Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (TLK) Q2 2013 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Telkom First Half 2013 Results Conference Call. [Operator Instructions] All the materials are available on our website at www.telkom.co.id. Please be advised that this conference is being recorded today. Right now, for -- I would like to turn the conference over to your -- our moderator for today, Albert Tan, the SVP of Business Strategy and Integration. Please go ahead.

Ladies and gentlemen, welcome to PT Telkom Indonesia's first half results ended June 30, 2013 conference call. There will be an overview from our CEO, and after that, the question-and-answer session will be conducted for all participant on this call. Today's presentation is available on the webcast and an audio recording will be provided after the call for the next 7 days. We released our financial results of first half ending June 30 on July 19, and the reports are available on our website, www.telkom.co.id. Before beginning, let me remind you today's call and the responses to the questions may contain forward-looking statements within the meaning of Safe Harbor. Actual results could differ materially from projections, estimations or expectations voiced during today's call. These may involve risk and uncertainty and may cause actual results to differ substantially from those described in today's call. Telkom Indonesia does not guarantee to any actions, which may have taken in reliance of the discussion held today. Ladies and gentlemen, it is my pleasure to introduce you to the Telkom's Board of Directors who are joining us today. Mr. Arief Yahya, as President, Director and Chief Executive Officer; Mr. Honesti Basyir, as Director of Finance and Chief Financial Officer; Mr. Sukardi Silalahi, as Director of Consumer services; and Mr. Indra Utoyo, as Director of Innovations & Strategic Portfolio. Also present on the board -- are the Board of Directors of Telkomsel, Mr. Heri Supriadi, as Director of Finance; and Mr. Alistair Johnston, as Director of Marketing. Before Arief delivers his remark, I would like to take this opportunity to give a brief overview of Telkom Indonesia. Telkom is the single largest integrated telecommunications company and network provider in Indonesia, with over 163 million customers at the end of first half 2013. Telkom provide a strong business portfolio of T-I-M-E-S, TIMES, which stands for telecommunications, information, media and entertainment, directly or through our subsidiaries. We also deliver services to multicustomer portfolio, retail, enterprise, wholesale and international. As of June 30, 2013, the majority of shareholder of our common stock was the Government of Indonesia with 53.7% ownership and the remaining 46.3% was under the public ownership. I'll now hand over the call to our CEO, Mr. Arief Yahya, for his overview. Arief, this is your time.

