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Telekomunikasi Indonesia Adds 3.2 Million Wireless Subscribers in the Fourth Quarter

By Anders Bylund - Mar 20, 2018 at 8:41AM

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The largest telecom in Indonesia rounded out 2017 with strong data service sales to make up for fading legacy businesses like voice and text messaging.

Telekomunikasi Indonesia (TLK 0.33%), the largest telecommunications company in Indonesia, reported fourth-quarter results on Friday, March 16. Top-line sales rose along with 3 million wireless subscriber additions in the fourth quarter, and the company remains committed to a capital-intensive strategy of broadband data services and international growth.

Telkom Indonesia's fourth-quarter results: The raw numbers

Metric

Q4 2017

Q4 2016

Year-Over-Year Change

Revenue

$2.35 billion

$2.28 billion

2.9%

Net income

$328 million

$349 million

(6%)

GAAP earnings per ADS (diluted)

$0.32

$0.35

(8.9%)

Data source: Telkom Indonesia. One American depositary share, or ADS, is the equivalent of 100 series B shares of Telkom Indonesia on the Jakarta stock exchange.

What happened with Telkom Indonesia this quarter?

  • The company reports its results in Indonesian rupiah, not U.S. dollars. The rupiah strengthened by 0.8% against the dollar between the fourth quarters of 2016 and 2017.
  • Voice and SMS text-messaging sales continued their slide toward lower revenue while smartphone data plans and high-speed broadband services for landline customers provided respectable growth instead. Data sales in the Telkomsel wireless business rose 28% year over year for the full year while digital service revenues surged 34% higher.
  • Telkomsel now boasts 193.6 million customers, up from 190.4 million at the end of the third quarter and 174 million a year ago.
  • The IndiHome landline broadband service nearly doubled in size year over year. At nearly 3 million accounts, IndiHome's subscriber count rose 83% over the year-ago quarter and is seen as an important growth driver for the long term.
A technician attaching fiber-optic cable bundles to a piece of wireless networking equipment.

Image source: Getty Images.

What management had to say

"The growing contribution from Data, Internet & IT services shows that the Company has been heading toward the right direction to become a Digital Telecommunication Company," said Telkom CEO Alex Sinaga in a prepared statement.

Management also said that data and digital businesses "are the future of the telecommunication industry," vowing to double down on growth in these thriving areas.

Looking ahead

Telkom Indonesia is also investing heavily in next-generation wireless infrastructure and high-speed connections to the global internet. Capital expenses increased by 14% in 2017 over the previous year, led by big investments in international and wireless networks. The company is laying down fiber-optic links across the Pacific Ocean floor, preparing to launch another communications satellite, and installing 3G/4G wireless network nodes in cell towers around Indonesia.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends Telkom Indonesia. The Motley Fool has a disclosure policy.

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