Bret Ginesky: Good morning, and thank you for joining us today for Telkom Indonesia's nine-month 2026 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. 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. Following the presentation, we will have a Q&A session. The first question will be taken from written-in questions, and then we will open the queue to verbal questions. In addition, please feel free to raise your hand to ask questions. We would ask that all questions only have a maximum of two parts, and any additional questions, please re-enter into the queue. First, I would like to introduce our board members who are joining us today.
Bret Ginesky: Our new CEO, Bapak Nanang Hendarno, who was appointed to this position at our recent EGMS last month. Bapak Arthur Angelo Syailendra, our Director of Finance and Risk Management, who is joining us online. Ibu Veranita Yosephine, our Director of Enterprise. Bapak Budi Satria Dharma Purba, our Director of Network. Bapak Kharim Siregar, our recently appointed Director of Digital IT. Bapak Willy Saelan, our Director of Human Capital. Bapak Andy Kelana, who is joining us online as well, our Director of Legal and Compliance. Bapak Radita Ali Putra, our recently appointed Director of Wholesale & International Service. Also joining us are the Board of Directors of our subsidiary, Telkomsel. Bapak Nugroho, Telkomsel's President Director. Bapak Daru Mulyawan, the Director of Finance and Risk Management. Bapak Lionel Chng as Director of Marketing, and Bapak Stanislaus Susatyo as Director of Sales.
Bret Ginesky: We would like to thank Ibu Dian Siswarini and Bapak Faizal Rochmad Djoemadi for their service to the company and wish them both well in the future after the changes that we saw at our EGMS last month in September. Now, I would like to hand the call to our President Director and CEO, Bapak Nanang Hendarno, to discuss our 9-month 2026 results and strategic initiatives. Pak Nanang.
Nanang Hendarno: Thank you, Bret. Good morning, everyone, and thank you for joining. I would like to first thank Ibu Dian and Bapak Faisal for their contributions to the company and their hard work in implementing and executing the Telkom 30 strategy. In addition, I would like to introduce our new board members. Bapak Karim Siregar joins us from Bank Jago and Google Cloud as Director of Digital IT, bringing a plethora of experience on technology and innovation to the company. In addition, I would like to welcome Bapak Radhita Aliputra, who has spent his career in our subsidiary, Mitratel. As this is my first call as President Director, I understand there are a lot of questions you may have. I would like to initially address a few items.
Nanang Hendarno: First, on our strategy, we will continue to implement the Telkom 30 strategy, and we are trying to accelerate the streamlining, so we will focus specifically on that over the coming months. Moreover, we intend to continue on the Telkom 30 strategy going forward, and any changes would be minor and adapting to the market environment. An example is the high demand for data centers would drive increased CapEx to the segment. Another is that, for example, the spectrum auction we won in July. We were not sure if this auction would happen or not coming into 2026, so we will make adjustments for the new spectrum and our goal to monetize that investment. I would also like to make a brief comment on MSCI. We sincerely value all of our shareholders, and we are supportive of the country's efforts to remain in EM index.
Nanang Hendarno: We will continue this support, and we will continue to execute our buyback to reflect this support. The current macro situation continues to show headwinds, while key macro indicators stabilize in Q3 2026. Recently, we have seen the government continuing its improved policies and offering a more coordinated message from Q2 into Q3 2026, looking to implement good policy. In Q3 2026, Bank Indonesia was able to stabilize the rupiah at around IDR 18,000 per US dollar and started to see the elevated SRBI rates from June come off, implying liquidity was improving. 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 expansions.
Nanang Hendarno: We continue to monitor the situation with MSCI and communicate with the regulators, the IDX, and Danantara, working cohesively to try and find an adequate solution. While the most recent GDP figure was an increase of nearly 5.3% in Q2, we remain cautious. First, the base effect was of a weak Q2 2026, and the second, we remain cautious on the middle class that has been showing more stress across data points we monitor. Specific to Telkom, we believe there is potential for the rupiah's performance to impact our CapEx and operating costs. To date, reported inflation remains relatively contained, primarily due to the impact of subsidies that are limiting the impact of fuel and food prices being passed through the end customers.
Nanang Hendarno: We would be cautious in the coming months of imported inflation due to the war in the Middle East, any changes in government policy, or the risk of an impact from El Niño, as some segments are seeing project costs rising due to the geopolitical situation. Despite the current cautious period, we reported solid results in 9 months 2026 and continue to see opportunities for market repair to continue. Over the last 16 months, we have achieved many initiatives toward our four transformational pillars of operation and service excellence, streamlining of assets, unlocking values, and driving modus operandi shift. As reported, our OCF declined by 3.1% to IDR 48.1 trillion in the 9-month period, with the IDR 970 billion impact from the ERP in Q1 2026, placing some pressure on the reported full year 2026 figures.