Thank you, Albert. Good afternoon, ladies and gentlemen. A very warm welcome to each one of you to our conference call for 6 months period results ending June 30, 2013. We sincerely appreciate your participation on this call. Into this call, I will give you the overview of our operational and financial results for the first half. And secondly, I'd like to update you on the progress of our cellular and fixed line business development, as well as other business portfolio. Ladies and gentlemen, let me start the overview by sharing the highlights of our 6 months results. The first, Telkom consolidated revenue increased 9.4% year-on-year. This is in line with Telkomsel performance with recorded 12% year-on-year revenue increase. Second, Telkomsel gained 4.5 million net additional customers during the second quarter, with total customer builds to be 125 million. The third, Telkomsel continued to expanding its network coverage and capacity by adding close to 8,000 new BTS during the first half 2013, with almost 70% of them are 3G BTS. Ladies and gentlemen, our fixed broadband users increased 42% year-on-year to 2.8 million, and the revenue increased to IDR 2.2 trillion in the first half 2013. Our mobile data users also increased. In the first half, it increased 9.9% from last year to 51.8 million users. We booked IDR 4.8 trillion revenue from mobile services, a 37.9% increase year-over-year. Total mobile, other services and fixed broadband revenues increased around 25% year-on-year to IDR 7 trillion. During second quarter, Telkomsel recorded 4.5 million customer that lifted our customer base to be 195 million. In the first half, we added 7,928 units new BTS, and almost 70% of them are 3G networks. And still end of the first half, Telkomsel owned 62,000 BTS and 20,800 of them are 3G networks. Ladies and gentlemen, consolidated revenue growth remained strong with 9.4% increase year-on-year, and Telkomsel revenue growth maintained a double-digit 12% increase year-on-year. Revenue contribution for the first half 2013 was still denominated by cellular and voice revenue, which makes 38% to our total operating revenue. Data, Internet and high speed services came in second, contributed, 37%, followed by fixed line voice that contributed 12.5%. The remaining 11.7% is contributed by interconnection, network and others. Total expense increased by 7.8% year-on-year, was lead due to the increase in operations and maintenance with -- in line with the acceleration of network deployment in our cellular subsidiary. During the first half of 2013, we built more than 1,500 BTS per month. Ladies and gentlemen, during the first half 2013, Telkomsel did maintain double-digit growth year-on-year for its revenue, EBITDA and net income. Mobile data services sales being the growth driver, with almost 38% revenue growth, that is better than the first quarter growth which has 36.5%. In this respect, by the increase of flat, flat-bearing and our free-use customers, as well as our focus on increasing customer wallet share and sustaining revenue growth by maintaining a good quality of customer. During the first 6 months, we deployed more than 1,500 new BTS per month, with almost 70% of them are 3G. We are consistently improving our 3G coverage and capacity to cope with growing demand of better assets. Telkomsel data and digital business grew 36% year-on-year for the first half 2013, contributed 18.6%, which is higher in contribution in first half last year, which is 15%. We expect Telkomsel could maintain its performance by consistently exploiting its legacy business, such as voice, SMS and network leased; strengthening its core business, such as mobile Internet and mobile broadband, and triggering digital systems, such as improving digital services and platforms. By then, we expect double-digit revenue for 2013 could be maintained. On the fixed line business, let me share our Indonesia Digital Network 2013 Program for the first half of 2013. On the Indonesia digital access, until end of June, we have 5.7 million broadband, combined, blended of fiber-to-the-home, fiber-to-the-curb and ADSL. On top of that, we have installed 64,000 Wi-Fi access point in public areas. These Wi-Fi access points are accessible for Telkom and Telkomsel customers and expected to offload Telkomsel wireless broadband traffic. Meanwhile, on the transport side, we call it Indonesia digital ring, we have completed 68,000 kilometers of maintenance and regional backbone network, out of targeted 75,000 kilometers in 2015. [indiscernible] we are consistent with our current strategy by maintaining our Flexi operation to be very efficient. And we'll allocate the spectrum to be used for broadband services for Telkomsel. We believe that with such an arrangement, we will be able to improve productivity of our Flexi assets and at the same time, improve our upfront broadband service quality to our subscriber in more efficient way. As mentioned in previous conference calls, we are looking at opportunities to do business purchase. We are committed to have more international business exposure, to gain more experiences and enhance our competencies to rely our [indiscernible]. In Hong Kong, with MVNO scheme, at end of June this year, we have already have around 49,000 customers with ARPU of USD 60. Meanwhile, in Timor Leste, we have more than 51,000 customers with ARPU of USD 4.30. We are now looking on initiating our MVNO operation in Malaysia. We expect by the third quarter this year to [indiscernible] these assets. Other than that, we also look forward to initiating MVNO operations in Macau and Taiwan, countries where we have significant numbers of Indonesian migrant workers. We expect to be able to make it by next year. In line with our goal to becoming leading TIMES player in the region, in the media business, Telkom is continuously enhancing the portfolio, not only organically but also nonorganically, by executing some corporate actions. As most of us are already aware, Metra-Net Telkom signed strategic partners. The partnership is focused on providing more value to our subscribers and create a strengthened alliance empowering TelkomVision to advance into this increasingly competitive media market. With the partnership, TelkomVision will become the main source of good quality content for overall TIMES media that enable us to further develop our media business, including online TV service and plan more for less DT [ph] service, what we call UCDT [ph]. This action are in line with our growth strategy where Telkom wants to further strengthen media, through partnership strategy. Our business. Currently, we are still in the process of initiating corporate action to unlock the value of our business. From our deep analysis of our business circuit in Indonesia and our current situation, the most preferable option for Telkom to unlock our business is by inviting strategic partners that will enhance our business capability and competitiveness. And after that, unlocking the value of our enhanced tower business make success for this company. However, we're still considering in preparing IPOs as another option. We believe this corporate action will enable us to unlock the value of our variable tower assets in the right time with the best revenue for Telkom. As part of our strategy to optimize our growth opportunities, we are combining both organic and nonorganic activities. We design our nonorganic activities into 2 parts, internal nonorganic activities and external nonorganic activities. We call them as acquisitions and alliances, A&A. In these A&A activities, Telkom will maintain the value discipline, where we'll also provide 3 possible acquisitions hereby calculating the value enhancement opportunities for all our Telkom group business portfolio. By doing so, we will ensure that our A&A activities will create significant value with current Telkom Group business. Ladies and gentlemen, let me now briefly reiterate guidance for 2013 as spread out. For 2013, we expect Telkomsel revenue could grow in line or better than market growth. Meanwhile, for fixed line business, positive revenue growth recorded in the first half 2013 would be maintained. With that, we expect our consolidated revenue growth between 8% to 9% year-on-year. For EBITDA margin, it will be stable or slightly decline for Telkom consolidated and Telkomsel. By forming partnership and looking opportunities to pay-as-you-grow and revenue-sharing scheme, we expect CapEx spending for 2013 to be 20% to 25% of our revenue. That's ending my remarks. Thank you.

