Indonesia's largest phone and cable TV service provider, PT Telekomunikasi Indonesia (NYSE: TLK), reported second-quarter results July 27. The company's data services continued to deliver strong growth.
Here's what more you need to know about Telkom Indonesia's second quarter.
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Telkom Indonesia's second-quarter results: The raw numbers
What happened with Telkom Indonesia this quarter?
- Data service sales increased by 20% year over year in the first half of 2017. That segment now accounts for 53% of Telkom Indonesia's total revenues.
- Cellular and landline phone revenues increased by 4% over the same period.
- Telkom Indonesia now serves 178 million mobile phone lines under the Telkomsel service brand, 81.7 million 3G and 4G wireless data plans, and 2 million fixed broadband customers through the IndiHome internet service.
- Cash flows fell sharply due to higher cash expenses in the operating business and a 12.5% year-over-year increase in payroll expenses. The company's headcount is decreasing, but average compensation per employee is on the rise.
What management had to say
In a conference call with financial analysts, Telkom Indonesia CEO Alex Sinaga underscored his company's double digit growth in revenue, net income, and EBITDA profits in the first half of 2017. To keep that growth trend going, the company's marketing budget was boosted by 19% and focused on finding more customers for the 4G wireless and IndiHome fixed broadband services.
Voice services are undergoing a market shift that should feel familiar to Westerners.
"Voice revenue grew by 8.7%, while SMS revenue decreased by 14%, while traffic in both voice and SMS decreased by 11.9% and 23%, respectively," Sinaga said. "Despite the market saturation, Telkomsel was still able to grow its customer base by 13.1% to 178 million as a result of effective sales and marketing programs."
Sinaga simply reiterated his existing guidance for fiscal year 2017, which called for revenue growth ahead of the local telecom industry's mid to high single-digit percentage pace. EBITDA and net margins are seen sliding lower as the company invests in infrastructure upgrades such as the IndiHome broadband network and wider 4G wireless coverage.
The company is pouring roughly 25% of its revenues this year into capital expenses focused on these infrastructure upgrades. Capital expenses are up by 21% this year, compared to the first half of 2016.
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