Nanang Hendarno: At 30 September 2026, our free cash flow to the firm decreased by 2.7% on a trailing 12-month period. Lower CapEx and finance costs only partially offset the impact of higher costs impact on operating cash flow. Through ERP, streamlining, and natural attrition, our full-time employees, or FTE, have decreased by 10.4% year-on-year to 17,442, and we anticipate the figure to continue to decline through year-end. Moreover, at Telkomsel, the stand-alone digital business data revenue continues to show consistent year-on-year growth. Our streamlining, our initiatives continue to progress with 14 companies that has been sold, closed down, or folded into existing businesses through 30 September. In October, we signed a CSPA to sell GSD to hotel subsidiary of Danantara, increasing the streamlined business total to 15, with potentially a number of others to come in Q4 2026.
Nanang Hendarno: Moreover, our focus remains on the efficient CapEx spending, as more than 94% of the deployed CapEx was for core business segments. Our progress on our third pillar, unlocking value, is evident as we completed phase II of the InfraNexia asset transfer. We have noted that we will focus on industry consolidation opportunities through the year-end, followed by working to identify a strategic partner for the fiber business. In connection with the AI boom and demand for data centers, we are simultaneously exploring partnership to support our expansion. In the first 9 months of 2026, the modus operandi shift 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.
Nanang Hendarno: I would note that we expect that in November, the enterprise business will be shifted to an OpCo from the current positioning at the HoldCo. Our end state structure with a leaner headcount, efficient HoldCo, and transparent OpCo setup is coming into focus. In achieving this, we will continue to streamline and move forward with our unlocking value initiatives. Now I would like to shift to the topic and provide an overview of our 9-month 2026 results, of which Angelo will provide a more comprehensive discussion later in the call. Our consolidated revenues are at the high end of our full-year guidance, up to 3.5% year-on-year to IDR 113.5 trillion. The continued success of market repair at Telkomsel, driven by strong data revenue growth of 7.7%, supported an increase in revenue at Telkomsel by 1.8% year-on-year to IDR 82.9 trillion, offsetting the decrease in legacy and fixed broadband.
Nanang Hendarno: Moreover, if you back out the legacy business, revenues are growing at 4.8% year-on-year at 9 months 2026. The HoldCo, we reported solid results with revenue growth in B2B Infra of 5.4%, B2B ICT growth of 3.1%, and our international business grew 5.8% year-on-year. The consolidated EBITDA margin in 9 months 2026 decreased to 48.9%. The biggest drag is coming from the cleansing at IndiHome from Q2 2026 and our ERP costs. As we noted on our last call, the margin pressure should alleviate in Q4 2026 as the seasonal strength in pricing should support margins. At Telkomsel, the EBITDA margin decreased to 48% from 46.2% quarter-on-quarter, as seasonal weaker revenue growth was driven by ARPU contraction of 2.4% to IDR 44,900. Our reported net income of IDR 14.4 trillion decreased 4.3% year-on-year.
Nanang Hendarno: However, after adjusting for one-off items, the core net income was IDR 16.5 trillion, or up 3.9% year-on-year. On the next slide, I would like to review the guidance for 2026. Through 9 months 2026, our revenue and CapEx guidance is well within our forecast, while our EBITDA margin is slightly low. Our revenues were up 3.5% above the 1% to 3% growth target. Our EBITDA margin was 48.9%, which is slightly below our more than 50% guidance. Our C2R was 13.5%. Currently, it is below our 17% to 19% guidance. At this time, we are maintaining our reported EBITDA margin guidance at more than 50%, as we believe a few one-off items and an expected stronger Q4 2026 at Telkomsel could help to achieve this figure.
Nanang Hendarno: A few items we would like to point out, our normalized revenue growth remains on target, and on our C2R outlook, as the current figure is quite low, we continue to anticipate that our full year 2026 target of 17% to 19% is going to be achieved, as there are a number of initiatives underway in the Q4. We continue to be cautious on the impact of the geopolitical tensions that could impact a number of input costs. I would now like to turn the call over to our CFRO, Bapak Angelo Syailendra, to discuss our financial in greater detail. Angelo, please continue.
Arthur Angelo Syailendra: Yeah. No, thank you, Bapak Nanang Hendarno, and apologies for not being able to make it in person, as I am in transit. The mapping of the revenues by the new business segments is broken down more clearly in this slide. I would like to emphasize the disclosure of our intersegment and external revenue, where the total gross revenue in 9 months 2026 reached IDR 174.5 trillion, with IDR 61 trillion coming from intersegment revenue. Now, the intersegment revenues are generated through internal transactions between our subsidiaries, while external comes from non-group related. On a year-on-year basis, total revenues, those we report from external sources, increased by 3.5% to IDR 113.5 trillion, and now represent 65% of our gross revenue. This number is up from 63.8% in the last quarter. As we look to unlock more business value, the sizable intersegment revenues will continue to be monetized.
