TELKOM INDONESIA 2016

Referred to bureau of statistic center, economic growth of indonesia in 2016 was at 5.02 %, it was better than growth in 2015. Telecommunication industry was one of industry segment which experienced growth in the year, its growth stood at 8.87 % compared to previous year. Telecommunication industry started to transform to digital business. In addition, government supported to advance digital economy in indonesia.

Telkom indonesia, a state owned corporation has developed biggest infrastructure to support its business across the globe. It already has fiber optic connection over Europe until United state of America. It has SEA ME WE 5 from Merseille to dumai, it is 20.000 km length and SEA-US connecting Manado to Los Angeles with 15.000 km length. The total length of its fiber optic network was 106.000 km.

Based on its annual report it has 362.200 access point, 95.000 m2 gross facility data center, 129.033 unit BTS and tree satellites.            

Its cellular user in 2016 was 173.9 million people. It increased 14 % compared to cellular user in 2015.      

Development in infrastructure is functioned to maintain its double digit growth and also to support its technology and digital service across the world.

The leading telecommunication company, Telkom experienced double digit growth both in its income and its net profit. In 2016, its revenue was 116.333 billion.

In during 2016 the company succeeded in obtaining double digit growth in its revenue, the incremental was 13.5 %. Based on its financial statement, the highest portion of income in 2016 was contributed by revenue from data, service and internet segment. It was 51 % of total revenue. Subscribers start to consume more data and internet service as Telkom has been developing its IT infrastructure. It influences in velocity of data transfer and video streaming. Its net profit also grew higher in 2016, the company succeeded to increase its gross margin by reducing interconnection cost. 

STEL.SI 2016

Company snapshot

Singapura Telecom was established in Singapore at 1879, its name was Singapore Telephone Board. At recent the company runs its operation in 25 countries. It has more than 600 million customers that comprise India, Singapore, Philippines, Thailand, Australia and 17 African countries.

In African and India, its joint venture is Bharti Air Tel Limited, this company has more than 340 million subscribers across india and African countries.  Singapore Telecom is possibly able to access data of its joint ventures in many countries including indonesia through Telkomsel. Because of that, there was issue about illegal taping of customers of Telkomsel in indonesia. 

The company is 51 % owned by Temasek Holding, a state owned company which owns various companies in Singapore and outside of Singapore.  

The company concerns in building digital segment which is focusing in three main points, it comprises digital marketing, OTT video and data analytics. They transformed from sms and voice – centric to data centric digital world.

In 2016, sales declined 1.5 % in comparison with sales in 2015. Based on its annual report 2016, the decline of sales was occurred due to revenue decrease in consumer segment. It slightly decreased 4.2 %. Meanwhile other segment, digital life and enterprise advanced compared to those two segments in 2015.

As the result of that asset turnover ratio decreased, so did return on equity. However, its net profit margin in 2016 improved in comparison with net profit margin in 2015. The weakened currency was probably as the cause of its decline. 

Therefore the company keeps in advancing the consumer segment, it plans to develop 5G technology with ericsson to develop a smart nation. It also put 800 hotspots in Singapore to allow its customer to access data service. Another service, residential fiber broadband service has been started since 2015. The capital expenditure was used to acquire new potential company and to develop IT infrastructure.

Singtel claimed as the first operator in south east asia which provides tri band LTE network using three spectrum. 

In asutaralia, optus may focus to develop video content as the main purpose, based on cisco’s visual networking index, video on demand will attain 77 % of mobile data traffic in Australia. Customer at adult age tends to use video service for communication and entertainment. 

In digital life segment, the company developed an intelligence digital marketing through amobee. This subsidiary is connected with various internet advertising such as social media, web, video and mobile. Amobee is able to optimize media strategies to increase brand awareness. 

Another digital life product is HOOQ, this is an OTT (over the top) video solution, the company cooperates with Sony Entertainment and Warner bross entertainment to provide this video service product. In order to advance innovation, the company also invested US 250 million to finance start-up companies. 