Thank you, Arief. We will now begin the question-and-answer session. When raising a question, we appreciate if you could speak clearly and state your name and your company. Operator, may we have the first question, please.

[Operator Instructions] Your first question comes from the line of Sachin Salgaonkar from Goldman Sachs.

I have 3 questions. First, if you could provide a little bit more clarity on Flexi being used to improve the broadband connectivity as you mentioned, and then can the spectrum be used for providing EGSM services, and if so, what is the timeline we need to look for that? My second question is on tower. Now you said 2 options, one is to looking for a strategy partner and again, there is a potential IPO. So any timeline on each of this will be helpful. And the third question there is on the nonorganic external opportunities which you mentioned, anything you could guide us in terms of what could be the maximum size of investment you are looking, and secondly, on the areas of interest, as in if any other potential operator has been looked on or some other value-added services, that could be helpful?

Okay. In terms of, yes, we'll pick the next there. So for the Flexi plan, I think as we already decided, we will prepare this business and we will try to use the results for the network would be, we agree to the both side network sharing, we will share the infrastructure. Then for the second, yes, we are about to implement on the EGSM approach, with high connectivity with Telkomsel. So I think the license or the permission has been -- maybe the detail will be -- we'll come with a statement when the EGSM will be started to implement, but it's becoming our direction to combine between Flexi and Telkomsel to support the EGSM implementation. Second, about the tower -- unlock the tower, yes, the timeline, hopefully, on this Q3. Hopefully, we will come to the state-of-the-art facility and then to start the embracing the strategic partners. Then after that, we hope we can move into unlocking the value of the test. So by having the partner, hopefully, it will improve the story and also the profitability of tower management and also input the talent fee and we'll unlock, including how to unlock tower, or recycling the Telkomsel after that. So Q3 had been quite a nice thing for tower. And for the external, especially the Internet expansion, so we got -- we are actually looking for a portfolio where they will provide the good projection for the future, not about buying revenues, we are not interested in buying revenue of the portfolio in the international mobile or whatsoever, but we are trying on catching the portfolio in the regional, where we can provide the project -- better projection and growth story. So we have some target that maybe we still -- cannot be disclosed at this moment. Okay, really, we can add the area with this year. Focus are the international scene, to the area where we think that -- a good area for growth like Myanmar, we feel focus our resources to grab Myanmar potential market. There is one already that we are getting at the moment, that we are remain the international provisioning for connectivity -- for Internet connectivity in Myanmar and get the complex on Myanmar. This content had probably [indiscernible].