Arthur Angelo Syailendra: An example is through opening up access to our existing infrastructure, which we can tap the opportunity to generate sizable external revenues, which will amplify our business economics. 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 46.6 trillion in gross revenue for nine months 2026, with IDR 39.5 trillion, or around 84.8% coming from internal revenue sources. Switching to Telkomsel, who continues to make progress in strengthening pricing discipline despite a seasonal softness in Q3 2026, with early signs of further pricing improvement in Q4 2026. As anticipated, on Q-on-Q basis, financials were under pressure primarily due to seasonality, as revenue decreased 2.7% to IDR 27.3 trillion, while EBITDA declined 5.3% to IDR 12.3 trillion, and net income decreased to IDR 4.2 trillion in Q3 2026.
Arthur Angelo Syailendra: Despite the seasonality, market repair continues as mobile ARPU increased by 3.5% on year-on-year basis, while our data yield is slightly down to IDR 3.03 per megabyte on year-on-year basis. We would also like to emphasize that payload continues to increase, up 5.7% on year-on-year basis. In Q3 2026, despite the year-on-year ARPU increase and the strong data yield, we note that our customer base experienced a modest decline to 151.1 million subscribers. Looking into Q4 2026, we anticipate that the operating environment will improve as there is a year-end festive season that should support the ARPU demand. We also anticipate exit ARPU in December 2026 will be strong. More specifically, coming to our non-B2C business, our B2B Infra, B2B ICT, and our B2B international business have shown improving results as we work to improve strategy and clearer alignment of business segments.
Arthur Angelo Syailendra: Our B2B Infra segment reported revenue growth of 5.5% to IDR 7.4 trillion, driven by tower business and data centers, which represent over 61% of the segment revenue. On year-on-year basis, our tower business saw its tenancy ratio increase to 1.6 times from 1.55 times in previous year, and our DC business EBITDA increased 35% year on year, with revenue up 17% in the same period. Our B2B ICT business also reported an increase of 3.1% in revenues to IDR 11.2 trillion, primarily due to the impact from 10.9% increase in the Indibiz product growth along with subsidiaries that we are in the process of streamlining and deliberately slowing down their business growth, along with a decrease in government spending. Our international business also reported a total segment revenue of IDR 8.9 trillion.
Arthur Angelo Syailendra: We see strong demand for our international submarine cable business and are looking to invest more aggressively in expanding capacity at this higher margin business. Simultaneously, we are slowly decreasing our exposure to the international voice business. This should lead to a pickup in EBITDA margin in our international business over the medium term, which is reflected in the increase of 160 basis points in Q3 2026 versus the prior year. We have shifted more of our CapEx spending to this segment in 2006 from our B2B Infra segment. There are some adjustments that we would make to our reported net income based on items that we believe are non-core and one-off in nature. First, we anticipate elevated transformation advisory costs in 2026 and likely in 2027, as we are making solid progress on our streamlining initiatives.
Arthur Angelo Syailendra: The costs are across multiple transactions, from the sale of AdMedika to the closing of businesses, and this IDR 220 billion in nine months 2026. We anticipate this figure will continue to rise through year-end and will impact 2027 results as well. Due to the accounting policy change in our FY25 results that changed the useful life of some of our non-network assets, we experienced an IDR 1.2 trillion increase in depreciation expense in nine months 2026. At our Telkomsel subsidiary, the investment in GoTo is impacted by an after-tax impact to Telkom of the mark-to-market adjustment, totaling additional IDR 531 billion as the share price decreased in the first nine months of 2026. In addition, after-tax unrealized losses, primarily related to MDI Ventures portfolio, which total to IDR 707 billion.
Arthur Angelo Syailendra: In addition, the tax impact is the difference of IDR 180 billion due to the different tax rate between Telkom Group at 19% and at Telkom InfraNexia at 22%, following the completion of the InfraNexia transaction. The IDR 298 billion is related to the tax impact from the useful life change in our fiber assets. All in, we calculate normalized net income at IDR 16.5 trillion, or an increase on a consolidated basis of 3.9% year on year. As we transform the business, we believe the primary focus should be on our cash flow generation and ability to grow this across the business segment. Our operating cash flow decreased 4.6% year on year to IDR 62.3 trillion due to higher cash payments for operating expenses alongside the costs from the ERP program.
Arthur Angelo Syailendra: In addition, the free cash flow to the firm decreased by 2.7% on a trailing 12-month basis to IDR 41.6 trillion. With the limited leverage employed, the company has strong capacity to pay elevated dividends. As we can see, our free cash flow to equity of IDR 39.9 trillion is well above the dividend we have paid and implies a strong capacity to pay elevated dividends based on our capital allocation strategy and our focus on total shareholder return. In nine months 2026, more than 94% of our CapEx was deployed towards our core business segment, which is B2C and B2B Infra.
