Half Year 2026 Telkom Indonesia (Persero) Tbk PT Earnings Call

Speaker #1: Good morning, and thank you for joining us today for Telcom Indonesia's 1/2 26 earnings call. Before we start, let me remind you that today's call and the responses to questions may contain forward-looking statements within the meaning of Safe Harbor.

Speaker #1: Actual results could differ materially from projections or estimates, and may involve risks and uncertainties that may cause actual results to be different from what we have discussed today.

Speaker #1: Following the presentation, we will have a Q&A session. The first question we'll be taking— the the first few questions we'll be taken from written-in questions, and then we will open the queue to verbal questions.

Speaker #1: I would note this is different from what we have done in the past, so we will open it up to verbal questions afterward. Just please raise your hand for that.

Speaker #1: First, I'd like to introduce our board members who are joining us today. Ibu Dian Sosorini, our President Director, and CEO. Bapak Angelo Shalendra, our Director of Finance and Risk Management.

Speaker #1: Ibu Veronica Yosefin, our Director of Enterprise. Bapak Nanang Hendarno, our Director of Network. Bapak Seno Somaji, our Director of Strategic Business Development and Portfolio.

Speaker #1: Bapak Faizal Rachmadi Jomadi, our Director of Digital IT. Bapak Willy Ceylon, our Director of Human Capital. Bapak Andy Kalana, our Director of Legal and Compliance, is joining us online.

Speaker #1: And Bapak Budi Satria, our Director of Wholesale and International Service. Also joining us are the Board of Directors of our subsidiary, Telcom Cell. Bapak Nugroho, Telcom Cell's President Director.

Speaker #1: Bapak Daru Mulyawan, the Director of Finance and Risk Management. Bapak Stanislaw Susachio, Director of Sales. And Bapak Lionel Cheng, as Director of Marketing. Now, I would like to hand the call to our President Director and CEO, Ibu Dian Sosorini, to discuss our first half 26 results and strategic initiatives.

Speaker #2: Thank you, Brad. Good morning, everyone, and thank you for joining. Let me start the presentation with micro situations. The current macro situation continues to show headwinds.

Speaker #2: Recently, we have seen the government working to implement good policy as Bank Indonesia raised rates by 100 basis points, and issued new policies to attract foreign capital.

Speaker #2: Moreover, we have seen the initiation of needed reforms in subsidy programs that ideally will lead to more efficient utilization of the state budget, and support future economic expansion.

Speaker #2: 5.6% in the first quarter, we remain cautious. First, the best effect was off a week first quarter 2025, and second, we have seen further weakness in consumer confidence and retail sales data.

Speaker #2: Moreover, we believe there is potential for the rupiah's recent performance to impact our CAPEX and operating costs. Also, to date, we are not yet seeing an impact.

Speaker #2: Furthermore, inflation has picked up year on year, but for the most part, it is due to low base effect figures. We would be cautious in the coming months of imported inflation due to the war, in the Middle East, and the risk of an impact from El Niño, as some segments are seeing project costs rising due to the geopolitical situation.

Speaker #2: Despite this current cautious period, we reported strong results in the first 2021 half of 2026 and continue to see opportunities for market repair to continue.

Speaker #2: Within our Telcom 30 vision, we are seeing solid progress in transforming the business to a leaner, more profitable business. Over the last 12 months, we have achieved many initiatives toward our four transformational pillars of operational and service excellence, streamlining of assets, allocating value and driving modus operandi shift.

Speaker #2: In the first half of 2026, we saw our operating cash flow increase by 7% year on year, as we continue to see strong cash generation from the business.

Speaker #2: Moreover, our free cash flow to the firm increased by 12.8% on a trailing 12-month period, as we see improving operating cash flows and an annualized decrease in CAPEX in first half 2026.

The current macro situation continues to show headwinds. Recently, we have seen the government working to implement good policy as a backbone. Indonesia raised rates by 100 basis points and issued new policies to attract foreign capital. Moreover, we have seen the initiation of needed reforms in subsidy programs that ideally will lead to more efficient utilization of the state budget and support future economic expansion. While GDP increased by 5.6% in the first quarter, we remain cautious. First, the base effect was off—a weak first quarter 2025. And second, we have seen further weakness in consumer confidence and retail sales data. Moreover, we believe there is potential for the rupiah’s 3% performance to impact our capex and operating costs. Although today we are not yet seeing an impact.

Speaker #2: Through ERP, streamlining and natural attrition, our full-time employees or FTE have decreased by 9.7% year on year, to 17,438 personnel. And we anticipate this figure to continue to decline through second half of 2026.

Speaker #2: Moreover, at Telcom Cell, not only has our pool continued to increase to over 46,000 rupiah in second quarter 2026, the exit month our pool for June was over 47,000 rupiah.

Furthermore, inflation has picked up year-on-year, but for the most part, it is due to low base effect figures. We would be cautious in the coming months of imported inflation, due to the war in the Middle East and the risk of an impact from El Niño. As some segments are seeing project costs rising due to the geopolitical situation, despite this current cautious period, we reported strong results in the first half of 2026. The first half of 2026 continued to see opportunities for market repair to continue.

Speaker #2: As 10 loan digital business data revenue increased by 14% year on year, to 17.1 trillion rupiah, all driving margin to nearly 40% at Telcom Cell.

Within our Telecom 30 vision.

We are seeing solid progress in transforming the business to a leaner, more profitable business.

Speaker #2: On streamlining, our initiatives continue to progress with 12 companies that we have been sold, closed down, or folded into existing businesses. Through this transactions, we also expect an impact of increased workforce efficiency.

Over the last 12 months, we have achieved many initiatives towards our four transformations, or pillars, of operational and service excellence, streamlining of assets, unlocking value, and driving models of brand shift.

Speaker #2: Moreover, we have focused on better management of our CAPEX spending, as more than 94% of deployed CAPEX was to core business segments, namely B2C and B2B infra.

In the first half of 2026, we saw our operating cash flow increase by 7% year on year, as we continue to see strong cash generation from the business.

Speaker #2: Our progress on our third pillar, unlocking value, is evident as we anticipate phase two of the infra next year asset transfer to be completed in second half 2026.

Moreover, our free cash flow to the firm increased by 12.8% on a trailing 12-month period, as we see improving operating cash flows and an annualized decrease in capex in the first half of 2026.

Speaker #2: We have noted that we will focus on industrial consolidation opportunities through year-end 2026, followed by bringing in a strategic partner for the fiber business.

Speaker #2: In addition, we are progressing in identifying a strategic partner to enter our data center business, while noting we recently signed an MOU to expand our data center footprint in Singapore.

Through ERP streamlining and natural attrition, our full-time employees (FTE) have decreased by 9.7% year on year to 17,438 personnel, and we anticipate this figure to continue to decline through the second half of 2026.

Speaker #2: In the first half of this year, the modus operandi shift pillar progress is reflective in our reported financials. Our segment reporting has been reclassified to be clearer, and allow investors to value this business segments more appropriately.

Moreover, at the home sale, not only have our pore continued to increase, to offer 46,000 Rupiah in second quarter 2026. The exit amount pulled for June was offered at 47,000 Rupiah.

Speaker #2: While enhancing the transparency into each segment performance. As we continue the transformation process, we expect value to be realized. Our end state structure, with a lower headcount, efficient whole co and transparent opco setup, is coming into focus.

As 10 loan digital business data revenue increased by 14% year-on-year to Rp17.13 trillion, all driving to nearly 40.

There.

Speaker #2: In achieving this, we will continue to streamline and move forward with our unlocking value initiatives. Now, I would like to shift the topic to provide an overview of our first half 2026 results, of which Angelo will provide a more comprehensive discussion later in the call.

Down or folded into existing businesses. So, for these transactions, we also expect an impact of increased workforce efficiency. Moreover, we are focused on better management of our capex spending, as more than 94% of deployed capex was to core business segments, namely B2C and B2B Infra.

Speaker #2: Our consolidated revenues are the high end of our full year 2026 guidance, up 3.9% year on year, to 75.9 trillion rupiah. The continued success of market repair at Telcom Cell driven by strong data revenue growth, supported an increase in revenues at Telcom Cell by 3.3% year on year to 55.6 trillion rupiah.

Our progress on our third pillar, unlocking value, is evident as we anticipate Phase 2 of the Infra ET transfer to be completed in the second half of 2026. We have noted that we will focus on industry consolidation opportunities through year-end 2026, followed by bringing in a strategic partner for the fiber business.

Speaker #2: Offsetting the decrease in legacy and fixed broadband. At the hold call, we reported mixed results, with revenue growth in B2B infra and others, while B2B ICT and international business showed a modest decline.

In addition, we are progressing in identifying a strategic partner to enter our data center business, while noting we recently signed an MOU to expand our data center footprint in Singapore.

Speaker #2: The consolidated EBITDA margin in second quarter increased to over 50.4%, in line with our guidance and contributing to the first half of the year pickup in EBITDA margin to 49.4%.

Speaker #2: As we noted on our last call, the margin pressure in the first half is more a function of higher growth in a few lower margin businesses that should decline in second half.

In the first half of this year, the modus operandi received pillar progress is reflected in our reported financials. Our segment reporting has been reclassified to be clearer and allow investors to value these business segments more appropriately. While enhancing the transparency into each segment's performance as we continue the transformation process, we expect value to be realized.

