- Moderate internet penetration rate and low data consumption suggest that the telecommunication industry in Indonesia has not yet reached its mature phase, in our view.
- While internet speed is slow, we think 5G technology may not be popular in retailers due to possible high tariff, at least in the short term.
- Being the incumbent, we believe Telkom is attractive due to its dominant presence in the growing industry.
- Telkom’s TTM EV/EBITDA is trading at around 5.6x, higher than peers, but we think its fundamentals justify the premium.
- Risks to our thesis include the lower-than-expected industry growth, Indosat's aggresive expansion, and possible M&A schemes.
For further details see:
Telkom: In The Right Position To Capture An Attractive Opportunity