---
endpoint: analytics
pattern: Telecoms
status: done
latency_ms: 355233
conversation_id: 6f1bd499-1849-4765-9a53-7fd38f630358
citations: 0
created: 2026-05-31 20:20:14Z
---

# Provide a one‑year narrative of Telkom, outlining how business performance, market conditions, and company actions shaped investor sentiment and valuation.

# Telkom Indonesia (TLKM IJ) — A One-Year Narrative (Aug 2024 → Jun 2025)

Telkom enters this twelve-month window battered, recovers a narrative, then exchanges that narrative for a more sober, cash-return one. The arc has three movements: (1) a deep de-rating from a frustrated growth story, (2) a sector-led rehabilitation built on irrational-to-rational competition and an AI data-centre option, and (3) a re-pricing in early 2025 as guidance disappointed but capex discipline and dividends became the new pitch — culminating in a board overhaul, a record dividend, and a slim premium-to-target valuation by mid-year.

---

## I. Starting position — August 2024: a wounded incumbent with an AI side-bet

When CLSA hosted Telkom's offline analyst briefing on **14 Aug 2024**, the stock was at **Rp2,850** with a **12M price target of Rp4,100 (~+44% upside)** and an OUTPERFORM rating — a setup that already implied the market had refused to price the bull case [2]. The 12-month stock performance was **−25.2% absolute / −30.0% relative**, with the share price visibly declining from ~Rp4,480 in Aug-22 through Rp3,440 in Aug-23 to Rp2,920 by Feb-24 [2].

Management's pitch was a pivot away from a flagging mobile core toward a **monetisable AI data-centre asset**. Telkom told analysts it was hunting a strategic partner for **Neutra DC**, open to divesting **up to 50%** of the unit to bring in technical expertise and generative-AI contracts. An adviser had been appointed; deal completion was targeted by **1Q25** [1]. The valuation framework still treated Telkomsel at a generous **15x forward PE** and gave the data-centre/wholesale stack only **4x EV/EBITDA**, signalling considerable optionality in the wrapper if execution arrived [2].

The bear case was already legible inside the bull report: the financial performance of the non-cellular business is "unpredictable, given a lack of clarity in released data," and **government interference** was a structural overhang on an SOE versus its private peers — language that would prove prescient over the following nine months.

---

## II. Sector inflection — October–November 2024: from price war to price hikes

The first turn came from competitors, not from Telkom itself.

- **Late Sept – Oct 2024**: XL Axiata raised data prices ~5%; Indosat (IOH) raised its IM3 Freedom Combo and Freedom U packages **10-13% nationwide**; Telkomsel was unchanged but expected to follow [3].
- A CLSA **101-person ride-hailing driver survey** (Oct 2024) found **80% would accept price hikes** and **53% would absorb a 10% hike without down-trading** — supportive of operators reasserting pricing power [5].
- CLSA explicitly framed Telkom as the asymmetric play: "After a major sell-off in 1H24, we regard Telkom as a better option in the sector ... (valuation at a **10-year low** and competition easing)" [4].

By the **27 Nov 2024** Telkom-specific note ("Eyeing a mean reversion"), Telkom itself had begun raising data bundle prices **5-10%**, following IOH's ~9-10% and XL's ~5-7% — the first time in the cycle that all three operators were aligned on direction [7]. The note flagged a key structural nuance: because Telkom's mobile segment is only ~60% of group revenue (versus ~84% for IOH and ~97% for EXCL), the incremental ARPU lift from a sector-wide hike is smaller for Telkom — diluting the upside [7].

Management's parallel self-help levers were laid out:
- A **Rp1.5tn early-retirement programme** booked in 2Q24, designed to bring FY25 personnel costs down YoY [29].
- A target to bring **capex-to-sales** down to **17-18% by FY27** to allow EBITDA-margin expansion [9].
- Completion of the **"one billing" system by end-FY24**, enabling national launch of the convergence product **EZnet** (Rp150k/month, up to 10 Mbps) as a fixed-broadband + Telkomsel-Lite bundle [9].