Our end-state structure, with lower headcount, efficient Hulco and transport, and of course, setup, is coming into focus.

Speaker #2: Allowing us to meet our EBITDA margin targets. And Telcom Cell, the EBITDA margin decreased to 46.2% Q on Q, as the growth in revenue was offset by higher costs associated with the strategic calibration at IndiHome and management bonus accruals.

In achieving this, we will continue to streamline and move forward with our unlocking failure initiatives.

Now, I would like to shift the topic to provide an overview of our first half 2026 results, which Angel will provide a more comprehensive discussion of later in the call.

Speaker #2: Our reported net income of 10.6 trillion rupiah increased 1.4% year on year. However, after adjusting for one of items, the core net income is 11.3 trillion rupiah, or up 6.2% year on year.

Speaker #2: On the next few slides, I would like to review the results at Telcom Cell and strategic initiatives at IndiHome. Telcom Cell's market repair strategy has translated into solid improvements in Q on Q financial, supporting a 5.3 revenue growth year on year to 28.02 trillion rupiah, and 1.6% Q on Q.

Our consolidated revenues are at the high end of our full-year 2026 guidance, up 3.9% year-on-year to Rp 75.9 trillion. The continued success of the mobile segment, driven by strong data revenue growth, supported an increase in revenues in the home segment by 3.3% year-on-year to Rp 55.66 trillion.

Throughout the call, we reported mixed results with revenue growth in B2B Infra and others, while B2B ICT and international business saw more or less a decline.

Speaker #2: Telcom Cell's EBITDA increased 10.3% year on year, and net income increased 24.9% year on year in second half 2026. Second quarter 2026. We continue to see the mobile output moving higher, up 11.6% year on year, to 46,000 rupiah, and up 2% Q on Q.

The consolidated EBITDA margin in the second quarter increased to over 50.4%, in line with our guidance and contributing to the first half of the year pickup in EBITDA margin to 49.4%.

Speaker #2: The exit output in June of 47,000 rupiah was supported by a strong World Cup boost. Our data yield remained relatively flat Q on Q at 3.1 rupiah per megawatt per MB, noting that payload figures have been slowly decreasing year on year and Q on Q, partially attributed to the year-on-year decline in customers base, as we have focused on maintaining higher quality low churn customers.

As we noted on our last call, the margin pressure in the first half is more a function of higher higher growth in a few lower margin businesses, that should decline in second half allowing us to meet our epiderm margin targets and tell the Evita margin decreased to 46.2% Q on Q as the growth in Revenue was offset by higher cost associated with the Strategic calibration, at in the home and management bonus approvals.

Speaker #2: In second quarter 2026, despite the output increase and the strong data yield, we note that our customer base only slightly contracted Q on Q.

Our reported net income of 10.6 trillion rupiah increased 1.4% year on year. However, after adjusting for a one-off item, the core net income is 11.3 trillion rupiah, or up 6.2% year on year.

Speaker #2: Looking into the third quarter, we anticipate that the operating environment will be more challenging as there is no festive season or special event to support demand, prior to a likely pickup in fourth quarter 2026.

Speaker #2: IndiHome continues to see pressure from pricing on year-on-year basis, which has led to 3.8% decrease in year-on-year revenues, while Q on Q figures increased by 0.6% to 6.4 trillion rupiah.

Speaker #2: The output increased 3.4% to 211,000 from 204,000 Q on Q. Preliminary, as a result of the strategic recalibration efforts that lowered to total FBB subscribers at Telcom Cell by nearly 8% to 9.5 million.

On the next few slides. I would like to review the results at the cam sale and strategic initiatives at Indie Home, Telecom sales. Market repair strategy has translated into solid improvements in queue on Q Financial supporting a 5.3. Revenue growth year on year to 28.02 trillion rupiah and 1.6% Q on Q. Telecom sales have been the increased, 10% year-on-year and net income increased 24.9% year-on-year in the second half 2026 second quarter 2026. We continue to see the mobile app, moving higher up, 11.6% year on year to 46,000 rupiah and up.

Speaker #2: I would like to speak about this in a little more detail to explain the recalibration that Telcom Cell management employed. Following the historical strong growth in this segment, management conducted an in-depth review of the customer base and updated its parameters for definition of subscribers.

Speaker #2: Following the systemic review of all 10.3 million customers, management concluded that a number of customers had not been generating revenue for over 12 months and were highly unlikely to renew the service.

2% Q on Q. The exit are put in June of 4700 rupiah was supported by a strong World Cup boost, our data, yield remained relatively flat Q on Q at 3.1 rupiah per makeup for MB noting. That pilot figures have been slowly decreasing year on year and Q on Q partially attributed to the year on the decline in customers base as we have focused on maintaining higher quality loan customers

Speaker #2: These customers were removed from our subscriber base. In order to position the company for future growth, they were OPEX impacts to Telcom Cell from this change.

Speaker #2: Accordingly, those costs were 100 billion rupiah of provision costs along with 130 billion rupiah of costs related to adjusting to the updated customer life cycle.

Yule event to support demand prior to a likely pickup in Q4 2026.

Speaker #2: Moving forward, IndiHome is focusing on quality-driven growth and moved away from volume-driven business. This will include a more comprehensive customers acquisition strategy, including layered verification processes, efficiency action to reuse exceeding existing port from clean customers, modernizing of the network, output mix enhancement by focusing on a more for more strategy, and locking in customers via convergence, as we saw our strong convergence ratio now exceed 65%.

In the Home segment, we continue to see pressure from pricing on a year-on-year basis, which has led to a 3.8% decrease in year-on-year revenues, while quarter-on-quarter figures increased by 0.6% to Rp6.4 trillion. The RPO increased 3.44% to 211,000 from 204,000 quarter-on-quarter previously, as a result of the strategic recalibration efforts that led to...

Total FBB subscribers at home saw an increase of nearly 8%, reaching 9.5 million.

Speaker #2: I would also like to update you on the spectrum auction that was a subsequent event to the quarter. We are quite happy with the results as we added 100 megahertz to our spectrum, which now totals 265 megahertz.

I would like to speak about this in a little more detail, to explain the recalibration that Telkom's management employed following the historically strong growth. In this segment, management conducted an in-depth review of the customer base and updated its parameters for the definition of subscribers.

Speaker #2: The additional spectrum consists of 20 megahertz of 700 megahertz and 80 megahertz of 2.6 gigahertz. The additional spectrum will support our ambitions to improve our coverage, improve capacity, and 5G build-out, which will provide customers with an improved digital experience.

Following the systemic review of all 10.3 million customers, management concluded that a number of customers had not been generating revenue for over 12 months and were highly unlikely to renew the service. These customers were removed from our subscriber base.

In order to position the company for future growth, there were Opex impacts to tack on the sale from this change.

Speaker #2: The total upfront fee is 1.2 trillion rupiah, and the total we will pay in the first year is 2.1 trillion rupiah, including the annual fees.

Speaker #2: This will have a larger initial impact on cash flow, but limited P&L impact in 2026. I would now like to turn presentation over to Angelo, our CFO, CFRO.

Accordingly, those costs were Rp100 billion of proficient cost, along with Rp130 billion of cost related to adjusting to the updated customer-side life cycle.

Speaker #2: Please, Angelo.

Speaker #1: Thank you, Bu Dian. The mapping of the revenues by new business segments is broken down more clearly in this slide. I would emphasize the disclosure of our inter-segment and external revenue, where total gross revenue in first half 2026 reached IDR 118.9 trillion, with IDR 43.1 trillion from inter-segment revenues.

Moving forward in the home is focusing on quality driven growth and moved away from volume driven business. This will include a more comprehensive customer acquisition strategy including layered verification processes. A CNC action to reduce exceeding, existing Port from clean. Customers modernizing of the network RPO mix enhancement by focusing on a a more for more strategy and locking in customers via convergence. As we saw our strong conversion ratio now exceed 65%,

Speaker #1: The inter-segment revenues are generated through internal transactions between subsidiaries, while external revenues come from the non-group related. On a year-on-year basis, external revenue increased by 3.9% to IDR 75.9 trillion, and now represents 63.8% of our gross revenues, which is up from 63.5% last quarter and contributed positively to our consolidated revenue.

I would also like to update you on the Spectrum auction, which was a subsequent event to the quarter. We are quite happy with the results as we added 100 megahertz to our spectrum, which now totals 265 megahertz. The additional spectrum consists of 20 megahertz of 700 MHz and 80 megahertz of 2.6 gigahertz.

Speaker #1: As we look to unlock business value, the sizable inter-segment revenue will continue to be monetized. An example is through opening up access to our existing infrastructure, we can tap the opportunity to generate sizable external revenues, which will further amplify our business economics.

The additional spectrum will support our ambitions to improve our coverage, increase capacity, and expand 5G build-out, which will provide customers with an enhanced digital experience.

Speaker #1: If we disaggregate the gross revenue by segment, it becomes evident that there is a massive value unlocking opportunity in our B2B infra segment, as we have IDR 33.1 trillion in gross revenue in first half 2026, with IDR 28.4 trillion or 85.9% from internal revenue sources.

