Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (TLK) Q2 2015 Earnings Report, Transcript and Summary

Thank you for standing by, and welcome to the PT Telkom's First Half 2015 Results Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, 4th August 2015. I would now like to hand the conference over to your first speaker today, Mr. Andi Setiawan, Vice President of Investor Relations. Please go ahead, Mr. Setiawan.

Thank you. Ladies and gentlemen, welcome to PT Telkom Indonesia First Half Ended June 30, 2015 Conference Call. We released our results on July 31, 2015, and the reports are available on our website, www.telkom.co.id. Today's presentation is available on the webcast, and an audio recording will be provided after the call for the next 7 days. There will be an overview from our CEO. And after that, all participants are given the opportunity to participate in the Q&A session. Before we start, let me remind you that this 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 posed during today's call. This may involve risk and uncertainty and may cause actual results to differ substantially from what we discuss in today's call. Telkom Indonesia does not guarantee to any actions, which may have been taken in reliance of the discussion held today. Ladies and gentlemen, it's my pleasure to introduce you the Telkom's Board of Directors who are joining with us today: Mr. Alex J. Sinaga as President, Director and Chief Executive Officer; Mr. Heri Sunaryadi as Director of Finance and Chief Financial Officer; Mr. Abdus Somad Arief as Director of IT, Network and Solutions and Chief Technology Officer; Mr. Honesti Basyir as Director of Wholesale and International Services; Mr. Dian Rachmawan as Director of Consumer Services; Mr. Herdy Rosadi Harman as Director of Human Capital Management. Also present are the Board of Directors of Telkomsel: Mr. Ririek Adriansyah as President and Director, Mr. Heri Supriadi as Director of Finance, and Mr. Mas'ud Khamid as Director of Sales. Before Alex delivers his remarks, I will take this opportunity to give a brief overview of Telkom Indonesia. Telkom is the single largest integrated telecommunication company and network provider in Indonesia. Telkom provides a strong business portfolio of types: Telecommunication, information, media and edutainment, directly or through its subsidiaries. And we also deliver services to multi-customer portfolio: Retail, enterprise, wholesale and international. As of June 30, the majority shareholders of Telkom was Government of Indonesia, with 52.6% ownership, and the remaining 47.4% was under public ownership. I now hand over the call to our CEO, Mr. Alex J. Sinaga for his overview. Alex, the mic is yours.