Despite the better narrative, sentiment was **deeply negative going in**: the stock had returned **−26.4% absolute / −28.8% relative** over the prior 12 months [8], and Telkom traded at ~**4.3-4.6x EV/EBITDA** in late May 2024 — well below the ~5.3x average [30]. CLSA cut 24-26CL NPAT by **7-9%** to reflect one-off retirement costs and soft 9M24 revenue, then **rolled the SOTP forward to 25CL and trimmed the Telkomsel multiple from 15x to 13x**. The target price moved from **Rp4,100 to Rp3,500** but OUTPERFORM was reiterated on mean-reversion logic [7][10].

Stock data: **Rp2,710** with TP Rp3,500 implied +29% upside [30].

---

## III. The dividend dawn and the consolidation tailwind — January 2025

The **XL–Smartfren merger** (announced 11 Dec 2024, EGM scheduled 21 Mar 2025) crystallised the bullish sector setup. CLSA's view: "We are positive on more sector consolidation and believe it will be more beneficial for **Telekomunikasi Indonesia (TLKM) and Indosat (ISAT) in 2025**. Competition is expected to be benign when XL integrates with Smartfren next year" [11]. CLSA forecast Indonesian mobile telco industry revenue growth of **high single digit to low teens** in 2025, with operators able to raise data prices **twice** versus once in 2024 [12]. Telkom and IOH were the preferred picks, given XL's expected integration disruption [12].

This was the high-water mark of the bull thesis: Telkom was supposed to ride two rounds of price hikes, harvest convergence revenue from EZnet, watch capex roll off, and re-rate toward a 13x Telkomsel multiple.

---

## IV. The unwinding — February–March 2025: Danantara, the Military Law, and the policy overhang

What changed sentiment was not Telkom-specific — it was **state-action risk**.

- **24 Feb 2025**: **Danantara**, Indonesia's new sovereign wealth fund and SOE super-holding, was inaugurated with an aspiration to be an "agent of growth by optimising SOEs' businesses and investment in priority projects." CLSA observed that "the market has taken a hit YTD, with **uncertainty over Danantara as one of the reasons**, in our view" [13]. Telkom was the 6th-largest SOE by total assets (**Rp285trn / ~US$17.4bn**) and the largest non-bank listed SOE inside Danantara's scope.
- **20 Mar 2025**: Parliament passed the **Military Law amendment**, which the market had feared would put non-bankers / military on the boards of key SOEs (banks and Telkom). CLSA argued the worry was "unwarranted" — the additional five government posts open to active officers are defence-linked, and Danantara's incentives align with maximising SOE profitability and dividend payouts [14]. By this point Telkom's stock had drifted to **Rp2,390** [14], down ~12% from the November note even with the broader telco price-hike thesis intact.

This combination — Danantara uncertainty + Military Law fears + a softer-than-hoped industry pricing follow-through (Telkomsel had to **rationalise its byU "Super Kaget" package**, effectively a 444% price/GB increase by shrinking the data allotment, in April [21]) — pressured the SOE complex. The bull-case "two rounds of price hikes" was already being challenged by management itself.

---

## V. The pivotal pivot — April 2025: "Returning cash"

Telkom reported **4Q24 results on/around 21 April 2025**, and CLSA's response note marked the formal handover from a growth/mean-reversion story to a **cash-return story**.

The numbers were ordinary but the framing was decisive: **"Telkom's 4Q24 results were inline, and although not particularly strong it was a relief to investors given pessimism due to price competition."** Management's FY25 guidance was deliberately **conservative**: low-single-digit revenue growth and unchanged 50-52% EBITDA margin range [15][20]. The market got two unexpected gifts in exchange:

1. **Capex intensity guidance dropped to 17-19%** for FY25 (versus 22-23% original 2024 guidance and **16.3% actual** for 2024), well below historical levels — and CLSA viewed this as "a net positive" with scope for higher free cash flow [16][19].
2. Management signalled the **dividend payout could exceed the prior 70-80% guide** [16]. With 2024 DPS of Rp191.1 implying an **84% payout**, the dividend yield base was already ~7.4% at the prevailing share price, with room to expand toward 8-9% on CLSA estimates.

Operating detail behind the headlines [20]:
- **Telkomsel ARPU** improved **+2% QoQ** to Rp44k in 4Q24, with subscribers +1% QoQ.
- **4Q24 ARPU by operator**: Telkomsel **Rp44**, XL **Rp43**, IOH **Rp39** — Telkom still in the lead but with the gap closing.
- Full-year group **operating costs +3.1% YoY** (+2.0% ex-early-retirement) versus revenue +0.5%, hence the negative operating leverage that compressed Group EBITDA margin to **50.0%** from 52.0% in 2023.