The total upfront fee is Rp 1.2 trillion, and the total we will pay in the first year is Rp 2.1 trillion, including the annual fees. This will have a larger initial impact on cash flow, but limited impact in 2026.

I would now like to turn the presentation over to Angelo, our CFO.

Please Angelo.

Thank you, buddy. And

Speaker #1: More specifically, our B2B infra, B2B ICT, and international business have shown results in line with our expectations. The B2B infrastructure segment reported revenue growth of 19% to IDR 33.1 trillion, of which 14.1% are external revenue.

The mapping of the revenue is by new business. Segments are broken down more clearly in this slide. I would emphasize the disclosure of our intro segment and external revenue. We have total gross revenue. In First South 26 Rich, iDrive 118.9 trillion, with iDrive 43.1 trillion from intersegment revenues.

Speaker #1: Driven by our tower business and data centers. As our tower business saw its tenancy ratio increase to 1.57 from 1.53 in the previous year, and our DC occupancy increase to 88%.

Speaker #1: Our B2B ICT business reported a decrease of 5.4% in total revenues to IDR 8.8 trillion, of which 83.1% are external revenue. This is primarily due to the impact from subsidiaries that we are in the process of streamlining deliberately slowing down their business growth along with a decrease in government overall IT spending.

The interest segment revenues are generated through internal transactions between subsidiaries, while external revenues come from non-group entities on a year-on-year basis. External revenue increased by 3.9% to IDR 75.49 trillion and now represents 63.8% of our gross revenues, up from 63.5% last quarter, and contributed positively. Our concern is that revenue.

As we look to unlock business value, the sizable intra-segment revenue will continue to be monetized. An example is, by opening up access to our existing infrastructure, we can tap the opportunity to generate sizable external revenues, which will further amplify our business economics.

Speaker #1: Our international business reported total segment revenue of IDR 6.3 trillion, of which IDR 90.8% is external revenue. We see strong demand for our international subsidy cable business and are looking to invest more aggressively in expanding capacity at this higher margin business.

If we disaggregate the gross revenue by segment, it becomes evident that there is a massive value-unlocking opportunity in our B2B infra segment. As we have the idea, Rp33.1 trillion in gross revenue is for South 26, with iDrive at Rp28.4 trillion, or 85.9%, from internal revenue sources.

Speaker #1: Simultaneously, we are slowly decreasing our exposure to the international voice business. This should lead to a pickup in EBITDA margin in this business over the medium term that revenue growth may be offset from the decreasing exposure to voice hubbing, which has low margin.

Speaker #1: We have also shifted more of our capex spending to this segment in 2026 within our B2B infra segment. There are some adjustments we would make to our reported net income based on items that we believe to be non-core in nature.

So the revenue growth was 19%, reaching IDR 33.1 trillion, of which 14.1% was external revenue, driven by our tower business and data centers.

As our tower business saw, its tenancy ratio increased to 1.57 from 1.53 in the previous year, and our DC occupancy increased to 88%.

Speaker #1: First, we anticipate elevated transformation advisory costs into 2026 as we are making solid progress on our streamlining initiative. The costs are a cross multiple transactions from the sale of Admedica and Telcomedica to the closing of businesses and reach IDR 49.6 billion in first half 2026.

Speaker #1: We also anticipate this figure will continue to rise along with sale proceeds from divestment through year-end. Due to accounting policy change in our FY25 results that changed the useful life of some of our network assets, we experienced IDR 867 billion increase in depletion expense in first half 2026 that will likely persist throughout the year.

Our B2B ICT business reported a decrease of 5.4% in total revenues to IDR 8.8 trillion, of which 83.1% are external revenue. This is primarily due to the impact from subsidiaries that we are in the process of streamlining, deliberately slowing down their business growth, along with a decrease in government overall IT spending.

Our International Business reported a total segment revenue of IDR 6.3 trillion, of which 90.8% is external revenue.

We see strong demand for our International Subzi cable business and are looking to invest more aggressively in expanding capacity at this higher-margin business.

Speaker #1: At our telecom sales subsidiary, the investment in GOTO is impacted by mark-to-market adjustment as the share price decreased from IDR 58 per share in first half 2025 to IDR 50 per share in first half 2026.

Simultaneously, we are slowly decreasing our exposure to the international voice business. This should lead to a pickup in EBITDA margin in this business over the medium term. But revenue growth may be offset by the decreasing exposure to voice, which has low margin.

Speaker #1: This had an impact on the consolidated net income of IDR 235 billion. In addition, the tax impact is the difference of IDR 180 billion due to different tax rate between telecom group at 19% and infra annexative at 22% following the phase one of the infra annexia transaction.

We have also shifted more of our capex spending to this segment in 2026, within our B2B infra segment.

There are some adjustments we would make to our reported net income based on items that we believe to be non-core in nature.

Speaker #1: In addition, IDR 191 billion is related to the tax impact from the useful life change in our fiber asset. All in all, we calculate normalized net income at IDR 11.3 trillion or an increase on a consolidated basis of 6.2% on year-on-year basis.

First, we anticipate elevated transformation advisory costs into 2026, as we are making solid progress on our streamlining initiative.

The costs are across multiple transactions, from the sale of other medical to the closing of businesses, and risk idea. 49.6 billion in proof of 26.

Speaker #1: As we transform the business, we believe the primary focus should be on our cash flow generation and its ability to grow this across the business segments.

We also anticipate this figure will continue to rise, along with proceeds from divestment, through year-end.

Speaker #1: Our operating cash flow increased 2.6% year-on-year to IDR 66.1 trillion, supported by stronger revenues on the strength of our R2 increase and lower corporate income tax primarily due to timing issue on tax restitution.

Due to an accounting policy change in our FY22 results, that changed the usual life of some of our network assets, we experienced an IDR 867 billion increase in depreciation expense in Q2 '26. That will likely persist throughout the year.

Speaker #1: In addition, the free cash flow to the firm increased by 12.8% on a trailing 12 months basis to IDR 36.9 trillion. With the limited leverage employed, the company has strong capacity to pay elevated dividends.

Speaker #1: Hence, we would suggest looking at the FCFF in analyzing our dividend payment capacity. As we can see, our FCFE of IDR 36.5 trillion is well above the dividend that we have paid in July 10 and implies a strong capacity to pay elevated dividends in 2026 and beyond.

At our telecom sales subsidiary, the investment in GoTo is impacted by mark-to-market adjustment as the share price decreased from IDR 58 per share in FY '25 to IDR 50 per share in FY '26. This had an impact on the consolidated net income of IDR 235 billion.

In addition, the tax impact is the difference of IDR 180 billion due to the different tax rates between the Telkom Group at 19% and in Forex Active at 22%, following phase 1 of the Inra transaction.

Speaker #1: I would also note that this is prior to minority interest adjustment. Moving on to capex, in first half 2026, more than 94% of our capex was deployed toward our core business B2C and B2B infra.

In addition, the 191 billion is related to the tax impact from the useful life change in our fiber assets.

All in all, we calculate normalized net income.

At IDR 11.3 trillion, or an increase on a consolidated basis of 6.2% on a year-on-year basis.

Speaker #1: Since the current management team joined last year, we have made efforts to manage capex spending as we want to implement a disciplined and more efficient costing structure.

Speaker #1: In first half 2026, telecom group realized capex of PPE and intangibles reached IDR 10.8 trillion, which equates to 14.2% of our total revenue. This represents a decrease of 1.5% on year-on-year basis in absolute spending and led to our C2R ratio decreasing by 78 basis points.

As we transform the business, we believe the primary focus should be on our cash flow generation and our ability to grow this across the business segments.

Our operating cash flow increased 2.6% year-on-year to IDR 666.11 trillion, supported by stronger revenues on the strength of our ARPU increase and lower corporate income tax, primarily due to a timing issue on tax resolution.

Speaker #1: We would also note that the network modernization will likely have an impact on our overall capex. Now, let's review our 2026 guidance and our achievement through first half 2026 on the next slide.

In addition, the free cash flow to the firm increased by 12.8% on a trailing twelve months basis to IDR 36.9 trillion.

Speaker #1: Through first half 2026, our revenue and capex guidance is well within our guidance, while our EBITDA margin is slightly below. Our revenues were up 3.9% above the 1 to 3% growth target.

With the limited leverage employed, the company has strong capacity to pay elevated dividends. Hence, we would suggest looking at the FCFF in analyzing our dividend payment capacity.

Speaker #1: Our EBITDA margin was 49.4%, which is slightly below our more than 50% guidance. Our C2R was 14.2%, which is currently below our 17 to 19% guidance.

As we can see, our FCFE of IDR 36.5 trillion is well above the dividend that we have made on July 10th and implies a strong capacity to pay elevated dividends in 2026 and beyond. I would also note that this is prior to minority interest adjustment.

Speaker #1: We are making no adjustment to our guidance at this time as all results are in line with our expectations. There are few items we would like to point out.

Moving on to Capex, in the first half of 2026, more than 94% of our Capex was deployed towards our core business, B2C, and B2B infrastructure.

Speaker #1: First, on the EBITDA margin, we saw the second quarter standalone EBITDA margin increase to over 50% and believe that there is potential upside in the second semester.

Costing structure.