Okay. And in regards for the -- our preparation for EGSM. Our frequency can be used for the EGSM and we are just waiting for the approval from the regulator. And we expect that the decision will come in the second half of this year, but not for the nationwide. The nationwide, we expect for next year. So it will only be on the Eastern part of Indonesia for the year of 2013.

This is very clear. One small follow-up option on the tower point which you mentioned. Now presume that if you find out a strategic partner, there could be permission needed from the government or the government authorities. Is there any risk we could see for getting that permission, given that we are coming very close to the general elections in Indonesia?

Okay. I think yes, we will -- we also consider that -- the issue. But actually, what we are trying is a solid plan which we believe it can create the optimum value. Then second, also given the certainty and also, speed, because timing is also important for this tower, we feel that this is the best moment for us to unlock it. But we still maintain also how to be seen as also a good state-owned company, that's already been in our strategy.

Operator, can we take the next question, please?

Your next question comes from the line of Roshan Raj from Merrill Lynch.

Three questions for me. First one, this is a big picture, a strategic level. Looking at asset utilization, do you think that we are looking at a lot towards monetizing your land? And on the other hand, you are looking at options to divest or invest, towers in Pay TV. This is very different from what other telcos in the region are doing, which is to grow assets like Pay TV and sell assets like land? I just want to understand, what kind of opportunities and risks do you see in this approach, and why take this approach at all? The second question is on the treasury shares expiring in August, what has been the plan for the remaining shares? And further on interim dividend and stock split, any color there in terms of the quantum of dividends and the timing?

Can you repeat your first question again, please? And can you please speak a tad slower?

The first question is towards improving asset utilization. So news reports suggest that possibly you are working towards utilizing your asset -- land to develop buildings, and on the other hand, you are looking at options to divest towers and Pay TV. Now this is different from what many telcos in the region are doing, and this is to divest assets like land, while looking at growing assets like Pay TV. So I just want to understand why this different approach from PT Telkom? And what are the risks and opportunities you see with this approach?

I'll hand over to Indra for the first question, and second and third question will be for Honesti.

Okay. Yes, about asset utilization. Yes, and I guess Telkom has been off the land and off the building, yes, we plan to unlock the assets, about to finance -- for protection to -- and bring partners. Yet you can see -- hopefully, it's coming from real player, the best player in the industry. So we will try to find partners to leverage and also unlock our land assets. And also, we will transfer our -- we will transform our [indiscernible] to the Telkom property of GSD, our subsidiary. So hopefully, they will let region unlock our asset through the corporate action. The second, about divesting, actually, the -- as we already defined our portfolio as TIMES, telecommunications, information, media and entertainment, sure that we are about actually growing the portfolio of media, but we are already studying about how to spend less and create value on the media business. We do the study with technically, and there are assessments that mostly, the media business in Indonesia is based on advertising business. So the -- at the current model of TelkomVision, we don't have to -- the skill in terms of content production, so everything comes about the content you buy. So that will pressure -- be pressure to ask about the cost. The cost of content is very high by the conduct model, that is why we try to embrace the better model. So from the suggestion that we -- either we consolidate free to add, since free to add is very good and very dominant in Indonesian media business, or we go into low-cost Pay TV. So we will recommend 2 directions. So we embrace the partner, which have a very strong in content and also media experts -- expertise, and we will find with TelkomVision and Telkomsel becoming the first of content and media assets for all the other strategy in Telkom Group so maybe that's the direction we go.

Follow-up on the first question. So just on the land, can I just confirm that by definition, you are not allowed to sell any of those assets, land particularly?

