Last Update 08 Dec 25
Fair value Increased 3.96%TLKM: Infrastructure Spinoff And EGM Decisions Will Shape 2025 Margin Outlook
Analysts have raised their fair value estimate for Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia from IDR 3,656.96 to IDR 3,801.82, citing increasing confidence that the market is underestimating potential capital unlocked from ongoing infrastructure spinoff and streamlining initiatives.
Analyst Commentary
Bullish analysts highlight that the recent upgrade reflects growing conviction that the market is underestimating the value that could be realized from Telekom Indonesia's infrastructure spinoff and operational streamlining. The higher price target, now set above the revised fair value estimate, underscores confidence in both near term execution and medium term growth visibility.
These analysts point to the ongoing reorganization as a catalyst that could unlock balance sheet flexibility, improve returns on invested capital, and sharpen strategic focus on higher margin digital and enterprise segments. Taken together, these factors support a more constructive view on the company’s earnings and cash flow trajectory.
Bullish Takeaways
- The upgrade to a Buy rating with a higher price target of IDR 4,000 signals increased confidence that current valuation does not fully capture potential upside from restructuring initiatives.
- The infrastructure spinoff and streamlining are expected to crystallize hidden asset value, which could narrow the discount to intrinsic value and support multiple expansion.
- Streamlined operations should enhance execution efficiency, potentially improving margins and free cash flow, thereby supporting higher sustainable dividend capacity.
- Stronger balance sheet flexibility after the spinoff is viewed as a platform for disciplined growth investments in data, enterprise, and digital services, supporting a more robust long term growth profile.
Bearish Takeaways
- Bearish analysts remain cautious that the full benefits of the infrastructure spinoff may take longer than expected to materialize, creating execution risk relative to the upgraded valuation case.
- There is concern that regulatory and competitive pressures in the domestic telecom market could offset some of the margin gains anticipated from streamlining efforts.
- Any delay or deviation in restructuring plans could undermine investor confidence and limit the potential for a sustained re rating toward the higher price target.
- Uncertainty around capital allocation after the spinoff, including the balance between dividends, debt reduction, and growth capex, could introduce volatility in earnings expectations and valuation multiples.
What's in the News
- Extraordinary General Meeting scheduled for December 12, 2025 in South Jakarta to seek shareholder approval on key corporate matters, signaling an active governance agenda (Key Developments)
- Proposed amendments to the company’s articles of association to be tabled at the December 12, 2025 EGM, potentially enabling greater flexibility for future restructuring and strategic initiatives (Key Developments)
Valuation Changes
- The fair value estimate has risen slightly from IDR 3,656.96 to IDR 3,801.82, reflecting a modest uplift in the assessed intrinsic value of the company.
- The discount rate has inched up from 12.30 percent to about 12.33 percent, a minimal change that slightly increases the required return in the valuation model.
- The revenue growth assumption has edged down marginally from about 4.26 percent to around 4.25 percent, signaling a slightly more conservative top line outlook.
- The net profit margin forecast has eased from roughly 15.92 percent to about 15.85 percent, incorporating a modestly lower profitability expectation.
- The future P/E multiple has risen from about 19.29x to roughly 20.18x, indicating a somewhat higher valuation multiple applied to forward earnings.
Key Takeaways
- Strategic initiatives like group procurement and fixed-mobile convergence boost net margins, earnings, and long-term revenue growth.
- Expansion in digital connectivity and infrastructure, including data centers, enhances revenue potential and earnings with higher profit margins.
- A volatile market and declining legacy revenue threaten margins, while reliance on economic recovery and high expenses complicate projected revenue growth.
Catalysts
About Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia- Provides information and communications technology, and telecommunications network services worldwide.
- Telkom Indonesia's successful completion of a one-billing integration enhances fixed-mobile convergence capabilities, laying the foundation for long-term wholesale revenue growth by accelerating FMC adoption and improving customer engagement. This is likely to impact both revenue and net margins positively.
- Continued strategic initiatives such as group procurement processes to lower CapEx and improve content cost efficiency should significantly increase net margins and earnings due to the lowering of operational expenses.
- Expansion in the B2B segment, focusing on digital connectivity supported by platform expansion, particularly data centers and cloud services, points to potential sustainable revenue growth and improved earnings as these sectors offer higher margins.
- Acquisition of fiber optics by Mitratel, which strengthens its position as a digital infrastructure company, suggests potential growth in tenancy and usage, ultimately increasing revenue streams.
- The company plans to keep CapEx to revenue at 17-19% in the medium to long term, which, combined with cost efficiency measures, may provide greater free cash flow for dividends, potentially impacting stock attractiveness and driving up earnings per share.
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia's revenue will grow by 3.6% annually over the next 3 years.
- Analysts assume that profit margins will increase from 15.5% today to 15.8% in 3 years time.
- Analysts expect earnings to reach IDR 25942.3 billion (and earnings per share of IDR 255.2) by about September 2028, up from IDR 22863.0 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting IDR28985.0 billion in earnings, and the most bearish expecting IDR22950.0 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 18.3x on those 2028 earnings, up from 13.5x today. This future PE is lower than the current PE for the US Telecom industry at 22.7x.
- Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 12.33%, as per the Simply Wall St company report.
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The company is operating in a highly competitive and volatile macroeconomic environment, which may impact revenue growth if competitors undercut prices or if economic conditions worsen.
- The decline in legacy revenues and pressure on data yield could affect net margins if the company is unable to offset these declines with new digital revenue streams or cost efficiencies.
- Despite growth initiatives, the fixed broadband penetration remains low, which may limit potential earnings growth if not effectively addressed.
- The company's significant dependence on macroeconomic recovery and market repair initiatives poses risks to achieving projected revenues if economic conditions or industry dynamics do not improve as expected.
- High operating expenses and pressures related to maintaining customer engagement and retention could negatively impact net margins, particularly if the company doesn't achieve expected revenue growth.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of IDR3379.13 for Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of IDR3900.0, and the most bearish reporting a price target of just IDR2900.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be IDR164230.6 billion, earnings will come to IDR25942.3 billion, and it would be trading on a PE ratio of 18.3x, assuming you use a discount rate of 12.3%.
- Given the current share price of IDR3110.0, the analyst price target of IDR3379.13 is 8.0% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