Arthur Angelo Syailendra: Since last year, we have made efforts to manage CapEx spending as we want to implement a disciplined and a more efficient costing structure, while we see a need to invest to modernize the network, as we have noted on our FY25 earnings call, that there will be increase in C2R in 2027 and 2028. In nine months 2026, Telkom Group realized CapEx of PPE and intangibles reached IDR 15.7 trillion, which equates to 13.8% of our total revenue. This represents a decrease of IDR 1.3 trillion on year-on-year basis in actual spending and led to C2R ratio decreasing by over 220 basis points. We would also note that the network modernization will likely have an impact on our CapEx. Now, I will turn the call back over to Brad and the IR team to manage the Q&A segment. Thank you.
Bret Ginesky: Thank you, Angelo. I would now like to move to the Q&A section of the call. As a reminder, the first few questions we will take from the Q&A chat box and questions that were written in to us, and then we will move to questions from the audience. I would note that we will like anyone who is asking a question to state their name and the company that they work with. Any written-in questions, if you could also state your name and the company you work with as well. We will now move to the first few questions. Just give us a moment to set everything up. Question number one. This is written in. What is the ARPU outlook at Telkomsel, and how will competition and quota rollover affect it? Lionel, would you like to take this?
Lionel Chng: Thank you very much, Brad. Specifically for ARPU, we expect to improve in Q4 on a sequential basis, primarily due to three reasons. The first one is in terms of seasonality improvements as we head into the end-of-year holiday season. Number two, a combination of market repair and also our new NARU campaign. Finally, Q4 will be the quarter where we really move much more aggressive in terms of network monetization, as we have been recently focused in terms of network capacity improvements and also 5G expansion. With regards to competition, we continue to monitor them very closely. The activities that they do and any response that we have will be a calibrated and also a targeted one. We hope that there will be continued pricing discipline in the market.
Lionel Chng: Finally, with regards to rollover, Telkomsel supports the regulatory direction with rollover already available on selected products, and we are closely working with the regulatory team while rollover value solutions are being rolled out for our consumers. Thank you.
Bret Ginesky: Thank you, Pak Lionel. The next question that we have that was written in, "What changes under Telkom Enterprise, and when should investors expect financial benefits?" Pak Nanang can start with this answer, and maybe Bu Vera can add if there is anything.
Nanang Hendarno: Thank you, Bret. Digiserve provides the intended operating platform for Telkom Enterprise. Telkom's acquisition from TelkomMetra became effective 1 November 2026. This internal transfer does not itself create additional consolidated revenue or earnings. The objective is to integrate enterprise capabilities and reduce overlap, aligning customer coverage, product offerings, and deliver resources across the portfolio. Benefits depend on commercial and operational execution, greater cross-selling, more profitable recurring services, reduced duplication, and improved collections. The restructuring establishes the platform. Earning improvement depends on realizing those benefits. Bu Vera, would you please add?
Veranita Yosephine: Yes. Thank you, Pak Nanang. The ambition is to continuously keep the momentum of growth in the enterprise business by allowing the business to be more efficient, whereby we consolidate the units into the new entity, Digiserve, so that we can be more equipped with the right capabilities and focus in order to drive our desired portfolio. Thank you.
Bret Ginesky: Thank you, Bu Vera and Pak Nanang. The next question that we have that's written in, then following this, we will move to questions from the line. "Is AI demand translating into revenue growth, and how far will NeutraDC move beyond colocation into GPU as a service?" Maybe Pak Nanang can start with this.
Nanang Hendarno: Growth is supported by customers ramp-up in Singapore, new billable capability at Cikarang, and increased Neutra Compute usage. The contribution specifically attributable to AI is not disclosed separately. NeutraDC has a partnership with a GPU provider to offer GPU-as-a-Service through Neutra Compute, alongside connectivity and colocation as main revenue driver. Hosting customers' GPUs and providing computing services represent different revenue opportunities and investment exposures. Further GPU-as-a-Service expansion depends on customer commitments, hardware ownership, and utilization economics. Capacity growth alone does not establish full AI monetization.
Bret Ginesky: Thank you, Pak Nanang. Now we would like to move the Q&A to anyone who is dialing in on the call. The first question we will take from Piyush. Could you just please state your name and the company you work with before asking your question? Sorry, Piyush, it should work now.