Speaker #1: On our C2R outlook, we anticipate that our FY26 target of 17 to 19% is still achievable, although we forecast to be at the high end of the target including the spectrum costs.

Speaker #1: We continue to be cautious on the impact of the geopolitical tension that could impact a number of our input costs. I would now like to turn the callback over to Brad to manage the Q&A.

In first half 26, Telecom Group realized capex of PPE and intangible Street iDrive 10.8 trillion which equates to 14.2% of our total revenue. This represents a decrease of 1.5% on year-on-year basis in absolute spending and led to our c2r ratio, decreasing by 78 basis point.

Speaker #1: Thank you.

We would also note that the network modernization will likely have an impact on our overall CapEx.

Speaker #2: Thank you, Angelo. I'd like to now move to the Q&A section of the call. As a reminder, we are going to start with two questions that came from written in already, and then beyond that, I think there's a couple questions that have already been written in the conference call as well.

Now, let's review our 2026 guidance and our achievements through the first half of 2026 on the next slide.

For 2026, our revenue and capex guidance are well within our guidance, while our EBITDA margin is slightly below.

Speaker #2: We'll move to those questions, and then we will go opening up everything to verbal questions. So let me start with the first question we have here.

Our revenues were up 3.9%, above the 1 to 3% growth target.

Speaker #2: This question is, what are the published bid values for the newly acquired spectrum and how will the spectrum cost and related network deployment be reflected in the financial statements?

Our EBDM margin was 49.4%, which is slightly below our guidance of more than 50%. Our C2R was 14.2%, which is currently below our guidance range of 17% to 19%.

Speaker #2: This comes from a number of different investors and analysts. We'll ask this first to Padaru and then Panugi will probably add in on the telecom sales side.

We are making no adjustment to our guidance at this time, as our results are in line with our expectations.

Speaker #1: Okay. Thank you for the questions. The spectrum award consists of a one-time upfront payment of 1.2 trillion rupiah. Followed by annual license fees offered the license term with both recognized as operating expenses.

There are a few items we would like to point out. First, on the EBITDA margin, we saw the second-quarter standalone EBITDA margin increase to over 50% and believe that there is potential upside in the second semester.

Speaker #1: While the financial impact has been incorporated into our updated full year 2026 EBITDA margin guidance of around 46%, while the higher capex to revenue guidance of around 15% reflects the additional netbook deployment following the spectrum acquisition.

On our sector outlook, we anticipate that our FY26 17% to 19% is still achievable. Although, we forecast to be at the high end of the target, including the spectrum cost.

We continue to be cautious about the impact of geopolitical tensions that could affect a number of our input costs. I would now like to turn the call back over to Brad to manage the Q&A. Thank you.

Thank you, Angela.

Speaker #1: Surgically, the new spectrum strengthened our coverage and capacity and support the continued expansion of both 4G and 5G. Thank you.

Speaker #2: Thank you, Padaru. The next question we have is also coming from a couple different investors and analysts. What progress has telecom made under its portfolio restructuring and infrastructure value unlocking program?

Speaker #2: And what are the key milestones and priorities going forward? I think we can start with Pie Angelo, speaking about the streamlining, and then following that, Paseno can add on the unlocking of value.

Speaker #3: Thank you, Brad. Our restructuring program is progressing across two parallel workstreams. One being streamlining of the group subsidiary portfolio that we deem to be non-core, and also unlocking value from strategic infrastructure assets.

I would like to now move to the Q&A section of the call. Um, as a reminder, we are going to start with 2 questions that came, uh, from written in already and then, uh, beyond that, I think there's a couple questions I've already been written in in the, uh, conference call as well. We'll move to those questions, and then we will go opening up everything to verbal questions. Um, so let me, uh, start with the first question we have here. Uh, this question is, what are the published bid values for the newly acquired spectrum? And how will the Spectrum cost and related Network deployment? Be reflected in the financial statements. Um, this comes from a number of different, um, investors and analysts. Uh, we'll ask us first to padaru and then, uh, padui will probably add in on the Telecom sell side.

Okay, thank you for the questions. The Spectrum Award consists of a one-time upfront payment of 1.23 trillion rupiah.

Speaker #3: On portfolio streamlining, we completed the admedica and telcomedica divestment in June 2026 and recognizing an after-tax gain of IDR 429 billion, which is equivalent to a pre-tax disposal gain of IDR 550 billion.

Speaker #3: More broadly, we have now completed two divestments, two mergers, and the closure of eight businesses, marking tangible progress toward a more focused group structure.

Followed by annual license fees offered in the license term, with both recognized as operating expenses. The financial impact has been incorporated into our updated full-year 2026 EBITDA projections of around 46%, while the higher capex-to-revenue pattern of around 15% reflects the additional notebook deployment following this spectrum acquisition.

Speaker #3: We continue to advance the remaining initiative, which include further divestment, business closure, and merger or transfer of business. This processes are being prioritized based on their strategic relevance, valuation, execution readiness, and their potential to improve efficiency and capital allocation.

Surgically, the new spectrum strengthens our workforce and capacity, and supports the continued expansion of both 4G and 5G. Thank you.

Speaker #3: With this, I will pass this along to Paseno with respect to unlocking value from strategic infrastructure asset. Thank you.

Speaker #1: Thank you, Angelo. Thank you, Brad. So right now, we continue to advance the remaining initiative. This includes divestment, business closure, mergers, and transfer. This processes are being prioritized based on strategic relevance, valuation, execution, readiness, and their potential to improve efficiency and capital allocation.

Thank you pyro. Um, the the next question we have is uh also coming from a couple of different investors and analysts. Um what progress has Telcom made under its portfolio. Restructuring and infrastructure value unlocking program and what are the key milestones and priorities going forward? Um, I think, you know, we can start with P Angelo speaking about the streamlining and then following that Paso can add on the unlocking of value.

Thank you, Brett.

Speaker #1: Particularly on the some streams, one on the Falcon, the data center, we got a good development that we signed a good MOU with the Singapore government.

Um, our restructuring program is progressing. There are two parallel workstreams: Workstream 1 being the streamlining of the group subsidiary portfolio,

that we deem to be non-core, and also unlocking value from strategic infrastructure assets.

Speaker #1: This marked our important milestone towards development of digital infrastructure in the region. And secondly, on the other potential infrastructure, we still we are still endorsing the consolidation of the industry itself and right now we're going to mark the important milestone by end of this Q and hopefully we're going to have more I would say concrete action by end of this year.

On portfolio streamlining, we completed the Admedika and Telkomedika divestment in June 2026 and recognized an after-tax gain of IDR 429 billion, which is equivalent to a pre-tax disposal gain of IDR 500 billion.

More broadly, we have now completed two divestitures and mergers, and the closure of eight businesses, marking tangible progress toward a more focused group structure.

Speaker #1: Thank you.

Speaker #2: Thank you, Pie Angelo and Paseno. The next question we have, we have a question from a couple different analysts that's overlapping with each other, but I'm going to break it down in a couple different ways.

Speaker #2: So this is coming from Piyush with HSBC. In telecom sell, what changes in capex outlook for 2026 post-spectrum auction and how does it impact 2026 telecom group capex outlook?

Relevance, valuation, execution readiness, and their potential to improve efficiency and capital allocation with this. I will pass this along to Passenger, uh, with respect to unlocking value from strategic infrastructure assets. Thank you.

Speaker #2: Also, what led to the sharp Q on Q increase in marketing expenses by 47% Q on Q and GNA expenses by 35% Q on Q?

Speaker #2: And what led to the decline in EBITDA Q over Q despite an increase in mobile ARPU? Can you share the outlook for the mobile subs and indie home subs growth?

Speaker #2: These are all coming from Piyush and also ones coming from another analyst, but also last question, in telecom sell, what led to the steep drop in indie home subs Q on Q?

Speaker #2: Lionel, do you want to start with that and then we can move on with other people at telecom sell with Padaru?

Speaker #1: Thank you. If we go to the indie home subs, that is something that I will cover right now. As mentioned by Ibu Dian, we do a periodic cleansing of our subscriber base and this time around we decided to reduce the subscriber base for customers that had not been active with us for more than 12 months.

Thank you. Thank you, Brett. So right now, we continue to advance the remaining initiative. This include my firstman, business closure, mergers and transfer. This processes are being paid past based on strategic reforms, valuation execution Readiness, and their potential to improve efficiency and capital allocation particularly on on, uh, uh, some streams 1 on the Falcon, the data center. We got a good development that we, we, we signed a good, um, uh, mou, uh, with the Singapore government, this Mark, uh, our important Milestone towards, um, uh, development of digital infrastructure in the region, and secondly, on the um uh the the other, uh, uh potential, uh infrastructure. Uh, we still, uh, we are still endorsing, the consolidation, um, of the, uh, industry itself. And um, right now we're going to Mark the important Milestone by end of this queue and hopefully,

We, um, we're going to, uh, have a more, um, I would say, concrete action by the end of this year. Thank you.

Speaker #1: We believe that this is a necessary and important exercise that we do and it's important also to highlight that there is no revenue impact from that exercise that we did.

Speaker #1: Okay. Let me continue with the EBITDA question. The EBITDA decline was primarily driven by three factors. The first is continued pressure from legacy business erosion and then the second is one of expenses related to FPP-based calibration and customer coalition optimization as just explained by Pie Lionel.

