc-62bc-4578-a96b-c4ded0106152
citations: 19
created: 2026-05-31 22:08:59Z
---

# What’s the bull case bear case for Telkom?

# Telkom Indonesia (TLKM IJ / TLK US) — Bull Case vs Bear Case

**Note on entity:** This analysis covers **PT Telekomunikasi Indonesia (Persero) Tbk** (TLKM IJ, TLK US ADR) — the SOE-controlled telco holding 70% of Telkomsel, 72% of Mitratel (tower co), plus IndiHome (FBB), MDI Ventures, and stakes in Gojek-Tokopedia. Republic of Indonesia owns 53.7% [6]. Internal coverage is from CLSA (latest dedicated note: "Telkom — O-PF, Returning cash", 21-Apr-2025); public data from Telkom's Annual Report 2025.

---

## Bull Case

**1. Capital return inflection — "Returning Cash" is the new narrative.**
After years of heavy capex, management cut **2025 capex/sales guidance to 17–19%** (vs. 23% in 2024 and 22–24% guidance going in), and 2024 actually printed **16.3%** — meaningfully below original guidance [1][5]. CLSA frames this as the structural unlock: with capex intensity normalising, costs no longer outrun revenue, **margins have scope to improve**, and management has signalled the **dividend payout ratio could exceed the previous 70–80% guidance** [1][2]. The capex/Ebitda margin trajectory shows capex/sales falling from ~25% in FY22 to 17.5% in 25CL while Ebitda margin holds ~50–51% [5].

**2. Valuation + dividend yield combo.** Trading at ~**10x PE on 24A**, going to **9.8x 25CL and 9.1x 26CL**, with dividend yield rising from **7.4% (24A) to 8.0% (25CL) and 8.6% (26CL)** and ROE 19–21% [6]. Net debt/equity is falling fast (27% → 20% → 12% → 6% by 2027CL), so balance sheet is becoming a net positive for shareholder returns rather than a constraint [6]. CLSA's SOTP-based **TP Rp2,900** values Telkomsel at 11x 25CL PE (80% of valuation), Mitratel at market cap, data centres/wholesale at 3x EV/Ebitda [17].

**3. Industry rationalisation tailwind.** Telkom raised data bundle prices **5–10%** in late-2024, following IOH (+9–10%) and XL (+5–7%) [8] — the first synchronised price action the sector has seen. CLSA's investment thesis hinges on this: "Telkom has struggled to grow … as it lost market share in the mobile segment and the sector did not raise prices in unison in 1H24. This is set to change and improve after sector revenue growth stalled, competition rationalised and operators look to raise prices again. Dividend yield has always been around 5% with 20% ROE" [3]. The structural support is the **mid-2025 XL Axiata + Smartfren merger into XL Smartfren Telecom (XLSmart)**, which "is expected to stabilize the industry by reducing price-based competition and promoting efficiency and network quality" — three-player market vs. four [18]. Upside to 2025 revenue guidance exists "if the industry is rational and raises prices across all brands and products" [15].

**4. Fixed-broadband cross-sell catalyst.** One-billing-system integration completed end-FY24, enabling national rollout of **EZnet** (cheaper FBB + Telkomsel mobile bundle) into mass-market Ex-Java [7]. IndiHome retains **>60% share** of the fixed-broadband market per the company's 2025 annual report, and FMC (fixed-mobile convergence) with Telkomsel One is the framework for re-accelerating FBB ARPU [19].

**5. Specific catalysts in pipeline.**
   - **AI data centre strategic partner** — Telkom is actively seeking one; a deal could "jump start its AI data center business" and re-rate growth [4].
   - **Data price hikes** could "change the no-growth narrative on Telkom" [4].
   - **Rp3tn buyback** in place plus an AGM (27 May 2025) that could ratify a higher payout [1].