Thank you, Andi. Good afternoon, ladies and gentlemen. Welcome to our conference call for first half 2015 results ended 30th June 2015. We sincerely appreciate your participation in this call. I would like to update you on the progress of our cellular and fixed line businesses performance as well as our businesses portfolio. Ladies and gentlemen, until end of this first half of 2015, we continue our excellent performance both in terms of operational and financial results. Let me start the overview by sharing the highlights of our first half of 2015 results. Number one, Telkom first half of 2015 consolidated revenue grew by 12.2% year-on-year, with EBITDA and net income grew by 6.3% and 2.2% year-on-year, respectively. While our cellular subsidiary, Telkomsel, recorded triple level digit growth, the revenue grew by 13%, EBITDA by 10.7% and net income by 14.7% year-on-year. Number two, mobile digital businesses continues strong growth at 37.6% year-on-year, resulted in OTT data, Internet and IT service, exclude SMS. Revenue grew by 33.7% [ph] year-on-year. At the same time, Telkomsel successfully exploit [ph] its legacy business with points grew by 9.1 year-on-year and SMS grew by 5.2% year-on-year. Number three, Telkomsel continues aggressive network deployment with 11,495 new BTSs installed in the fourth domain 10-leading network supply to strengthen mobile broadband experience that around 90% of new BTSs for 3G and 4G BTS. Ladies and gentlemen, our strong results in the first half of 2015 was in line with solid performance of cellular businesses. In term of operational aspects, Telkomsel gained almost 3.5 million net additional customers during first half of 2015, for a total customer base 244.1 million, despite relatively high SIM card penetration in Indonesian market. Mobile data payload jumped significantly to 207.2 petabytes or increased 121.4%, mainly supported by the fast-growing 3G and 4G capable devices adoption, which grew by 54.2% to 48.1 million users. Telkomsel continue expanding its network infrastructure by adding 11,495 new BTSs during first half 2015. We're around 90% 3G and 4G BTS. It is reflecting our focus, continue on data business. In the meantime, our fixed line subscribers increased to 10.2 million from 9.5 million, while fixed broadband users increased by 15.9% year-on-year to 3.7 million, contributed by our newly launched IndiHome Triple Play. Ladies and gentlemen, our excellent operational achievement has resulted in strong financial performance. Telkom consolidated revenue grew by 12.2% year-on-year, mainly contributed by our cellular subsidiary by around 70% contribution. We successfully maintained a healthy level of profitability with EBITDA margin of 48.2% and net income margin of 15.2%. Our margin was slightly lower, partly attributable to accelerated depreciation for our fixed wireless business and early-retirement program for the group's employees. On the expenses side, it increased by 14.4% to IDR 33.7 trillion. Operation and maintenance expenses grew by 50.3%, in line with the acceleration of network deployment, both in our cellular and fixed line businesses, in particular to support digital businesses growth. The personnel expenses grew by 23%, which was mainly due to early-retirement program for Telkom Group employees. General and administrative expenses increased by 9.2%, in line with increasing administration and also expenses. Marketing expenses decreased 2.8%, attributable to a more efficient marketing program, driven by a relatively stable competition and effective sales channel. In the meantime, depreciation and amortization increased by 7.7% to IDR 8.8 trillion, partly due to impairment of Flexi assets. Ladies and gentlemen, in the mobile business side, Telkomsel continued its strong momentum in first half 2015 with triple double-digit growth in revenue, EBITDA and net income, which grew by 15%, 10.7% and 14.7% year-on-year, respectively. Revenue grew by -- sorry, revenue grew to IDR 35.399 trillion, with the growth engine coming from digital businesses that increased by 37.6% year-on-year. Digital businesses accounted for 27.4% of total revenues, increase from 22.5% in the previous year. Telkomsel monthly recorded healthy growth in legacy business, which grew by 5.8% year-on-year, voice increased by 9.1% and SMS 5.2% year-on-year. This is attributable to the successful execution of cost of raise pricing and market segmentation strategy. Despite a high SIM card penetration, Telkomsel recorded grow in subscriber base of 4.9% year-on-year to 144.1 million due to effective sales and marketing programs. EBITDA and the income margin was superior at 54.4% and 28.5% respectively. During the first half of 2015, we deployed more than 11,000 new BTSs of which around 90% were 3G and 4G BTS in an effort to maintain leading network supply and grow our digital businesses. Data traffic increased by 121.4% to 207.2 petabyte, mainly driven by high-growth in 3G and 4G-capable device that reached 48.1 million, an increase of 54.2% year-on-year. This represented 53.4% of our customer base. As of June 2015, BTS [indiscernible] total 96,915 units, an increase of 21.8% year-on-year. More than half of our total BTSs were 3G and 4G BTS. Telkomsel made another milestone on 6 of July where it officially used 1,800 megahertz spectrum for LTE 4G services. We continue to strengthen our footprint with Makassar and Lombok to enjoy our 4G clear services following Jakarta, Bali, Bandung, Surabaya and Medan. Currently, Telkomsel 4G subscribers reached 655,000 subscribers. Ladies and gentlemen, we have decided and set up a road map to revive our fixed line businesses. This year, we are focusing our efforts to keep our sources, capacity and capabilities in terms of human resources and field equipment, so that we could accelerate deployment of fiber optic network to serve our customers with our fixed broadband services. We have superior product called IndiHome Triple Play, building services consist of fixed line voice, Internet access and pay TV, with competitive promotional price, until end of June had reached 427,000 IndiHome customers. Now I'll explain about our third focus, international business expansion. To realize our vision to be a regular player in telecommunication, IT and digital media, in the second quarter 2015, we may took operate except -- the first is engagement to acquire a telecommunication operator in Guam and second is the expansion of our data center in Singapore. In June, Telkom, through its subsidiary, Telekomunikasi Indonesia International USA, we call it Telkom USA, has entered an agreement to acquire TeleGuam Holdings, a parent company of GTA TeleGuam, a telecommunication operator in Guam. The planned transaction is subject to approval from Guam and United States authorities. This acquisition is expected to elevate Telkom's exposure in international businesses. After obtaining the license from the Singapore regulatory body last year, Telekomunikasi Indonesia International Singapore or Telin Singapore in June, started the development of new data center in Jurong, with around 20,000 square meter in size. This is the third data center owned by Telin Singapore and is expected to commence operations by third quarter 2016. Jurong Data Center is designed to fulfill the needs for premium data center for Singapore and regional and global mapping. Ladies and gentlemen, in order to make our company more efficient with healthy human resource structure, we have been doing early-retirement programs since 2002. In the second quarter 2015, we conduct the early-retirement program with 576 Telkom's employee and 116 Telkomsel's employees took part in the program, which cost around IDR 844 billion. Now let me discuss about bonds issuance. Telkom successfully issued IDR 7 trillion bonds in June 2015. The bonds that were issued in various tenure: 7 years, 10 years, 11 years and 15 years, and 30 years with coupon rates of 9.925%, 10.25%, 10.6% and 11%, respectively. The bond issuance was part of the company's 12 trillion served registration bonds offerings, which would be carried out in a 3-year period. The proceeds will be mainly used to fund our infrastructure development and also to finance our M&A activities. On capital expenditure, until June 2015, Telkom spent IDR 11.9 trillion, of which IDR 5.8 trillion was for Telkomsel and the remaining IDR 6.1 trillion was for Telkom and other subsidiaries. Telkom's CapEx was mainly utilized for deploying access and weak-point infrastructure to support development services, while Telkomsel CapEx was mainly utilized for radio access network. Let me now share with you about regulatory update. There are potential change in regulation that's still in progress, which could give impact to cellular business. They are interconnection tariff and 1,800 megahertz spectrum rearrangement. We expect the new interconnection tariffs scheme will provide fairness and incentive for operators to deploy infrastructure in the rural and remote areas. The interconnection regulation change is scheduled to be done by end of this year or early next year. Meanwhile, 1,800 megahertz spectrum rearrangement is expected to be completed by November this year. Post-rearrangement, the spectrum will be [indiscernible] and is fully ready for 4G LTE services. Finally, the last update that I could share with you is regarding with the conditional share exchange agreement with PT Tower Bersama infrastructure. The CSEA is in the process of termination due to commissioner request to terminate the transaction. Ladies and gentlemen, let me reiterate guidance for 2015 to conclude my remarks. We expect both Telkom and Telkomsel's revenue to grow in line with or slightly better than market rate by continued effort to grow the digital business revenue. For EBITDA and net income margins, we expect them to slightly decline both for Telkom and Telkomsel, in line with continued growth plan infrastructure development in mobile and fixed line businesses. Thank you.