Thank you, bye. Angelo and Paiseno. Um, the next question—we have a question from a couple of different analysts that's overlapping with each other, but um, I'm going to break it down in a couple of different ways. So, uh, this is coming from Push, it's HSBC. Um, in Telkomsel, what changes in Capex outlook for 2026, post-spectrum auction, and how does it impact 2026 Telkom Group Capex outlook?

Also, what led to the sharp Q1-Q1 increase in marketing expenses by 47% Q1-Q1 and G&A expenses by 35% Q1-Q1?

Speaker #1: And the third is higher commercial spending associated with major events including the World Cup. While mobile ARPU improved, the uplift was not sufficient to fully offset this temporary and structural pressures.

Speaker #1: Looking ahead, we expect profitability to improve as the calibration impact normalized, legacy decline moderates, and our focus on higher quality mobile and FMC customer translate into better monetization.

And what led to, um, the decline in EBITDA quarter over quarter, despite an increase in mobile app? Can you share the outlook for the mobile subs and IndiHome subs growth? Um, these are all coming from, uh, Push and also, uh, you know, one's coming from another analyst. But, um, also, uh, last question in Telkomsel: what led to the steep drop in IndiHome subs, quarter on quarter?

Um, Lionel, do you want to start with that? And then we can move on with other people at Telkom, self Padaru.

Speaker #2: Thank you, Padaru and Pie Lionel. The next question we have is from Arthur at City. Can you clarify your revenue outlook? The first half of 2026 revenue growth was 4% while outlook remains at 1 to 3%.

Speaker #2: Are you expecting softness in the second half of 2026? Maybe Ibu Dian can contribute to this.

Speaker #4: Thank you for the question. Yes, our revenue grew 3.9% in first half. Above the full-year guidance of 1 to 3%. So actually there are a few factors that are impacting our decision to not adjust the revenue target.

Thank you with regards to the Indie home Subs, that, that is something that I will cover right now as mentioned by IBEW Dian. We do a periodic cleansing of our subscriber base. And this time around, we decided to reduce the, the subscriber base for customers. That had not been active us for more than 12 months. We believe that this is a necessary necessary and important exercise that we do. And it's important also to highlight that there's no Revenue impact from that exercise that we did.

Speaker #4: First, we see additional progress in streamlining and expect in the second half of the year there will be further divestments that could have a modest impact on total revenues.

Okay, let me continue with the EPA question. Uh, the EPA decline was primarily driven by three factors. The first has continued pressure...

Speaker #4: Second, in the second half of 2025, we saw strong revenue peak up as market repair at telecom sell had already started to impact the figures.

Speaker #4: And the third factors, we are trying to provide accurate guidance to investors and we do not want to offer promise. I think when you see our strategy, we are more focused on EBITDA margin growth versus revenue growth.

Speaker #4: And that is what we really want to deliver as we continue to transform the businesses. Thank you.

From Alluka business erosion. And then, the second is expenses related to FPP, basically calibration and customer coalition optimization, as explained by [speaker]. And the third is higher commercial spending associated with major events, including the World Cup. World mobile ARPU improvement, however, is not sufficient to fully offset these temporary and structural pressures. Looking ahead, we expect profitability to improve as the calibration impact normalizes, electricity client motor rates improve, and our focus on higher-quality mobile and FMC customers translates into better results.

Monetization.

Speaker #2: Thank you, Ibu Dian. Now we'll go to the people who have raised their hands. The first person, Ranjan, could you please unmute your mic and ask your question?

Speaker #5: Hi, good morning. And thank you for the presentation and the opportunity. A couple of questions from my side. Firstly, on the 5G, congratulations on the spectrum auction.

Thank you for that, and Paul. I know the next question we have is from Arthur at Citi. Can you clarify your revenue outlook? The first half of '26 revenue growth was 4%, while outlook remains at 1 to 3%. Are you expecting softness in the second half of 2026? Maybe Budion can contribute to this.

Speaker #5: We were just wondering if you can help us understand how will the rollout be planned for 5G in Indonesia. We noticed that one of your competitors are pretty strong increase in capex spending to roll out the network.

Thank you for the question. Yes, our revenue grew 3.9% in the first half, above the full-year guidance of 1, 2, 3%.

Speaker #5: That's the second one. That's the first one. The second question, is on B2B or ICT segment. We know that the revenues can be quite lumpy from quarter to quarter.

So uh actually there are a few factors that are impacting our decision to not adjust the revenue Target. Uh, first we see additional progress in streamlining and expect in the second half of the Year. There will be for the deaf man the effects that could have a modest impact.

Speaker #5: Is second quarter one of those quarters where we have recorded higher revenues and it could run at a lower rate in the coming quarters?

Speaker #5: Thank you.

In the second half of 2025, we saw strong revenue pick up as market repair at the Konsol had already started to impact the figures.

Speaker #2: Thank you for the two questions, Ranjan. The first question on the spectrum, the 5G rollout, was a little bit broken up what you're saying, but I think we can start with Ibu Dian, do you want to talk a little bit or Padaru?

Speaker #1: I will cover it. Thank you very much for the question, Ranjan. The first part, with this new spectrum that we now have, we're doing it in a phase-by-phase approach.

And the third factor, we are trying to provide accurate guidance to investors, and we do not want to offer promises. I think, when you see our strategy, we are more focused on better margin growth versus revenue growth. And that is what we really want to deliver as we continue to transform the business. Thank you.

Speaker #1: The first part is this. Over 2026 first half, we rolled out more than 6,000 sites. And that has already been fully maximized from sales and marketing perspective.

Thank you, buddy. And, um, now we'll go to the people who have raised their hands. Um, uh, the first person, uh, Ranjan, could you please, um, un-un-unmute your mic and, um, ask your question.

Speaker #1: In the coming year, the balance of the year we expect to roll out an additional 107 cities where we have identified from both sales and marketing opportunities for us to, number one, improve our customer experience and then, number two, be able to compete more aggressively versus our competition.

Hi, uh, good morning, and thank you for the presentation and the opportunity.

Uh, a couple of questions from my side. Firstly,

Um, on the, uh, on the 5G—congratulations on the spectrum auction.

Uh, just wondering if you can help us understand how the rollout will be planned for 5G?

Speaker #1: And finally, look for opportunities for us to monetize. So this spectrum allows us to go far wider than ever before and also far deeper.

Uh, in Indonesia, we noticed that one of your competitors is pretty strong.

Speaker #1: And we expect that to be an additional incremental subscriber base that we can tap into but also increase our payload. So we view it very positively.

Uh increase in uh, capex spending uh to uh to roll out the network. Uh, that's the second 1. Uh, that's the first 1, the second question, uh, is on B2B ICT.

Speaker #1: Finally, capex to revenue ratio will remain at about 15%.

Uh, segment. We know that the revenues can be quite lumpy from quarter to quarter. This is the second quarter.

Um, it's one of those quarters where we have recorded higher revenues, and it could run at a lower rate in the coming quarters. Thank you.

Speaker #2: Thank you, Lionel. Padaru, is there anything you wanted to add? And then the next part of your question on the B2B ICT revenue. And the outlook for that going forward.

Speaker #2: I think Ibu Dian will contribute to this one.

Thank you for that. Um, the first question on the spectrum, the 5G rollout—uh, so—it was a little bit broken up, what you were saying. But, um, I think we can start with...

Speaker #4: Okay. Thank you for the question. Yes, for the B2B ICT, we see for the first half 2025, there are some moderate contraction. First, it's because we streamline several ICT businesses from our portfolio that impact to the revenue contraction.

Uh, Buean, do you want to talk a little bit, or...

Speaker #4: But we see that from total revenue, B2B ICT external revenue was broadly stable at 7.3 trillion rupiah. Which is. On 1.3%. While the whole segment declined to 600 billion rupiah from 1.4 trillion.

Speaker #4: What we see is that from first quarter to second quarter, momentum in this business actually improved materially from first quarter. Based on this gross segment figures, external revenue increased to approximately 4.2 trillion up 35.5% Q on Q.

Uh, thank you very much for requesting. Re the, the first part with this new Spectrum, uh, spectrum. That we now have. We're doing it in the face by face approach. The first part is this over 2026 first half, we rolled out more than 6,000 sites and that has already in already been fully, maximized from sales and marketing perspective. In the coming year, the balance of the year we expect to roll out an additional 107 cities. Where we I I have identified from both sales and marketing opportunities for us to number 1, improve our customer experience. And then number 2, be able to compete more aggressively versus our competition. And finally, look for opportunities for us to monetize. So this spectrum allows us to go far wider than ever before and also,

Speaker #4: And 15.6% year on year. While segment result recovered to around 1.1 trillion rupiah reversing the first quarter loss. We see scope for further improvement through strict contract selection a good pipelining stronger collection discipline and also a greater focus on higher quality connectivity and also ICT solution.

So, far deeper, and we expect that to be an additional, uh, incremental subscriber base that we can tap into, but also increase our payload. So we view it very positively. Finally, tapx-to-revenue ratio will remain at about 15%.

Thank you, Lina. Uh, Daro, is there anything you wanted to add or...?

Okay.