---

## Bear Case

**1. The core mobile business is shrinking, not growing.** Telkomsel mobile revenue growth is **deeply negative**: ‑5.4% YoY in both 3Q24 and 4Q24, and **ARPU fell from Rp46.6k (1Q23) to Rp44.1k (4Q24)** [9]. The deeper telkomsel breakdown is worse: 4Q24 revenue ‑4% YoY, **ARPU ‑7% YoY** for FY24, **data yield Rp/MB ‑22% YoY** in 4Q24 — Telkomsel is selling more data traffic (+18% YoY) for materially less money [10].

**2. Negative operating leverage in 2024.** Telkom was "the only telco that saw its Ebitda margin shrink due to negative operating leverage where costs grew faster than revenue" [11]. FY24 Ebitda fell 3.3% YoY despite revenue +0.5% — operating leverage worked in reverse.

**3. Price hike benefit is structurally smaller for Telkom.** Because Telkomsel mobile is only ~60% of group revenue (vs. ~84% for ISAT, ~97% for EXCL), a sector-wide price hike "incremental impact for Telkom is smaller relative to peers" [12]. A 10% nationwide data bundle hike historically translates to 5–6% ARPU lift for IOH/XL, but CLSA only models **3–4% ARPU lift for Telkomsel** [9]. The very thing that's supposed to rescue the sector benefits Telkom less than competitors.

**4. Fixed broadband ARPU is bleeding.** IndiHome ARPU has declined consistently: **Rp270k (2021) → Rp268k (2022) → Rp250k (2023) → Rp239k (9M24)** [14]. CLSA: "Telkom's fixed broadband segment has grown 700k subs this year but revenue was flat YoY due to declining ARPU. This was mainly due to a change of product mix, where incremental subs mostly subscribed to the cheaper 10mbps package (Rp150k/month) under the brand, Eznet" [13]. EZnet — the bull-case cross-sell catalyst — is itself the ARPU dilutor; the fixed-wireless Orbit product flopped [13]. Competition is also intensifying: per Telkom's own annual report, IconNet (PLN Icon Plus), Biznet, First Media, and MyRepublic are all expanding aggressively — MyRepublic alone hit 1.5m FTTH subs in 2025 [19].

**5. Management guidance is genuinely soft.** 2025 guidance is **low single-digit revenue growth and 50–52% Ebitda margin** — both the same range as 2024 actuals — with "upside only if industry-wide price increases occur" [15]. This is not a growth story; it's a stabilisation story dependent on competitor behaviour.

**6. CLSA earnings estimates and target multiple are coming down.** CLSA cut **25CL/26CL Ebitda by 5%/7%, NPAT by 4%/6%, lowered Telkomsel target multiple from 13x → 11x PE**, and dropped its TP from **Rp3,500 → Rp2,900** [16][17] — the rerating story has been deferred, not delivered. The old (Nov-2024) SOTP at Rp3,500 already represented a derate from Rp4,100 a year earlier, so this is the second TP cut in ~5 months.

**7. Structural overhangs.** Key risks per CLSA: (a) intensified competition, (b) execution risk on the legacy-to-data transition, (c) opaque non-cellular business performance, and (d) **greater government interference for Telkom** as an SOE (53.7% state-owned) vs. private peers. Telkom's status under the SOE umbrella (and the new Danantara sovereign-holding architecture) means strategic decisions are not purely return-driven.

---

## Snapshot Financials (CLSA estimates)

| Year to 31 Dec | 2023A | 2024A | 2025CL | 2026CL | 2027CL |
|---|---|---|---|---|---|
| Revenue (Rpbn) | 149,216 | 149,967 | 155,020 | 161,883 | 168,281 |
| Net profit (Rpbn) | 24,559 | 23,649 | 25,374 | 27,502 | 29,790 |
| EPS growth (%) | 18.3 | (3.7) | 7.3 | 8.4 | 8.3 |
| Ebitda margin (%) | 52.0 | 50.0 | 50.9 | 51.5 | 51.8 |
| Capex/sales (%) | 22.5 | 17.3 | 17.4 | 17.4 | 17.5 |
| Dividend yield (%) | 7.2 | 7.4 | 8.0 | 8.6 | 9.4 |
| ROE (%) | 20.0 | 18.7 | 19.5 | 20.4 | 21.2 |
| Net debt/equity (%) | 31.2 | 27.3 | 19.6 | 12.4 | 5.8 |
| PE (x) | 10.2 | 10.6 | 9.8 | 9.1 | 8.4 |

Source: CLSA financials snapshot [6].