CLSA's response was to cut **25-26CL NPAT by 4-6%**, drop the Telkomsel SOTP multiple **from 13x to 11x** (in line with lower JCI multiples), and lower the **TP from Rp3,500 to Rp2,900** — but maintain OUTPERFORM on an 8% forward dividend yield and ~20% ROE [16]. The stock was priced at **Rp2,570** (+13% potential) [17]. A **Rp3trn buyback** was on the books and AGM was set for **27 May** [18].

Crucially, the catalysts list shifted in emphasis: the AI data-centre / Neutra DC strategic-partner story remained, but it was now positioned as upside optionality rather than the leading thesis — "Data price hikes could change the no-growth narrative on Telkom" [15].

---

## VI. The closing chapter — May–June 2025: governance reset, new CEO, record dividend

Sentiment improved as Danantara's intentions started to read more constructively for shareholders:

- **2 June 2025** ("First step for better SOE governance"): SOE AGMs in March–May produced a 23% average cut in Board of Commissioners size (Telkom: from 9 to 8), with the share of independent commissioners rising well above the 30% minimum (Telkom: from 32% to 37%). CLSA framed this as supportive: "**There was a relief rally post Danantara's announcement, but there is still much upside**" — interests of Danantara and minority shareholders are aligned around higher dividends and optimised profitability [25]. SOEs' share of the JCI had rebounded ~50bps from year-end 2024 to ~17% by end-May 2025; **Telkom was the largest non-bank listed SOE** [24].

- **10 June 2025** (Indonesia TMT weekly): Telkom appointed former XL Axiata CEO **Dian Siswarini** as new President Director at the AGM (replacing Ririek Adriansyah), with **Muhammad Awaluddin** as Vice President Director and **Angga Raka Prabowo** (Vice Minister of Communication and Digital) as President Commissioner. Shareholders also approved an **Rp21trn dividend payout for FY24** — boosting the stock as the market read the appointment as accelerating Telkom's digital-centric transformation [21]. The board overhaul was near-total: only two of the previous Commissioners remained, and the new CFO (Arthur Angelo Syailendra) brought direct data-centre operating experience (former President Director of Digital Realty Bersama) — quietly reinforcing the Neutra DC narrative [22].

- Stock prices through the cycle (TLKM IJ): **Rp2,850 (14 Aug 2024)** [2] → **Rp2,710 (26 Nov 2024)** [30] → Rp2,390 (20 Mar 2025) [14] → **Rp2,570 (21 Apr 2025)** [17] → **Rp2,820 (early Jun 2025)** [26] → **Rp2,770 (19 Jun 2025)** [27]. By June, the +3% upside to TP Rp2,900 was telling — the recovery had already largely matched the target [26].

A late-cycle datapoint on telco pricing discipline: across the past 12 months, XL hiked Sep-24 through Jan-25, IOH hiked +12% in Oct-24, Telkomsel hiked in two phases (Nov + Dec 2024); industry-average increases were **9-12%**, but since early 2025 **"there have been no significant price hikes across the board, as telco management has cited weak purchasing power as a key factor limiting further adjustments"** [23] — directly explaining why CLSA's "two-hikes-in-2025" January thesis under-delivered and why the April guidance cut was sensible.