Speaker #4: And the consolidation of enterprise capabilities into telecom enterprise. So we quite optimistic that this B2B ICT business will be better in the second half and upcoming years.

And then the next part of your question, on the B2B ICT revenue and the outlook for that—going forward, I think Abu Dion will contribute to this one.

Speaker #2: Thank you, Ibu Dian. And maybe if I can add just a little bit too. When we talk about the subsidiaries of these companies that are underperforming a little bit, or that are being streamlined, part of it is also their companies that we've not streamlined yet but we plan to streamline.

Okay, thank you for the question. Um, yes, for the B2B SCT V for the first half 2025, there are some moderate contraction. Uh, first is because, uh, we streamline so for the uh, ictp thesis from our portfolio, that impact to the uh, Revenue contraction. Um, but uh, we see that from total revenue, B2B. I see the external Revenue was broadly stable at 7.3 trillion. Rupiah

Speaker #2: So we're asking them to slow down generating new revenues and going after new projects. So that has an impact on this segment as well, particularly in the B2B ICT.

Uh, which is 1.33, while, uh, the whole, uh, segment declined to 6?

Speaker #2: Now we'll go to the next question from Raymond Kasasi. Raymond, if you could please unmute your line.

B and rupiah from Rp1.4 trillion.

Um, or what we see is that from first quarter to second quarter, um, momentum in this business actually uh improved material materially uh from first quarter

Speaker #6: Hello. Thanks for the.

Speaker #2: Raymond, we can barely hear you. That's better.

Speaker #6: Yeah. Sorry. Can you hear me? Okay. Sorry about that. A couple things from me. The first one is on the cellular. If I look at from the segment informations, the EBITDA Q on Q is pretty much flat.

Uh, based on this cross-segment figure, extra revenue increased to approximately Rp4.2 trillion after a 35.5% gain on Q-on-Q and 15.6% recovered to around Rp1.1 trillion, up 3%. The first, uh, quarter clause.

We see scope for further improvement through strict measures.

Speaker #6: Yet the spectrum fees charges starts kicking in 2027 roughly annual cost will be about 1 trillion rupiah. So my question is, do you see any risk that the ability about the market repair will be sufficient to cover all these increases or there is challenges about raising prices particularly on the lower segment?

Stricter contract selection, a good pipelining, stronger collection discipline, also a greater focus on higher quality connectivity, and also ICT solution, and the consolidation of enterprise capabilities into Telkom Enterprise.

So, we are quite optimistic that this B2B ICPC will be better in the second half and upcoming years.

Speaker #6: Because otherwise, if you cannot raise prices across the board, then this spectrum fee charges additional spectrum fee charges may not be value creative. So that's point number one.

Speaker #6: Point number two on the B2B ICT revenue profile. I've been looking at this for a number of years. I noticed that the revenue profile is very volatile.

Speaker #6: Meaning some actually based on the contract basis this is different than the B2B infra profiles. It's a bit difficult for us to forecast future revenue for B2B ICT given that that's maybe based on a project basis.

Thank. Thank you Budin and and maybe if I can add just a little bit too. Um, when we talk about the subsidiaries of these companies that are, um, underperforming a little bit or that are being streamlined, um, part of it is also their companies that we have, not streamlined yet, but we plan to streamline, so we're asking them to slow down, generating new revenues and, uh, going after new projects, so that has an impact on this, uh, segment as well, particularly in the B2B ICT. Um, now we'll go to the next question from, uh, Raymond, kasasi Raymond. If you could, please, uh, unmute your line.

Hello.

Hey.

Speaker #6: And meanwhile, if I look at the cost structure in the B2B ICT, there's a lot of fixed cost. Meaning in a quarter where your revenue is low, the margin got hit if I remember correctly, your first quarter B2B ICT EBITDA margin is actually negative.

Thanks, Brad. For Raymond, we can barely hear you. Yeah, sorry. Can you hear me okay? Sorry about that. A couple of things from me. Yeah, uh...

The first one is on the cellular.

Speaker #6: But when the revenue jumps, then there is a big swing in the B2B ICT EBITDA margin. So maybe you can give a comment maybe how you're going to improve the B2B ICT future revenue profile.

Uh, if I look at, uh, from the segment information, the AA Q and Q is pretty much flat. Yeah, uh, yet, uh, the spectrum.

Speaker #6: So that's the second one. The third one is on your account receivables. We've been looking at this for more than a decade actually. The outstanding remains flat hasn't come down.

Fees, uh, stages—that's kicking in, uh, 2027. Uh, the roughly annual cost will be about 1 trillion rupiah. So my question is, uh, do you…

Speaker #6: But one thing that I noticed closely is that the past due for more than three months has actually gone up. Maybe if you can give a comment on that.

Uh, do you see any risk that, uh, the ability of the market to repair will be, uh, sufficient to cover all these increases, or are there, uh, challenges about, uh, raising prices, particularly in the lower segment? Because otherwise, if you cannot raise prices across the board, then, uh,

Speaker #6: Thank you.

These spectrum fee charges—additional spectrum fee charges—may not be fully accrued. So, that's point number one.

Point number 2 on the

Speaker #2: Thank you, Raymond. Maybe we can first start with Lionel on the telecom cell side and then we'll move to the B2B ICT question and then the receivables question afterwards.

B2B ICT revenue profile. I've been looking at this for a number of years. Yeah. Uh, I noticed that the revenue profile is very...

Speaker #1: Yeah. Thank you very much, Raymond. So for overall cellular, from a segment information, the we remain optimistic to deliver it's our fiscal year 26 low to mid single digit cellular revenue growth guidance.

All about—yeah. Meaning some actually based on a contract basis. Uh, this is different than the B2B infra profiles, yeah. Uh, the...

Speaker #1: Supported by market repair. You rightly pointed out that market repair is an important component. We are also monitoring very closely the macroeconomic situation. But these are not the only drivers that we see as potential areas of growth.

Speaker #1: But we've demonstrated as we demonstrated during the World Cup campaign, the opportunity for us to attach value added services that has consumer demand is one opportunity.

It's a bit difficult for us to forecast future revenue for B2B ICT, given that it's often based on a project basis. Meanwhile, if I look at the cost structure in B2B ICT, there are a lot of fixed costs. Yeah. Meaning, uh, in a quarter where your revenue is low, the margin gets hit. If I remember correctly, your first quarter B2B ICT margin was actually negative.

Speaker #1: The second area that we are looking at is also in terms of monetizing the new spectrum that comes on board because there are new ways for us to serve the customer better.

Speaker #1: And also identify new ways for us to increase our paying users. And finally, there are cities that we are still market follower and not the market leader.

But when the revenue jumps, uh, then there is a big swing in the B2B ICT EBITDA margin. So maybe you can give a comment, maybe how you're going to improve the B2B ICT future revenue profiles. So that's the second one. The third one is on your accounts receivable. Yeah, we've been looking at this for more than...

Speaker #1: And we intend to monetize that and grow that segment as much as we can. Market repair does provide the opportunity for revenue growth, but we are also very cautious to watch out for upsubscriber base also.

A decade, actually, yeah. Uh, the outstanding remains flat, hasn't come down. But one thing that I noticed closely is that the...

Speaker #1: So those are the key areas for us as we look into fiscal year the balance of fiscal year 26. We do see the incremental cost, but we are also cautiously optimistic about the revenue potential and our subscriber potential into the second half.

Past due for more than three months has actually gone up. Maybe if you can give a comment on that. Thank you.

Speaker #1: Thank you.

Speaker #2: Thank you, Lionel. And the next part of the question, part two, on the B2B ICT and the volatility in the revenues. Angelo can take that one.

Thank you, amen. Um, maybe we can first start with Lino on the Telkom sell side, and then I will move to the B2B ICT question, and then the resale both question afterwards. Yeah, thank you very much, Freeman. So, for overall cellular, from a segment information that...

The the we remain optimistic.

Speaker #3: Yeah. Thank you for the question. Raymond, I think we probably mentioned it in our last quarter call. I think previously we did some sort of like what you call it, reconciliation on annual basis, Raymond.

Speaker #3: We are now doing it on quarterly basis. And therefore, going forward, we expect this kind of like lumpiness with respect to adjustment towards revenue and cost are being clearer.

To deliver its our fiscal year 26 low to mid single digit seller Revenue growth guidance. Supported by market repair, you rightly pointed out, the market repair is an important component. We are also monitoring very closely the macroeconomic situation, but these are not the only drivers that we see as potential areas of growth. It was demonstrated as we demonstrated during the World Cup campaign, the opportunity for us to attach value added services that make that has consumer demand is 1 opportunity.

Speaker #3: And also less lumpy. And this is actually 2026 is the first time we're doing it on quarterly basis. So we hope that this address your question on ways for us to address your difficulty in forecasting the revenue and also cost for this business going forward.

The second area that we are looking at is also in terms of monetizing the new spectrum that comes on board, because there are new ways for us to serve the customer better, and also identify new ways for us to increase our paying users.

And finally, there are cities where we are still, still, uh, uh, market follower and not the market leader. And we intend to monetize that and grow that segment as much as we can. Market repair does provide the opportunity for revenue growth, but we are also very cautious to watch out for our subscriber base also.

Speaker #3: So that's on the first point.