---

## Bottom Line

The bull case is essentially a **capital-return + industry-rationalisation story** — capex falling, dividend yield 8%+, payout potentially above 80%, ROE ~20%, and a three-player mobile market after XLSmart consolidates [1][2][6][18]. The bear case is that the **core engine is still in cyclical decline** (Telkomsel ARPU and data yield falling, FBB ARPU diluted by EZnet) and the leverage to any sector price hike is structurally lower for Telkom than for ISAT or EXCL [9][10][12]. CLSA sits at **OUTPERFORM, Rp2,900 TP**, framing the stock as a re-rating candidate on dividend yield + ROE rather than a growth name [1][17] — a stance that captures both sides: cheap with capital return support, but you need to believe industry pricing discipline holds for the multiple to rise.

---

**Sources**
[1] Telkom – O-PF (Returning cash), Norman Choong, CLSA, 21-Apr-2025 — chunk 7 (overview)
[2] Telkom – O-PF (Returning cash), CLSA, 21-Apr-2025 — chunk 9 (lower capex / higher dividend)
[3] Telkom – O-PF (Returning cash), CLSA, 21-Apr-2025 — chunk 42 (investment thesis)
[4] Telkom – O-PF (Returning cash), CLSA, 21-Apr-2025 — chunk 43 (catalysts)
[5] Telkom – O-PF (Returning cash), CLSA, 21-Apr-2025 — chunk 28 (capex/sales & Ebitda history)
[6] Telkom – O-PF (Returning cash), CLSA, 21-Apr-2025 — chunk 12 (financials at-a-glance)
[7] Telekomunikasi Indonesia – O-PF (Eyeing a mean reversion), CLSA, 27-Nov-2024 — chunk 5 (one-billing/EZnet)
[8] Telekomunikasi Indonesia – O-PF (Eyeing a mean reversion), CLSA, 27-Nov-2024 — chunk 4 (mobile price hikes)
[9] Telkom – O-PF (Returning cash), CLSA, 21-Apr-2025 — chunk 30 (ARPU & mobile rev growth)
[10] Telkom – O-PF (Returning cash), CLSA, 21-Apr-2025 — chunk 26 (Telkomsel operational stats)
[11] Telekomunikasi Indonesia – O-PF (Eyeing a mean reversion), CLSA, 27-Nov-2024 — chunk 38 (negative operating leverage)
[12] Telekomunikasi Indonesia – O-PF (Eyeing a mean reversion), CLSA, 27-Nov-2024 — chunk 25 (smaller mobile contribution)
[13] Telekomunikasi Indonesia – O-PF (Eyeing a mean reversion), CLSA, 27-Nov-2024 — chunk 32 (FBB ARPU/EZnet/Orbit)
[14] Telekomunikasi Indonesia – O-PF (Eyeing a mean reversion), CLSA, 27-Nov-2024 — chunk 31 (IndiHome ARPU table)
[15] Telkom – O-PF (Returning cash), CLSA, 21-Apr-2025 — chunk 10 (conservative guidance)
[16] Telkom – O-PF (Returning cash), CLSA, 21-Apr-2025 — chunk 35 (forecast revisions)
[17] Telkom – O-PF (Returning cash), CLSA, 21-Apr-2025 — chunk 39 (new SOTP, Rp2,900)
[18] PT Telkom Indonesia — Annual Report 2025, interim_report (cellular industry rationalisation, XLSmart merger)
[19] PT Telkom Indonesia — Annual Report 2025, interim_report (IndiHome >60% share, FBB competition)

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- [18] **AnnualReport2025-TLKM-att5.pdf** · external
- [19] **AnnualReport2025-TLKM-att4.pdf** · external