TLKM 2015

TLKM: development of IT Infrastructure as key success factor of double digit growth

Analysis

In 2015 Telkom attained high growth rate in its revenue which is at 14.2 % compared to revenue in 2014. The biggest portion of revenue came from data, internet and IT service, it was more than 46.7 % of total revenue at 2015. It exceeded revenue from cellular which was at 36.4 % of total revenue.

In cellular segment, Indonesia has more than 340 million subscribers; Telkom acquired more than 47 % of total market share. The market shares of competitors which consist of indosat, Htchison and XL Axiata subsequently are at 21 %, 16% and 13 %.            

In data, internet and IT services revenue in 2015 increased more than 26.5% compared to its revenue in 2014. The growth was participated by indihome subscribers, data cellular and internet revenue. The subscriber of mobile broadband increased from 31.2 million users in 2014 to 43.8 million users in 2015. The new adopted technology of smart phone may be possibly support the product.

For satellite segment, the company plans to replace recent satellite with new satellite that has wider range of coverage. Telkom 3S, its new satellite, is able to cover region of asia pacific and india.

The trend of revenue tend to not follow the economic growth, the slower of economic growth in indonesia in 2015 is not influencing the revenue growth of the company. The revenue experienced double digit growth, indeed. The increase may be probably occurred due to wider range of IT infrastructure over the islands in archipelago, as the result of that the company experienced double digit growth due the growth of subscribers in cellular service, mobile broadband service and etc.

The company set its position as the leader in digital industry, they allocated its fund to build IT infrastructure in each sector that comprises land, air and sea. In 2015 the company established the undersea fiber optic broadband highway from aceh to papua. Through this infrastructure the customer in papua, sulawei and Maluku islands are able to access better internet data connection service. The company has also built more than 100 thousands 3G and 4G BTS.

Bundling Product with Citibank: Citi-Telkomsel Credit card

In 2015Citibank launched its innovative product, it is a bundling product between Banking product and telecommunication company’s product, Citi-Telkomsel Credit Card, the claimed that the product is the first bundled credit card product in indonesia (annual report Citibank, page of 15). Telkomsel is also having partnership with other state owned bank such BRI, BTN and etc. 

TLKM

Telkom Indonesia

In 2014 the sales growth increased slightly compared to sales in 2013, it increased 7 % up. Meanwhile the gross margin in 2014 slightly decreased at 75.2 % of total sales, the gross margin at previous year was 76 % of total sales. The key driver of revenue is from personal segment or cellular segment. The company has more than 130 million subscribers in 2013. The number is expected continue to grow in the recent year and next year. Even there was a decrease in gross margin the net income in 2014 was higher than 2013, it was 5.7 % higher. In other hand the company still has biggest market share in Indonesia in 2014.

The slowdown in economic growth may decrease its margin and its sale growth in 2014. Consumer apparently decreased spending in cellular charge as the cost of living has increased in 2014 due to the higher inflation rate in the same year.

In 2014, the company had several new agreements with companies; there were Qnet Indonesia, Thales Alenia Space France, Waskita Karya and etc.

Qnet Indonesia has been commencing the establishment of telecommunication system at under the sea. Meanwhile Thales alenia space france provided satellite service of substitution satellite system.