Speaker #2: Yeah. And then on your third point, on the receivables and the some of the increase in the past due receivables for the three months and beyond, I think Angelo can take that one as well.

So, um, those are the key areas for us as we look into fiscal year 20—uh, the balance of fiscal year 2026. We do see the incremental cost, but we are also cautiously optimistic about the revenue potential and our subscriber potential into the second half.

Thank you.

CT and the volatility in the revenues—Angelo can take that one.

Speaker #3: Okay. I think your question I just want to make sure I get the question right. You have question on the past due of account receivable more than three months that going up on quarter and quarter basis.

Yeah, um, thank you for the question, Raymond. I think we probably mentioned it in our last quarter call.

Speaker #3: Now, I think the increase in past due receivable was reflected in our more prudent provisioning if you look at our provisioning figures. Rather than indicating a broad deterioration in the receivable quality, now, our focus is not simply on managing the accounting provision.

Speaker #3: But also on improving the underlying quality of our receivable. Going forward, we are strengthening customer and contract quality but not only that, we also enhancing our billing and collection process.

Speaker #3: While maintaining a tighter control over provisioning and discretionary overhead cost. Now, you can see that as a result, provisioning requirement will continue to depend on our collection performance.

Uh, I think previously, uh, we did some sort of like, you know what, you call it um reconciliation on annual basis, Raymond, uh, we are now doing it on quarterly basis, right? And therefore, you know, going forward, we expect this kind of like, you know, lumpiness with respect to adjustment towards revenue and cost uh are being uh clearer, right? And also, um, uh, less lumpy, right? And this is, uh, actually 2026 is the first time we're doing it on quarterly basis. Uh, so we hope that, you know, this address your question on, on, on Waze for us, uh, to address, you know, uh, your difficulty in, um, forecasting, the revenue, and also cause for this business going forward. Uh, so that's on the, uh, uh, first point.

Speaker #3: But we also expect better receivable quality over time as this initiative take effect and some of it has been touched upon by telecom cell team earlier by what they do on cleansing or recalibrating the base for indie home customer.

Um, yeah. And then on your third point, um, on the receivables and the, um, some of the increase in the past due receivables for the 3 months and beyond, I think Angela can take that one as well.

Speaker #3: Now, from a broader cash generation perspective, Raymond, net net when you see the overall totality you can see in our operating cash flow, right?

Okay.

Speaker #3: We continue to see a very healthy cash conversion. Our operating cash flow actually does increase 7% year on year to 34.9 trillion. Outpacing revenue net income growth which indicate that the increase in provisioning has not translated into deterioration in the group overall cash generating ability.

Speaker #3: Because cash flow is essentially a very good reflection of how we be able to convert our receivable be that 3, 6, 12 months or whatever have you into real cash.

Um, I think your question. I just want to make sure I, uh, I get the question, right. Uh, you know, you don't have questioned on the past 2 or 4, count receivable, uh, more than 3 months. Uh, that's going up, uh, on quarter and quarter basis. Now, I think the increase in passive receivable, uh, was reflected, um, in our more prudent professional. Uh, if you look at our provisioning figures, uh, rather indicating a broad deterioration in the receivable quality,

Speaker #3: Thank you.

Speaker #2: Thank you, Angelo. Thank you, Raymond, for the question. Next question is a follow-up from Piyush. Piyush, please unmute your mic and ask your question.

Now, our focus is not simply on managing the accounting profession, but also on improving the underlying quality of our receivables.

Speaker #4: Yeah. Hi. Thanks a lot. Great. Thanks, management. Few follow-ups. Firstly, on telecom cell, could you also share your 2027 capex outlook and on the 5G rollout?

Speaker #4: Could you expand a little bit on your network rollout as well as population coverage targets for 26, 27 and beyond? And what's your strategy for 5G FWA to complement your fiber broadband business if you can shed some light?

Uh, going forward. Um, we are strengthening customer and contract quality, uh, but not only that we also enhancing our billing and, um, collection process, uh, while maintaining a tighter control of our provisioning and discretionary overhead costs. Now, you can see that as a result, uh, professionally requirement a requirement will continue, uh, to depend, uh, on our collection performance. But we also expect better receivable quality over time as this initiative, uh, take effect. And some of it has been touched upon by, uh, Telecom sales team, uh, earlier. But

What they do on, you know, um, uh, cleansing or recalibrating the base for in the home, uh, customer.

Speaker #4: Secondly, just on the housekeeping, I remember on ERP you had earlier mentioned one to 1.2 trillion budget for 2026. Can you shed some light on how much is booked for 1H and what's the is it still on target for the full year?

Speaker #4: Thank you.

Speaker #2: Thank you, Piyush, for the question. Haidaru, we'll contribute and potentially Panugi and Pilanil as well.

Speaker #3: Yeah. Yeah. Yeah. So the main objective of having this additional spectrum on 700 as well as 2600 is mainly to make sure that telecom cell will keep competitive in term of network quality as one of the value proportion to the market.

Now, from a broader cast, generation perspective, Raymond, um, you know, net, net, when you see, um, the off-road totality, you can see in our operating cast, right? Um, we continue to see a very healthy cash compression. Uh, our operating cash flow, actually does increase 7% year on year to 34.9 trillion. Uh, outpacing Revenue, uh uh, net income growth, which indicate that the increase in professional, has not translated into the iteration in the group overall, uh, cash, generating ability. Uh, because cash flow is essentially um a very good reflection of of how we be able to convert. You know, our receivable beta 36 12 months or whatever have you uh into real cash. Thank you.

Thank you, Angela. Thank you, Raymond, for the question. Next question is a follow-up from Push. Push, please unmute your mic and ask your question.

Speaker #3: And one of the main program for that is to continue expanding our 5G. It's not only for mobile but also for the FWA as you mentioned just now.

Speaker #3: The penetration of fixed broadband using fiber is deemed to be not visible in all areas especially when we are trying to penetrate to the low-end segment.

Yeah. Hi, uh, thanks a lot, uh, great. Um, uh, uh thanks management. Um, if you follow-ups, uh, firstly on Telecom cell. Would you also share your uh, 2027 capex Outlook and on the 5G rollout? Um could you expand a little bit on your uh Network rollout, as well as population uh, coverage targets for 2627 and Beyond? And

Speaker #3: And this FWA with 5G together with sets 2600 megahertz is the ideal spectrum. And it will come with the specific solution in which the ONT is no longer the normal ONT.

Speaker #3: It's no longer like the common orbits but it is more like the ONT with SIM card. So whenever the demand is getting bigger, we can always upgrade the SLA and service quality accordingly.

What's your strategy for, uh, 5G fwa? Um, you know, to complement your fibre Broadband business if, if you can shed some light. Um, secondly. Just on the housekeeping. Um, um, I remember on Erp you had earlier, mentioned 1 to 1.2 trillion, uh, you know, budget for 2026. Um, can you, um, can you shed some light on how much is booked for 1 H and what's the, you know, like, uh, is it still on target for the full year?

Thank you.

Contribute, and potentially upon Nugi and Pineal as well.

Speaker #2: Okay. Continue from Deepanugi explanation that as of June 26, we had deployed around 6,000 5G BTS expanding our 5G coverage to more than 107 cities and regions across Indonesia.

Yeah.

Yeah. So

um,

Speaker #2: We have therefore updated full year 26 capex to a revenue rise guidance to around 15% reflecting higher deployment investment following the spectrum acquisition. But the rollout will remain disciplined and faced based on network needs, customer demand, and return feasibility.

The main objective of having this additional spectrum on 700 as well as 2600.

It is mainly to make sure that the cell will remain competitive in terms of network quality, as one of the value propositions to the market.

Speaker #2: Thank you.

And one of the main programs for that is to continue expanding. Our 5G is not only for mobile, but also for FWA, as you mentioned just now.

Speaker #1: Thank you, Haidaru, Panugi. The next question is another follow-up question coming from sorry, Ranjan.

The penetration of fixed broadband using fiber.

Speaker #5: Hi. Thank you for the opportunity again. Two quick follow-ups. On the fixed broadband revenues, the customer numbers have declined. They've also mentioned pricing pressures in the market as well.

It is deemed to be not visible in all areas, especially when we are trying to penetrate through the oil and segment, and this FW, every 5G together with such 20, uh, 2600 MHz, is the ideal spectrum,

and it will come with the, uh,

Speaker #5: With that context, can you help us understand the growth in the fixed broadband revenues on a quarter-on-quarter basis? The second question, again, is in your working capital?

Specific solution in which there is no longer the normal orientation.

Speaker #5: There seems to be a big increase in other payables. To 24.9 trillion rupiah, if you can help us understand what's behind that. Thank you.

Uh, it's no longer like the common orbits, but it is more like the OMV SIM card. So, whenever the demand is getting bigger, we can always upgrade the

Uh, SLA and surface quality accordingly.

Speaker #2: I can take the payable. That's an easy one, Ranjan. That's because that's the dividend payable that we already booked but we haven't paid in first half 26.

Speaker #2: If you recall, we paid our dividend sometimes in 30th of of June for first half 25. Well, we only pay our dividend on July 10, 26.

Speaker #2: But we're recommitted the amount and therefore you see that amount in our payable. Thank you.