Piyush Choudhary: Hi, this is Piyush from HSBC. Thanks, Bret. I have two questions. First for Pak Nanang, the new CEO. Could you share your priorities for the business in the next one to two years? I understand that Telkom 30 plan remains unchanged, but if you could share the short-term priorities for one to two years. Second question is on Telkomsel. In the broadband segment, ARPU has improved during the quarter. Could you share what led to the improvement and the outlook of fixed broadband ARPU? Thank you.
Bret Ginesky: Thank you, Piyush. Maybe the first question on the next couple of years as a priority at the company, Pak Nanang can start with that, and then maybe we can go to the Telkomsel team, Bapak Lionel Chng, on the ARPU question that you had for the second part of the question. Please, Pak Nanang.
Nanang Hendarno: Yeah, we are not providing guidance at this time, but as I mentioned earlier that we will continue with the TLKM 30 and four pillars. We always review each year and may make some minor adjustments if needed based on our internal reviews and discussion with Danantara. TLKM 30 execution should translate into clear accountability, lower business overlap, and better returns on capital under the strategic holding structure. The management remain committed in continuing and delivering, maintain our full-year guidance while remaining cautious about macroeconomic uncertainty and pressure on customer spending. Disciplined monetization, cost control, and selective investment remain key to delivering our targets.
Bret Ginesky: Thank you. Pak Lionel?
Lionel Chng: Yeah, thank you very much for the question, Piyush. We see improvements in terms of reported ARPU, and that is primarily driven by two, three reasons. The first one is this. We do see that our efforts behind the Exodus program to yield some good results, meaning it is a program where our existing base, we offer to them more speed for slightly higher prices or better speed alongside with a range of OTT services, digital lifestyle services. That has helped us to improve in terms of our existing base. The second one, for new customers coming on board, we recently revamped our total packages to make it more competitive into the market, meaning higher speed at a slightly higher price. Finally, we have also cleaned up a dormant base, which has helped clean up the overall subscriber base and has helped ARPU.
Lionel Chng: However, I do note that revenue still continues under pressure because our priority number one is to protect our existing base that we have from competition that has been focused primarily on price. Those are the three main reasons for the overall ARPU improvements. Thank you.
Piyush Choudhary: In terms of outlook, have we seen the worst, and from here on, as you take these initiatives, the ARPU can further improve, or it is more kind of a stable ARPU outlook at this point?
Lionel Chng: I think the price competition remains. I have got headwinds and tailwinds. The first one in terms of headwinds, competition continues to be highly aggressive in terms of price, including the expansion of fixed wireless access solutions, of which we do also have with our Orbit solutions and also EZnet Wireless. The second one, we are highly sensitive to the overall macroeconomic situation. Consumers are looking for better value. On the flip side, the team here has been very focused with regards to two main areas. Number one, there has been, over the last few months, a significant and also strategic restructuring of the sales organization to better focus our efforts on the focus in terms of sales of IndiHome. The second one, a lot more aggressive activities behind Exodus. In summary, Piyush, we are not out of the woods yet, but I am cautiously optimistic about 2027.
Piyush Choudhary: Great. Thank you.
Bret Ginesky: Thank you, Lionel, and thank you, Pak Nanang. On the next question, we have from Ranjan Sharma. Ranjan, could you just state your name and your company and then ask your question?
Ranjan Sharma: Hi, good morning. It is Ranjan Sharma from J.P. Morgan. Two questions from my side, please. First is on the seasonality for Telkomsel. Can you help us understand what you are referring to? Because that is not necessarily something that you have seen in 2025. In fact, your revenues are up like 3% to 4%, I believe, on a quarter-on-quarter basis in the last year. So, if you can help us understand what seasonality you are referring to this time around. The second question is on your operating cash flow is down 3% or so versus last year in the first nine months. What does it take to improve those operating cash flows? This seems to be a disconnect between operating cash flow and EBITDA, where you are showing EBITDA growth of 2%.
Ranjan Sharma: So, if you can help us understand what is driving the divergence in the growth in EBITDA versus the decline in operating cash flow. Thank you.
Lionel Chng: Yeah, could I take the first part, and then after that, I will hand over. Ranjan, thank you very much for that question. We do see traditionally seasonality as we head out from Q2, where there are numerous holidays and also events into Q3. However, last year was more of an exception because Q3 last year, we did do a series of market repair activities, of which helped uplift the overall revenue. This time around, we did not have that tailwind happening for both in terms of the seasonality, but also in terms of significant market price movements. That has been the difference that we see versus last year. If you trace back 2023 to 2024, you will see that seasonality dip.
Lionel Chng: However, this year has been a little bit more pronounced, and a lot of it has been attributed to the overall softness in consumer demand. I hope that answers your question.