Thank you, Alex. We do now begin the Q&A session. [Operator Instructions] Operator, may we have the first question, please?

[Operator Instructions] Your first question comes from Luis Hilado from HSBC Singapore.

I had 3 questions. The first was regarding the higher G&A and O&M expenses during the quarter. I just wanted to check if there were any exceptional items behind the increases like the 25% increase Q-on-Q for O&M or its pure operations? Second question is regarding the Bersama deal. Can you clarify if there's any chance at all that you will renegotiate the deal or the terms, or there's definitely no -- it will definitely be canceled permanently? And last question is, it seems to be that data pricing for the quarter is again down double-digit percentage-wise. I'm just wondering if that is the intention by Telkomsel to do such? Or is it competition driving the yields lower?

This is Heri, Finance Director here. Regarding your question, O&M significantly increased by 30.3%. Actually, this is in line with our continued infrastructure development, especially in our mobile and fixed line businesses, which resulted in higher operation and maintenance related expenses such as transport cost, power impact [ph] and electricity costs. In fixed business, the accuracy for [indiscernible] of IndiHome also have impact to higher O&M cost. There is -- and so far, your first questions. So there's addition from Heri Supriadi, our CFO.

I may have some -- I think it is one-off cost, of course. It is about IDR 161 billion for the early-retirement program in Telkomsel. And also we have about IDR 107 billion of [indiscernible] we should books because we have kind of dispute with the user programs. So that's extraordinary cost that only will come for this third quarter. It is not kind of recurring. [indiscernible] before we go to the Mitratel question, I think, if you follow the -- if you listened or heard the explanation of our CEO, it is clearly that we are performing well until the first half of this year. And we see that there's opportunity, not only in the digital business side, but also still lots of opportunity coming from legacy business. So we do believe that we can maintain the -- to maintain the growth of double-digit gains in revenue, EBITDA and net income until the end of the year. So we see, despite, I think, it's not really operable condition, I don't know, within the year, but we already see that telephony services, especially in cellular, is kind of -- like basic net for their -- people in Indonesia. So we still see this as opportunity for us to maintain our objective to keep the triple double-digit growth until the end of the year.