Okay. Uh, continuing from the Noki explanation, as of June 26th, we had deployed around 6,000 5G CPTs, expanding our 5G coverage to more than 1,007 cities and regions in Indonesia. We have therefore updated full year 2026 CapEx to the tune of around 15%, reflecting higher deployment investment following the spectrum acquisition. But the rollout will remain disciplined and phased based on network needs, customer demand, and return visibility. Thank you.

Speaker #1: Pilanil here. Just adding more perspective. Thank you very much for the follow-up question. So you do see that revenue declined year on year. And that has been quite it has been a challenge that we've been trying to address.

Thank you, padaru pangi. Um, the next question is another follow-up question. Uh, coming from, um, ran, uh, sorry, uh, ranjan

Speaker #1: And in the last two quarters, you saw that our revenue started to stabilize quarter on quarter. And this perhaps is the first quarter where we see it quarter on quarter growth.

Hi, thank you for the opportunity. Again, two quick follow-ups on the 6 billion revenues.

Speaker #1: That has been driven by a few factors. Number one, the active subscribers have started to increase. And we saw a double-digit increase in year on year.

The customer numbers have declined. They've also mentioned pricing pressures in the market as well.

Speaker #1: On the active subscribers, churn has reduced by double-digit also. And this combination has helped us to stabilize the business for us to be able to grow quarter on quarter.

With that context, can you help us understand the growth in fixed broadband revenues on a quarter-on-quarter basis?

The second question again is in your working capital.

Speaker #1: However, market pressures do continue to exist, especially in the low-end segment. So to cover that a little bit more, our focus is what we compete in the low-end segment.

Uh, there seems to be a big increase in other payables.

Uh, to 24.9 trillion rupiah—if you can help us understand, what's behind that? Thank you.

Speaker #1: It is a red ocean that we wish to steer away from. A lot of our focus will be in the mid to high-end segment where we will intend to do a combination of things.

Speaker #1: More higher speed for same price, higher speed for a slightly increased price. Number one. Number two, be able to offer things which our competitors have not been very successful at.

Speaker #1: For example, additional VASes and OTT, especially in entertainment that we intend to bundle together. At a very affordable price. And finally, fixed mobile convergence continues to be an important strategy.

I can, I can take the, the, the pay build as an easy 1. That's because, um, that's the defendant payable that we already booked but we haven't paid in for South, uh, 26. Uh, if you recall, uh, we paid our dividend. Um, sometimes in, you know, theoretic of June for the first half 2525. Uh, well, we only pay, uh, our dividend on July 10th, uh, 26th. Uh, but we already committed the amount and therefore, you see uh, uh, that amount in our uh, payable thank you.

Speaker #1: That is a differentiator for us. Fixed wireless access also will be another area that we'll play in with the additional spectrum. So the opportunity what we are cautious about the outlook, we intend to grow this business.

Speaker #2: Thank you. In addition to that, there will be some other innovation needed for the fixed broadband market here in Indonesia. Because we believe that for especially for the high-end segments, there are big opportunities that we can explore.

Line over here. Uh just adding more perspective. Thank you very much for the follow-up question. So you do see that that Revenue declined year on Year and that has been quite. It has been a challenge that we've been trying to address. And in the last 2 quarters you saw that our Revenue State started to stabilize quarter on quarter. And this perhaps is the first quarter where we see it quarter on quarter growth.

Speaker #2: And not only to make sure that it will create more stickiness to our high-value customers, but at the same time, it will also bring their ARPU growth by at least double digit.

Speaker #2: So we are working on it. And on the regulatory side, since we are maybe the only country with thousands of fixed broadband ISP, so we've been talking also to the regulator to make sure that it is more streamlined and to create a healthier industry for the fixed broadband business.

Speaker #2: Thank you.

Speaker #1: Thank you, Panugi, Pilanil, and Angela. We'll have one last question. Arthur, from Citi, if you can unmute and ask your question.

Especially in entertainment, which we intend to bundle together at a very affordable price.

And finally, mobile convergence continues to be an important strategy that is a differentiator for us.

Speaker #4: Hi. Thanks for the opportunity. I just wanted to check up on the asset divestment program. If you can get any clarity in terms of the timing, which assets are expected to be divested first, what are the timelines, and milestones that we should expect?

Fixed wireless access will also be another area that will benefit from the additional spectrum. So, the opportunity—while we are cautious, we are cautious about the outlook—we intend to grow this business.

And in addition to that, uh,

Speaker #4: And maybe questions on the proceeds, given that your balance sheet is actually quite full. So you can actually you don't actually need to do the divestments.

There will be some other innovation needed for the fixed broadband market here in Indonesia.

Uh, because we believe that, especially for the high-end segments,

Speaker #4: I'm just wondering what the plans are on this. Thank you.

Speaker #1: Hey, Arthur. I think Angela can take this one.

There are big opportunities that we can explore.

Um,

Speaker #2: Yeah. No. Thanks, Arthur. I think, as I mentioned previously, right, divestment is a term that we use when it comes to divestment of asset that we deem to be non-core.

not only to make sure that it will create more stickiness to our high-value customers, but at the same time,

It will also bring their reference. There are people—

Speaker #2: Now, on that particular universe, I think we anticipate to do about remaining three to four divestment till the end of the year.

Growth by at least double digits, so we are working on it.

And on the regulatory side,

Uh, since we are maybe the only country with thousands of Facebook and ISP.

Speaker #4: Sorry, Angela. I'm sorry. I was referring to the Infraco and the data center. Sorry.

Speaker #2: Oh, okay.

Speaker #4: I was not very clear on that question.

So we've been talking also to the regulator to make sure that...

Speaker #2: Yeah. That's probably better we handled by Paseno. Thank you.

uh,

Speaker #1: Sorry. Okay. So you're talking about the streamlining side of it. Maybe Paseno can handle this on the you're asking about the timing of the data center, any type of data center or Infraco transaction as well, correct?

It is more streamlined and will create a healthier industry for the fixed broadband business. Thank you.

Speaker #4: Yes. Okay.

Speaker #1: Okay. Thank you for the question again. So in terms of Infraco, we expect the important milestone to happen by end of this Q. Hence, the our target can start rolling to be implemented or executed by our last Q in this year.

Thank you, Pak Paulo and panel. We'll have one last question. Arthur from Citi, if you can unmute and ask your question.

Hi, thanks for the opportunity. I just wanted to check up on the asset—the investment program. If you can provide any clarity in terms of the timing, which assets are expected to be diverted first, and what are the timelines and milestones that we should expect?

Speaker #1: And in terms of data center, we expect more or less. The same timeline. However, probably the formalization of the end initiative would be signed by end of this year.

And maybe, uh, questions on the proceeds, given that your balance sheet is actually quite, um,

Um, quite full. So, you can actually—you don't actually need to do the day investment. So I'm just wondering what the plans are on this. Thank you.

Speaker #1: Thank you.

Hey Arthur, I think, uh, Angelo can take this one.

Speaker #4: Thank you, everyone. I have one announcement I'd also like to make the full PowerPoint presentation will be up probably around early afternoon today. That will be the 65, 70-page slide deck, which has all of the financials of the subsidiary as well in it.

Speaker #4: And other information that you guys are looking for. So that's typically how we do it. We put up the earnings call presentation first, and then that comes a couple hours after the call.

Yeah, no, uh, thanks Arthur. I think, as I mentioned previously, right? Um, the investment, uh, is a term that we use, uh, when it comes to, you know, uh, the investment of asset that we deem to be non-core. Now on that particular, uh, Universe. Um, I think, you know, we anticipate to do about, you know, remaining 3 to 4 divers, uh, till the end of the year, uh, with sorry. Angelo. Sorry I was

Speaker #4: So that will be up on the website and you'll get notification on that. I'd also like to thank everyone for participating and thank our board of directors and the board of directors at TelcomCell also for participating.

Referring to the info in the data center. Sorry. I was not placed their question. Yeah, that's probably better. We handled by Paso. Thank you. Oh, sorry. Okay, um, we thought you were talking about the streamlining side of it. Uh, maybe Paso can handle this on the, uh, time. You're asking about the timing of the, uh, data center, any type of data center, or in for code. Transaction as well. Correct? Okay.

Uh, thank you for the question again. So uh, in terms of info we expect the important Milestone to happen by end of this queue. Uh, hence the um, uh, our Target can start rolling to be implemented or executed by uh, our last queue in the, in the, in this year. And in terms of uh, data center, we expect more or less the same uh, timeline. However, probably the, um, uh, the formalization of the uh, n, uh initiative, uh, would be uh, signed by end of this year. Thank you.

Thank you, everyone. I have uh, 1 announcement. I'd also like to make um, the full, uh PowerPoint presentation will be up uh probably around, you know, early afternoon today. Um that will be the, you know, 6570 page slide deck which has all of the financials of the subsidiary as well in it and um other information that uh you guys are looking for. So uh, that's typically how we do it. We put up the earnings, call presentation first and then uh that comes you know, a couple hours after.

After the call. So that will be up on the website and you'll get notification on that. Uh, I'd also like to thank everyone for participating and uh, thank our board of directors and the board of directors at Telecom. Sell also for participating. If you have any additional questions, uh, please feel free to email us, uh, or contact us directly at, um, investor at telkom.co.za.

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