Bret Ginesky: Thank you, Lionel. Then, maybe I will take the second part of your question regarding the operating cash flow changes and the EBITDA and how they are also not fully aligned. On the operating cash flow, in the first 9 months of 2026, the ERP actually led to an outflow in that period, even though the ERP was taken up on the P&L in Q4 2025. So, that is one of the discrepancies. The other one is there were some one-off items associated with the cleanse at IndiHome that happened in Q2 2026 that impacted it. If we offset those numbers and normalize it, you get to about pretty much flat on the operating cash flow side of things.
Bret Ginesky: One other thing on the seasonality too, as Lionel Chng was mentioning, I think part of it is also the fact that this year, we are a little bit more fortunate that you have three quarters of some type of festive season happening, right? Because we had the World Cup, and then we had Q1 of Ramadan period, and then Q4, you have the Christmas period.
Ranjan Sharma: Got it. Thank you. Can I just seek clarification as well? Are you seeing any impact of the biometric registration in the Q3 numbers?
Lionel Chng: I think there has been a slight impact, not so much in terms of from a pure revenue perspective, but the overall number of subscribers signing up. We see less rotational churn, we see less dual SIMs, and I think it has been an initiative that we were preparing for for many months. We rolled it out in July, and so far, the overall impact has been minimal, but number of new subscribers coming in, especially in the low end, has shrunk.
Ranjan Sharma: Okay. Thank you.
Bret Ginesky: Thank you, Ranjan. Thank you for the question, Ranjan. The next question we will take from Arthur. Arthur, if you could unmute your mic and please state your name and your firm. Thank you.
Arthur Pineda: Hi, this is Arthur from Citi. Several questions, please. Firstly, on the asset spinoffs, are you able to provide color on the timing? Are we still on track for that this year for the data center and the InfraCo? Second question I had is with regard to the margin comments on expectations and improvement in Q4. What is driving this beyond scale benefits? Are there any other items that can be actually taken out? Maybe if you can get clarity with regard to the CapEx expectations for 2027, 2028. I am not sure if I heard this correctly, that we expect this to go up. What is driving this, and what level should we expect this at? Thank you.
Bret Ginesky: Arthur, maybe I can start a little bit on that. For the spinoffs, for the data center and InfraCo, the timing. We have completed the spinoff of the InfraCo business, phase 1 and phase 2. Now, throughout the rest of this year, I think we have mentioned on past calls and meetings that there was a big focus from Danantara on streamlining through the end of this year. Given that there are other state-owned enterprises that do have fiber assets, we would look at opportunities to try to consolidate that first in 2026, before pushing in 2027 to move forward with any type of strategic partnership on the fiber side of things at the InfraNexia level. On the data center business, we are seeing a lot of opportunity on expanding the data center business right now. We are working with Danantara consistently.
Bret Ginesky: I think Pak Nanang Hendarno has mentioned he has basically met with them every day since he has been CEO. The goal is to, one, we would like to find a strategic partner that would be likely to happen in 2027 if we move forward with that. We also see a lot of opportunity to build out data centers quite aggressively over the next number of years on our own. We maintain our target of about 400 megawatts by the end of 2030. I think as we mentioned on the analyst day, there is an aspirational target of that being up to over 1 gigawatt by the end of 2030. Obviously, this will require a lot of coordination between ourselves, between Danantara, and a potential strategic partner that we could bring in on that.
Bret Ginesky: The second question that you had, I think you. On CapEx, maybe Bapak Budi can answer that a little bit, particularly for 2027 and 2028. Although we have not given any guidance, we can give you maybe some idea of what we are thinking going forward.
Budi Satria Dharma Purba: Yeah, I think the lower ratio primarily reflect on the investment timing, if you see until nine month 2026. And it is expected that the CapEx will be increased significantly in Q4 2026. Some of the driver related to the 5G deployment, even though we are aligning the rollout with the customer demand, and we are expecting that it will help also in term of the return from all that rollout of the 5G, that we align it with the market situation. And we are still expecting that the C2R guidance still between 17% to 19%. Other than the 5G rollout, there are some project that still going on, and it is expected to be completed by Q4 2026, such as some investment on the subsea cable and also some completion project for the data center.
Budi Satria Dharma Purba: If for the 2027, maybe the profile a little bit different, just give you some heads up. On the business as usual, we still keep the C2R between 17% to 19%, but there are some also project or CapEx allocated to support our future growth, that such as on the data center, we will be a little bit more aggressive in term of the investment on the data center, looking at all the demand and the funnel that currently we already have. And we also invest on the subsea cable as well to cater the demand from AI.
Budi Satria Dharma Purba: I think for as overall for the next year, as total C2R could be higher for our 2026 guidance, but I just want to make sure that most of them, the increase is due to the next growth engine for us, while for the business as usual, we still keep it between 17% to 19%. Thank you.
Arthur Pineda: Thank you. Just to clarify on the margins on the Q4, which was the other question.