---

## VII. How the components moved — summary table

| Date | Document | Stock | TP | Rating | Telkomsel multiple | Key shift |
|---|---|---|---|---|---|---|
| 14 Aug 2024 | Data centre ambitions | Rp2,850 | Rp4,100 | O-PF | 15x 24CL PE | AI-DC strategic partner pitch [1][2] |
| 28 Oct 2024 | Ride-hailing driver survey | n/a | Rp4,100 | O-PF | 15x | IOH +10-13%, XL +5%, Telkomsel pending [3][4][5] |
| 27 Nov 2024 | Eyeing a mean reversion | Rp2,710 | **Rp3,500** | O-PF | **13x 25CL** | TP −15%; one-billing + EZnet + Rp1.5tn early retirement [6][7][9][10][29] |
| 1 Jan 2025 | XL–Smartfren merger note | n/a | Rp3,500 (TLKM) | O-PF (TLKM) | 13x | Consolidation = TLKM/IOH preferred picks; expects two price hikes [11][12] |
| 17 Feb 2025 | Telco towers (merger impact) | n/a | n/a | sector Neutral | n/a | Prefer operators over towers; tower TP cuts (TBIG, TOWR) [28] |
| 27 Feb 2025 | More clarity on Danantara | n/a | n/a | n/a | n/a | Danantara overhang acknowledged; Telkom is largest non-bank listed SOE [13] |
| 20 Mar 2025 | Changes to Military Law | Rp2,390 | n/a | O-PF | n/a | Fear of military-on-board overstated [14] |
| 21 Apr 2025 | Returning cash (4Q24 results) | Rp2,570 | **Rp2,900** | O-PF | **11x 25CL** | TP −17%; capex 17-19%, payout could exceed 70-80%, Rp3trn buyback [15][16][17][18][19][20] |
| 2 Jun 2025 | SOE governance | Rp2,820 | Rp2,900 | O-PF | 11x | Slimmer / more independent BOCs; relief rally [24][25][26] |
| 10 Jun 2025 | Indonesia TMT weekly | n/a | n/a | O-PF | n/a | New CEO Dian Siswarini; Rp21trn dividend approved [21][22] |
| 19 Jun 2025 | Indonesia TMT weekly | Rp2,770 | Rp2,900 | O-PF | 11x | MDI Ventures Rp483bn unrealised gains [27] |

---

## VIII. How performance, market conditions, and company actions shaped sentiment and valuation

**Business performance** moved the cycle but did not dominate it. Telkomsel ARPU fell from Rp46.5 in 4Q23 to Rp43.1 in 3Q24 before recovering to Rp44.0 in 4Q24 [20]; legacy revenue contribution shrank from 20% in 1Q22 to 6-9% by 2H24; data traffic grew **+14% YoY** but yield (Rp/MB) fell **−12% YoY** to 3.6 — the classic monetisation gap that has dogged Indonesian operators. Telkom's FY24 revenue grew **+0.5%** and Group EBITDA margin compressed **~200bps** to 50.0% on negative operating leverage (costs +3.1% vs revenue +0.5%) [20].

**Market conditions** were the dominant short-term swing factor. The price-hike sequence (IOH Oct-24, XL Sep-24/Jan-25, Telkomsel Nov-Dec 2024) supported the bull narrative through Q1 2025; then **weak Indonesian purchasing power** stalled further hikes [23], and the **JCI's broader correction** in 4Q24 / early 2025 forced multiple compression — directly cited as the reason for cutting the Telkomsel multiple from 15x → 13x → 11x [10][16]. **Policy uncertainty** under the new Prabowo administration (free-lunch programme execution, Danantara, Military Law) compounded the de-rating [13][14].

**Company actions** shifted the valuation framework rather than the absolute level. Telkom's three deliberate moves — (i) the **Rp1.5tn early-retirement** programme [29], (ii) **capex discipline** (from ~22-23% guided down to **17-19%** for 2025 and actual 2024 of 16.3%) [16][19], and (iii) the dividend signal (potentially **>80% payout**, **Rp21trn** approved at the AGM) [16][21] — re-anchored the equity story around cash return rather than top-line growth. The **Neutra DC strategic-partner process** continued to dangle as embedded option value (now reinforced by the new CFO's data-centre background) [1][22]. The **Dian Siswarini appointment** delivered the symbolic reset the market had been waiting for, paired with a record dividend [21].

**Investor sentiment and valuation**, on the CLSA cuts: SOTP per share moved Rp4,100 → Rp3,500 → Rp2,900 over the twelve months, ~−30% in target price, mirroring the actual share-price journey down to ~Rp2,390 in March and back to ~Rp2,820 by early June. CLSA never moved off OUTPERFORM through the entire cycle [2][7][16][26] — the thesis simply migrated from "growth + mean reversion" to "dividend yield + ROE + optional AI data-centre re-rate." By mid-June the stock was offering an estimated **~8% forward dividend yield with ~20% ROE** at 9-10x PE — a profile consistent with how Telkom had historically traded at trough valuation, with the new variable being whether Danantara-era governance reform unlocks the next multiple-expansion leg.