Yes. If we want to sell our assets, we get approval from the government first. It doesn't mean we cannot sell. If we want to sell, government will approve on that.

Okay, for the second question, regarding the stock, that is not from the -- it's one program, so [indiscernible] before August 2013. Now we are concluding to do the block sale for [indiscernible] one spot. Now also in the process in -- to do the block sale. Hopefully, that's before August 16, we can do -- we can finish the block sale. And also for subscript, we are also in the process, we just got approval from the Ministry of Law before we state the [indiscernible] exchange. So I think the [indiscernible] the middle of August, we can do the subscript. For interim dividend, now we are in discussion with our [indiscernible], because we proposed to pay interim dividend around third quarter. And things may be around third quarter, August, maybe we can inform later about the progress of interim dividend.

Your next question comes from the line of Arthur Pineda from Citigroup Singapore.

Four questions for me. Firstly, can you elaborate on your international business aspirations. Is this more on acquiring assets or are you focused more on MVNOs than amount of [indiscernible] as well? Secondly, with regards to the asset sales, particularly the share sales that you may undergo in August, what are your plans with the proceeds from this? Third question I had is with regards to your property assets. How much property can actually be freed up, what locations and what valuations are assigned to this? Lastly, you mentioned the sale on the tower assets, you're looking at a strategic partner, will this be a local strategic partner, but if I recall correctly, you can't spinoff assets to foreign entities on a non-listed entity, has this changed in Indonesia?

I'll hand this over to Indra or Honesti to answer the question.

The international application, I think if our CEO has defined the direction, he mentioned we will introduce 2 strategies, we follow the people and follow the money. So the -- we start with the hanging fruit strategy first. We like the strategy for follow people, we start with MVNO, actually we are -- try to reach our Asian market first, where our- exist in many countries, like Malaysia, in Hong Kong and Middle East. So it's becoming also good learning for us to -- for our talent, to expose in the international expansion. While at the same time, we are -- we look for the opportunity to find the room for growth, maybe this -- yes, let's have -- maybe also we'll find asset, that's also one option and also entering a greenfield, that's also another option for the telecommunications portfolio. We also have the second strategy, follow the money. Follow the money is, we will -- like the -- what we are doing currently in Australia, we start to profile the BPO services. Since we realized the cost in Australia, that the cost there is almost everything 10x Indonesia. So we can pay the cost play there, if we can provide the service which are less, maybe 40% or 30% is already quite competitive for that market. But that kind of approach we start, and we will do it in a very disciplined and also, what -- we'll plan to enter into other markets and also, in finding a good portfolio starting with the area where we believe it can keep a good projection in the coming future. The second question about our tower company. Yes, I think the regulation is still -- require a tower on the foreign admission company. So our partner will be local company, and one, I guess will be the -- from the best player in the tower business in the Indonesian market.

And for the first question regarding deposit from the stock, I think that we will spend [indiscernible] and expand our infrastructure, especially for high-growth business like broadband and cellular. As you know this, now we have the big project, what we call the IDN, and I think the profit on this fully will finance the IDN project.

How much can be freed up? There's a question, how much can be freed up?

Yes. I think now we are in the process to transform the property behind what we call the [indiscernible], and I think if you want to unlock the potential from this asset or from this business, I think maybe in 2014, maybe we can discuss about it. Now we are in the process to clear the growth already for property business.

Your next question comes from the line of Rama Maruvada from Daiwa.

One question from me, please. Can you talk about early retirement program. Do you intend to have -- undertake any exercise this year? What sort of any one-off costs are we looking at for this year?

Honesti will take this question.

Yes. I think we will continue the early retirement program this year. Hopefully, the timeline is around October this year. We did execute the early retirement program last year, spending around IDR 700 million. This year, I think this is around IDR 400 million is for early retirement program.