Bret Ginesky: When we look at the Q4 on the margin side of things, we are expecting that our EBITDA margins should be able to pick up in the Q4. The rationale for this is that we do expect to see some seasonal strength from the Telkomsel level. When we look at the rest of the business, we do not anticipate as of now that there will be one-offs that could impact the Q4. That would also help to improve the margin further. Beyond that, I think in the Q4, it depends. The one thing that when we look at things is on the normalized level or not, because there could be a couple assets that get streamlined. If this is completed by the end of the Q4, that could drive the margins higher if those are off the books by then.
Bret Ginesky: These are a little bit of a moving target because of the fact that we do have counterparties that we are dealing with. These would be assets that we are in the process of trying to sell. There is a number of businesses that we have moved quite far along with that are quite close to the end state of a transaction getting completed or not. We should know that by the end of this year. That could have an impact on the EBITDA margins as well, driving those potentially higher. We are not sure we will meet the 50% target, but we are quite close to it. That is why we have not made an adjustment on the guidance, as Pak Nanang mentioned earlier.
Arthur Pineda: Understood. Thank you very much.
Bret Ginesky: Thank you. We're going to go to We have a couple more questions. The next one from Nicholas Lumi. Nick, please state your name and the company that you work with.
[Analyst]: Hi. Thank you, Telkom management, for hosting the call. I would like to ask regarding the Telkomsel data yield, which has declined for two consecutive quarters from IDR 3.12 per megabyte in Q1 2026 to IDR 3.10 per megabyte in Q2 2026, and then now at IDR 3.03 per megabyte in Q3 2026. Can you give us some color behind this? Is it because you see people upgrading to bigger package at a slightly more expensive price, or is it more because of the weakening consumer power?
Lionel Chng: Yeah, can I take that question, Brett? Okay. Specifically for the data yield decline, the sequential moderation does reflect the softer customer activity and also softer consumer spending in Q3. We also see some heightened tactical competition happening. However, it should not be attributed solely to the customer buying larger packages at the same price, et cetera, because we are really managing the balance between value and the price for our consumers. We see that it has increased year on year. We do expect our data yield to improve in Q4, and we also intend to lead the market in terms of data yield versus competitors. We note that the nine-month data yield remains higher year on year at IDR 3.08 per megabyte, while nine-month mobile ARPU increased 7.1% to IDR 45.4 thousand.
Lionel Chng: Our main focus really remains in terms of disciplined pricing, relevant propositions that is competitive, and ultimately customer retention, balancing the customer affordability with the sustainable revenue quality. Thank you.
[Analyst]: Thank you. Thank you, Pak Yona. Can I just follow up on that with my second question? We see that Telkom has marked down the value of its MDI, investments in MDI Ventures. May I ask why this is only marked down in Q3 right now, and do you expect any further one-off in Q4 2026? Thank you.
Bret Ginesky: Yeah. On the MDI Ventures, obviously, I think you're aware that we're moving forward with streamlining different assets that we have. This would be one of them, so this is just part of the process in making sure the valuation is appropriate for any potential buyer to come in. That was the rationale behind that. I think it was just looking at the market to market of the pricing of the valuation of some of the assets there.
[Analyst]: Okay. Thank you. Thank you, Bret.
Bret Ginesky: Thanks, Nick. The next question, it's a written-in question that we have from Claire Wang. There's three parts to the question. I'm going to address all of them. A couple of these have already been addressed to an extent, so I'm going to try to cut it back a little bit. The first part, has Telkom engaged with MSCI or the regulators directly, and is Danantara's recent buying affecting Telkom's free float, given the state holdings are excluded from free float calculations? We have engaged with MSCI over the course of the last 12 to 13 months. I don't know that there's a lot that we can do to impact the MSCI situation, as our free float is quite elevated and we are not part of the target audience that they are going after.
Bret Ginesky: But obviously, it is having ramifications on our share price because we do have quite sizable foreign ownership, particularly from passive funds and a number of active as well, investors offshore. Is Danantara's recent buyback affecting Telkom's free float? As of now, we are not fully sure how much Danantara has committed to buying back of our shares. We try to monitor it. We have a buyback outstanding right now on our own. Our buyback through the end of Q3 and going into October. We were active on the buyback. We have continued to look at buying back shares over the course of, obviously, the last week. We have not been able to buy back shares because of the quiet period due to the earnings call.
Bret Ginesky: The week before that, we did buy back on one day, but the rest of the week, I think some of the buying may have been from Danantara or others. So we will obviously monitor the free float impact of any buyback that we continue to honor. Our buyback, we have about IDR 3.5 trillion remaining of the IDR 4 trillion that was allocated, and we plan to continue to buy back shares at prices around where we are at right now, where we find our share price extremely attractive. The other part of your question was looking at the InfraNexia spinoff, and the question was, "What valuation framework are you targeting, and how will the proceeds be allocated between reinvestment, deleveraging, and shareholder returns?