TLKM - In billions of rupiah	2013	2014	2015F	2016F	2017F
Revenue	82,967.0	89,696.0	95,974.7	103,652.7	111,944.9
COGS	-19,332.0	-22,288.0	-23,993.7	-25,913.2	-27,986.2
Gross Profit	63,635.0	67,408.0	71,981.0	77,739.5	83,958.7
Operating Expense	-21,859.0	-21,564.0	-23,073.5	-24,919.4	-26,912.9
Depreciation n amortization	-15,780.0	-17,131.0	-18,720.1	-19,960.1	-20,955.2
Other Income / - expense	2,657.0	1,885.0	2,017.0	2,178.3	2,352.6
Interest Expense	-1,504.0	-1,814.0	-719.3	-735.0	-660.0
Pretax Income	27,149.0	28,784.0	31,485.1	34,303.4	37,783.2
Taxes	-6,859.0	-7,338.0	-8,026.6	-8,745.1	-9,632.2
Net Income	20,290.0	21,446.0	23,458.5	25,558.3	28,151.0
Cash	14,696.0	17,672.0	21,903.9	27,106.6	29,343.0
Marketable securities	0.0	0.0	0.0	0.0	0.0
Trade Receivable	5,126.0	5,719.0	6,119.3	6,608.9	7,137.6
Inventories	509.0	474.0	510.3	551.1	595.2
Other Current Asset	12,744.0	9,897.0	10,589.8	11,437.0	12,351.9
Total  Curr Asset	33,075.0	33,762.0	39,123.3	45,703.5	49,427.7
Net Property, Plants and equipment	86,761.0	94,809.0	101,088.9	106,128.9	110,173.7
Other Non Curr Asset	8,115.0	12,324.0	13,186.7	14,241.6	15,380.9
Total Non Curr Asset	94,876.0	107,133.0	114,275.6	120,370.5	125,554.6
Total Asset	127,951.0	140,895.0	153,398.9	166,074.0	174,982.3
Short Term Debt	432.0	1,810.0	2,500.0	2,500.0	2,500.0
Account Payable	10,774.0	11,060.0	11,906.4	12,858.9	13,887.6
Curr Portion of Long term debt	5,093.0	5,899.0	6,000.0	6,000.0	7,000.0
Other Curr Liabilities	12138	13017	13928.19	15042.4452	16245.84082
Total Curr Liabilities	28,437.0	31,786.0	34,334.6	36,401.4	39,633.5
Long Term Debt	14,731.0	15,743.0	16,000.0	16,000.0	10,000.0
Deferred Taxes	3,004.0	2,743.0	2,743.0	2,743.0	2,743.0
Other Non Curr Liabilities	4,355.0	4,498.0	4,812.9	5,197.9	5,613.7
Total Non Curr Liabilities	22,090.0	22,984.0	23,555.9	23,940.9	18,356.7
Total Liabilities	50,527.0	54,770.0	57,890.5	60,342.3	57,990.2
Minorities	16,882.0	18,318.0	18,318.0	18,318.0	18,318.0
Common Share	5,040.0	5,040.0	5,040.0	5,040.0	5,040.0
Additional Paid Up Capital	2,323.0	2,899.0	2,899.0	2,899.0	2,899.0
Retained Earning	58,628.0	63,323.0	72,706.4	82,929.7	94,190.1
Other	-5,449.0	-3,455.0	-3,455.0	-3,455.0	-3,455.0
Share holder Equity	60,542.0	67,807.0	77,190.4	87,413.7	98,674.1
Share holder Equity & Min Interest	77,424.0	86,125.0	95,508.4	105,731.7	116,992.1
Total SE,Min Interest and Liabilities	127,951.0	140,895.0	153,398.9	166,074.0	174,982.3
Financial Ration	2013	2014	2015F	2016F	2017F
ROA	15.86	15.22	15.29	15.39	16.09
ROE	33.51	31.63	30.39	29.24	28.53
Gross Margin	76.70	75.15	75.00	75.00	75.00
Profit Margin	24.46	23.91	24.44	24.66	25.15
Current Ratio	1.16	1.06	1.14	1.26	1.25
Debt to asset	0.16	0.17	0.16	0.15	0.11
Interest Coverage	29.5	26.3	70.8	74.8	90.0
Days Payable	203	181	181	181	181
Days Inventory	10	8	8	8	8
Days Receivable	23	23	23	23	23
Free Cash Flow		12,525.0	17,259.0	20,537.7	24,127.0
EBITDA	44,433.0	47,729.0	50,924.5	54,998.5	59,398.3
Dividend Pay out	76.9	60	60	60	60