Your next question comes from the line of Colin MacCallum, Crédit Suisse. Colin McCallum - Crédit Suisse AG, Research Division: Two questions from me. First of all, on the broadband revenue growth, it was some mid-single digit, was that disappointing? The ARPU seems to have fallen a long because of the prepaid offering, are you having any success yet in monetizing the upgrade to fiber? And when will we see the broadband revenue growing a bit faster? That was the first question. Then second question is just on the towers issue. Obviously, you have a subsidiary already which builds towers. You have obviously finance capability internally, why you even considering a partner, why not just go straight to IPO? Could you just explain the thinking there, as to what you're missing that would require getting someone else involved which obviously, will potentially slow you down or leave you with less upside than doing it alone?

Indra will take this first question there.

Okay, about the tower, actually I would like to unlock the business as what industry would like to see, not what from our own interest. But our interest is how to make that -- it will be seen as a good portfolio and will be valued as optimized as possible. So tower, actually is a shared -- it's shared facilities, supporting shared facilities. So in the 3, if they work to see it as an independent, more independent, it will then -- more independent. So we already get the study provided by our IT service, if it is becoming independent services, our facilities sharing IT[ph], so it will be valued higher than if we do it alone as an operator. I think that's quite logical. So if you do alone, I think we already calculate the value. So compared to if you try to create the growth story first and break the best partner first to improve the tenancy and also management capability in the tower, hopefully, that can create a better portfolio and better structure which we believe in the future, will be providing for us -- providing a better value for us. So after comparing that, so we will need to understand that IPO has long -- and being a partner, so a partner will give more value to us, compared to IPOs by doing by ourselves to develop.

The next question, we'll hand it over to Sukardi Silalahi on broadband.

Okay. For broadband, I think, yes, right now, the growth of Speedy broadband is still single digit but as you see January to June, we have improvement for the growth of the revenue of the broadband, I think. For January, we have -- we get 4-something percent growth, and then in June, already improved somewhat 6-something percent, that's 6.5%. And then how to -- on the fact that fiber optic, right now, we have also the new product, the best broadband new product, our product is Speedy Instant, where Speedy Instant is for the low affordable customer, we just sell it above IDR 5,000 per day, and then the second product is, we have also in the home, we call it Indonesia Digital Home that solution for home, for house, and it is also our bundling with voice, Digi-DT [ph] and TV.

The next question comes from the line of Luis Hilado from HSBC.

I just had 2 questions. The first was, again, on the tower business, just wondering if part of the process of unlocking the value will continue to be buying out SingTel's effective stake in Telkomsel's towers before the process can push forward? And the second question is, if you can give us an update on the Telkomsel side about the penetration of 3G feature phones in the system, as well as smartphone penetration, and whether there's any impact yet to SMS revenues as a result?

The first question, I hand over to Indra. The second question, I hand it over to A.J. from Telkomsel.

Okay for the tower, yes, we -- despite the stages to unlock the 2 stages, the first is focus on the tower in Mitratel, which is our subsidiary, which manage their own tower and also towers from Telkom, from our internal infrastructure division, that's currently the [indiscernible] by Mitratel, so 100% owned by Telkom. So that's the first stage to unlock the tower. So on the first stage, we will then try to improve the tenancy ratio, currently, it's only 1.1, so that's why you need a partner that already have been successful and crucial in the market, that we are sure that they will be able to also improve the capability of the tower. Then the second stage is to definitely grow the line[ph], that is recycle on the Telkomsel tower, which have currently around 15,000, 18,000. So the real unlocking will be the tower that we set in Telkomsel. So the stage -- the second stage will be the lifting after the -- which can be IPO or [indiscernible]. So then, Telkomsel tower can get into the company. So in that case, I think, after the discussions with SingTel, because they would like to protecting the interest in the tower, so in theory, they still own 35% of tower in Telkomsel. So by doing that, so the interest of SingTel can be accommodated, can be satisfied by that approach.

Next question is to A.J.