Bret Ginesky: Is a special dividend under consideration?" I think as we have mentioned over the course of the last year and a half almost, that we do see a valuation in the 9 to 13 times on that business. We would look to be selling 20% to 35% of that at some point in 2027. If you just draw out the numbers based on close to $700 million EBITDA at that business, you would get to a valuation of about $6 billion to $7 billion. If we are going to sell 20% to 35% of that, you could have more than $1 billion to upwards of over $2 billion that could go towards some mixture of special dividend, reinvestment. We will likely see higher CapEx in 2027 and 2028, as Bapak Budi mentioned, primarily towards network modernization that we have talked about since the full year 2025 results.
Bret Ginesky: I think Bu Dian and Bapak Angelo mentioned that at that point in time. So, that is how we are looking at that currently. Deleveraging, I would say, is probably less likely with us. We still would anticipate that we will be able to increase our leverage. If you look at our net debt to EBITDA, it is still quite low compared to our peers and where we would like it to be. Moving on to your third part of your question, the operating cash flow was down 3.2% year-on-year in nine-month 2026. Does this change your full year 2026 dividend payout guidance? Should investors expect DPS to be maintained even if earnings are soft? We do still anticipate that we can pay out an elevated dividend for 2026 for the full year.
Bret Ginesky: I think when we look at the dividend payout and the potential on that, any decisions would probably be more tied to our CapEx spending for 2027 and 2028, rather than tied to the current situation of where our bottom line earnings will be. Keep in mind that we still have a number of one-offs that impacted the bottom line from the accounting policy shift that we did when we did the restatement of the 2023 and 2024 results in 2025. We are still seeing additional depreciation expense because of that. That is IDR 1.1 trillion year to date. Will probably end up being a little bit elevated from that level going forward. Probably ends up about IDR 1.4 to 1.8 trillion for the full year.
Bret Ginesky: That will have an impact just on the net profit number, but if you actually look at it is a non-cash item, so we are not too concerned about that. Now, the next question that we have, and this question will be taken by Telkomsel, is, one, "How does IndiHome see the impact of competition from FWA players?" I will pass that one on to Bapak Lionel to take this question. Thank you.
Lionel Chng: Yeah, thank you very much for that question. From an FWA standpoint, we have our own competitive products, which actually has been growing quite aggressively. Our combination of Orbit and also EZnet Wireless is being rolled out, and we see this as a complementary and competitive product depending on where we roll it out. For us, IndiHome remains as the top priority, with EZnet Wireless and also Orbit playing a supplementary role to compete in those areas where mobile can play a more significant role with our consumers. So we see this as an opportunity. We are watching competition closely with regards to their distribution and pricing activities while we continue expanding on our own also.
Bret Ginesky: Thank you, Bapak Lionel. There is one more question that we are going to take that we have. This question is from Sabrina at Trimegah, and this was written in. This is regards to Telkomsel. "How do you assess Telkomsel's product competitiveness, particularly as one of the incumbent operators has introduced low-priced starter packs? Do you see any risk of market share pressure, and how would you respond if pricing competition intensifies?
Lionel Chng: Thank you very much for that question. I will try to answer as concisely as I can, Sabrina. The first one is this. We monitor our price value competitiveness in the market on a monthly basis, reaching out to tens of thousands of consumers, asking them with regards to price perception. This is at the same time we monitor what competition is doing and what is relevant for our market. Having said that, our competitiveness really does go beyond price. It will be anchored in terms of network quality, our customer experience, and relevant propositions that we introduce. We will respond to competitive activities on a calibrated, but also on a targeted basis, so that we continue protecting our consumer, as consumer retention is a priority with sustainable ARPU.
Lionel Chng: The good news is that our market share remains broadly stable in Q3, despite the heightened tactical competition, while healthier customer acquisitions improved throughout the quarter. Important to note that our high-value customers continue to grow and remain stable quarter on quarter, and the pressure really came from the lower end. Finally, for us, we continue monitoring the market dynamics, taking care of what happens with our consumers with the macroeconomic situation, at the same time responding competitively with targeted offers, personalized CVM activities, and also portfolio optimization. I hope that answers your question. Thank you.
Bret Ginesky: Thank you, Bapak Lionel Chng. Thank you all for joining. This will be the end of our conference call. We look forward to speaking to you at our full year results, which will be held in hopefully early 2027, or earlier than last year. I would like to thank Bapak Nanang Hendarno and the rest of the board of directors, and Bapak Nugroho and the board of directors from Telkomsel. Please feel free to reach out to any of us from IR if you have any follow-up questions. Thank you. Have a nice Monday.
Nanang Hendarno: Thank you.
