Highlights

• 4Q26 recovery expected as pricing pressure eases. Seasonal ARPU recovery, new campaigns and network improvements should support stronger performance, while capex remains within guidance.
   
• TIF monetisation remains the key value-unlocking catalyst. Further BUMN asset consolidation could strengthen TIF’s scale ahead of a strategic stake sale, although management changes may introduce near-term execution risks and delay monetisation.
   
• Maintain BUY with an unchanged target price of Rp3,300.
   

Analysis

• Operating trends should improve in 4Q26, although macro headwinds and restructuring remain near-term risks. Telkom Indonesia’s (TLKM) 3Q26 revenue declined 2.8% qoq, weighed by a 3.6% drop in mobile revenue as ARPU fell to Rp44,900 from Rp46,000 in 2Q26 and mobile subscribers declined 1.6% qoq. Higher operating costs, including spectrum acquisition and personnel expenses, alongside around Rp1.3t in unrealised investment losses, further pressured profitability, bringing EBITDA margin to 43.7%. Management expects margin pressure to ease in 4Q26 as pricing pressure moderates, supported by seasonal ARPU recovery, new campaigns and network improvements. TLKM is maintaining its 2026 guidance and targeting a stronger 4Q26 performance at Telkomsel. Capex is expected to remain within 17-19% of revenue, with spending increasingly directed toward B2B infrastructure, including subsea cables and data centres. NeutraDC also targets 400MW of capacity by 2030, with an aspirational target of 1GW, providing additional long-term growth opportunities.