Okay so the first question, around 3G devices, so we currently have about 20 million 3G devices -- 3G-enabled devices on the network, which is about 17%. In terms of smartphones, we also have about 20 million and those 2 categories are obviously overlapping the seasonalities[ph] on the 2G smartphones out there. We're now starting to see, I think increasing growth in both 3G and smartphones, driven primarily by device pricing. So we've already said, around the $50 mark, which really were smartphones, 3G becomes mass market, and we're seeing -- seeing a lot of the clarity in that space, Huawei, [indiscernible], but also a lot of what we call sort of local China brand, which are brought in. So I think we're expecting that to accelerate. In terms of SMS revenue, no, the answer is no, we're not seeing cannibalization yet. So although our data service revenue growth is 38%, actually, our SMS services revenue is 8.6%, and we do see that when a customer migrates to either 3G or a smartphone device, their overall ARPU increases, and we're seeing ARPU increases, I think, up to 30% and 50%. So very much converting a customer to being a daily-using, smartphone-using, 3G-using customer starts to create value.

If I may ask one follow-up, a clarification rather. You mentioned that the 3G devices and the smartphone devices are roughly the same. Does that mean most of the 3G devices are actually smartphones now?

No you have 3G phones and you have 3G smartphones. But on the whole -- I mean on the whole, the trend you're seeing towards 3G smart, but absolutely you still get 3G feature phones and 3G smartphones out there in the marketplace.

Your next question comes from the line of [indiscernible].

I just have a question on your BTS additions. In the second quarter, I think, they've been highest that I've ever seen in a quarter. I think you were running at about 50 per day, I don't think there's been a higher figure previously compared to that. So what should we expect for the rest of the year? These BTSs are going into areas where you're not present yet or you are increasing capacity in urban areas, but I guess, it was quite an impressive, aggressive figure for the second quarter. Second question is just on your admin expenses, they've picked up a bit both year-on-year and Q-on-Q in the second quarter, were there any one-offs in that figure? Third question was just on your fixed line revenues. I think they grew Q-on-Q in the second quarter. That doesn't normally happen. Normally, there's a bit of a decline or they're flat, so should I read anything significant into that Q-on-Q growth for your fixed line revenues?

Okay. I'll hand it over to A.J. for the first question on your BTS question.

So you're right, we had a -- we had an aggressive quarter of network roll out. I think the guidance for network roll out is still pretty much the same. So we're looking at CapEx of around $1 billion, we're looking at about, on average, about new BTS per month, of which, 70% are 3G and I think we'll continue at that rate. We're probably a bit ahead at the time -- at the moment, which is [indiscernible]. In terms of where we put it, we actually have a demand model which is generated based on -- well it generated by sales and marketing data to determine where demand for 3G exists. So obviously we look at handset penetration and we look at a bunch of other population data -- demographic data, and then we target. Obviously, we have one eye on current demand and current capacity, and we have our other eye firmly on future demand and future requirements. And so it's a bit of a trade-off, and we have 100 cities that are key focused cities, broadband, but indeed, we have our presence in to about 300 cities, or which we will be towards the end of this year.

For the second question, I'll pass it to Honesti.

We have not yet projection for Q-on-Q revenue or EBITDA, but as mentioned by our CFO at the beginning, as a guidance for you, we expect that our -- there will be new growth between 8% to 9% year-on-year. And for EBITDA, I think let's talk about EBITDA margin, and I think that our EBITDA margin will be stable, maybe slightly decline in terms of Telkom or Telkomsel. And you can see that our EBITDA for first semester is around 7%. I think we tried to keep in the same record on, but a little bit better. I think that is the answer.

Okay. Thank you very much. Thanks everybody for participating on today's call. I apologize for those whose questions could not be addressed. Should you have any further questions, please do not hesitate to contact us directly. Thank you.

That does conclude our conference for today. Thank you for your participating. You may all disconnect.