---

**Sources**
[1] Telkom – Data centre ambitions — CLSA (14 Aug 2024) — 607936311LinqAlpha.PDF
[2] Telkom – Data centre ambitions (market data block) — CLSA (14 Aug 2024) — 607936311LinqAlpha.PDF
[3] Indonesia telco – Ride hailing drivers' telco survey (IOH +10-13%, XL +5%) — CLSA (28 Oct 2024) — 607942193LinqAlpha.PDF
[4] Indonesia telco – Ride hailing drivers' telco survey (TLKM 10-yr valuation low) — CLSA (28 Oct 2024) — 607942193LinqAlpha.PDF
[5] Indonesia telco – Ride hailing drivers' telco survey (80% accept hikes) — CLSA (28 Oct 2024) — 607942193LinqAlpha.PDF
[6] Telkom – Eyeing a mean reversion (Reiterate O-PF, Rp3,500 TP) — CLSA (27 Nov 2024) — 607945601LinqAlpha.PDF
[7] Telkom – Eyeing a mean reversion (Mobile price hike impact) — CLSA (27 Nov 2024) — 607945601LinqAlpha.PDF
[8] Telkom – Eyeing a mean reversion (stock performance −26.4%) — CLSA (27 Nov 2024) — 607945601LinqAlpha.PDF
[9] Telkom – Eyeing a mean reversion (Rp1.5tn early retirement, 17-18% capex/sales by FY27) — CLSA (27 Nov 2024) — 607945601LinqAlpha.PDF
[10] Telkom – Eyeing a mean reversion (15x → 13x Telkomsel) — CLSA (27 Nov 2024) — 607945601LinqAlpha.PDF
[11] XL Axiata – XL-Smartfren merger (TLKM/IOH preferred) — CLSA (1 Jan 2025) — 607947327LinqAlpha.PDF
[12] XL Axiata – XL-Smartfren merger (two hikes expected in 2025) — CLSA (1 Jan 2025) — 607947327LinqAlpha.PDF
[13] Indonesian market – More clarity on Danantara — CLSA (27 Feb 2025) — 607951791LinqAlpha.PDF
[14] Indonesian market – Changes to Military Law — CLSA (20 Mar 2025) — 607953548LinqAlpha.PDF
[15] Telkom – Returning cash (4Q24 inline; conservative FY25 guidance) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF
[16] Telkom – Returning cash (capex 17-19% vs 23%, payout >70-80%) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF
[17] Telkom – Returning cash (Rp2,570, TP Rp2,900, +13%) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF
[18] Telkom – Returning cash (Rp3tn buyback, AGM 27 May) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF
[19] Telkom – Returning cash (2024 capex/sales 16.3%) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF
[20] Telkom – Returning cash (4Q24 operator ARPU table) — CLSA (21 Apr 2025) — 607956442LinqAlpha.PDF
[21] Indonesia TMT (new Telkom CEO Dian Siswarini, Rp21trn dividend) — CLSA (10 Jun 2025) — 607961627LinqAlpha.PDF
[22] Indonesia TMT (board overhaul detail) — CLSA (19 Jun 2025) — 607962353LinqAlpha.PDF
[23] Indonesia TMT (12-month industry price-hike timeline) — CLSA (10 Jun 2025) — 607961627LinqAlpha.PDF
[24] Indonesian market – First step for better SOE governance (SOEs 17% of JCI, relief rally) — CLSA (2 Jun 2025) — 607961011LinqAlpha.PDF
[25] Indonesian market – First step for better SOE governance (slimmer BOCs) — CLSA (2 Jun 2025) — 607961011LinqAlpha.PDF
[26] Indonesian market – First step for better SOE governance (TLKM Rp2,820, TP Rp2,900) — CLSA (2 Jun 2025) — 607961011LinqAlpha.PDF
[27] Indonesia TMT (MDI Ventures Rp483bn unrealised gains; TLKM Rp2,770) — CLSA (19 Jun 2025) — 607962353LinqAlpha.PDF
[28] Indo telco towers – Impact from another merger — CLSA (17 Feb 2025) — 607950864LinqAlpha.PDF
[29] Telkom – Eyeing a mean reversion (FY25 personnel costs lower after Rp1.5tn early retirement) — CLSA (27 Nov 2024) — 607945601LinqAlpha.PDF
[30] Telkom – Eyeing a mean reversion (Rp2,710 / TP Rp3,500 / +29%) — CLSA (27 Nov 2024) — 607945601LinqAlpha.PDF