Okay. Your second question is regarding the CSEA. So basically, CSEA will start the summer as mentioned by our CEO is in the process of termination due to commissioner request of terminate transactions. If you are questioning regarding what is the next -- it's actually after we terminate this -- in the process of terminations, it's only clear and then we will open another opportunity. That's -- yes, really a time to looking for another way to unlock the power [ph].

Okay. But this doesn't have to be with Bersama, you'll speak with Bersama again? Or it can be open to other methods?

Yes, we have to discuss it first. We cannot decide it now, actually.

Your next question comes from the line of Anand Ramachandran from Barclays.

The one question, interconnect, you mentioned you expected interconnect rate changes by year-end. Could you give us some more flavor of what kind of changes you expect? Also if you could tell us what is the net interconnect at the Telkom group level and then at Telkomsel at this point in time? And any -- I mean, that would be very useful.

Thank you, Anand, for that the question on the interconnection. We are waiting for the -- decision from the government, we expect we will [indiscernible] by this month, by August. And we expect that the thing will be implemented starting in January next year. What we do understand now, the regime will be different from what we're accessing now. And this will be asymmetric approach in which every operator will disclose the cost of each operator. And then we have bilateral agreement how to reach the settlement base cost for the interconnection. Overall, we see that the impact will be neutral for us first. The traffic of interconnection, it is about have happened in Java and other remaining half it is coming from outside Java. In Java, I think there are -- the traffic and also network belong by each operator quite similar, so the impact will be slightly negative, but border outside Java, we are clear. I think so, we are compared to ADSL operators. So we will get a positive in that region. So in total, we see this is quite normal, the impact to us. Beside, also we know that the margin from this interconnection is not as big as our total margin, 54%. This is only about 15%, so basically it is right now a neutral impact.

If I could very briefly follow-up. You mentioned bilateral arrangements, so is it possible that it's not disclosed, but there's just some kind of an announcement? And then when you talk about neutral, impact, is it at the Telkom Group level or at both Telkomsel and Telkom levels?

For both, I think they're neutral basically for both because most of the interconnection traffic is with us, with Telkomsel. So with Telkom normal, becoming neutral. And about this close, I think, we did work each other basically with each operator. So basically, it is quite clear that the course we should settle by these operator.

Your next question comes from Sachin Gupta from Nomura.

I have 3 questions. Firstly, on the Mitratel TV-IGG deal termination. Is it possible to discuss the reason or the rationale for termination? Is it valuation or the process or anything else? Just why it's been terminated? Secondly, in the wireless segment with Telkomsel, any thoughts and expectations with the upcoming launch of Smartfren? What are your expectations? And given how BOLT! is progressing as well, what could happen to the prices and market share going forward? And lastly, any update on IndiHome? How many customers do you have? How many home has [ph]? And also given your remarks, is it likely that the CapEx for this segment could rise materially in the next time, next 1 to 2 years?

For your first question regarding the CSEA, what we can mention right now is actually, we are still in the process to terminate the CSEA itself. And after we discuss this with our partner and then we will make a statement together. So it's better after we close the process and then Telkom and TB will make a statement together. As to [indiscernible], if I can -- I have to answer right now regarding the next step or the next options. That's what we can answer right now. So it's about tier after we meet our partner, with just Tower Bersama, and then if we are agreed and then we close the transaction and then we can make statement together. That's what I can answer right now.

Okay. Thank you, Sachin on the question on the competition and displacing there our Smartfren will come in the second half of this year. We do know that they are planning to -- starting to launch for the services by August this year. We know that we had built the network to support their plan. What we believe on this, this [indiscernible] the data. We need to have quite an extensive network. Second, we need also to enter in one, in the handset availability and also the service and cellular and [indiscernible] distribution. We believe cellular will come in to certain cities, not as extensive as ours. So we also still see that opportunity also if you're at level in the market. We believe they will have some market sales, but we also still believe by our leading network supply and also quality that we continue to improve, we can still maintain our market sales in this, that's our opinion.

So for your third questions regarding the IndiHome CapEx. Actually, our CapEx, group CapEx 60% to 65% goes to the Telkomsel group and around 20% for the Telkom, mostly goes to the IndiHome, actually. So if you see the total CapEx -- 20% of CapEx goes to the Telkom, Telkomsel and mostly goes to the IndiHomes. And end of June, the subscriber of IndiHome around 427,000. This is answering your third question.

Your next question comes from Roshan Raj from Bank of America Singapore.

Two questions. The first one on your flexibility to still revise of tariff in general, are you facing some resistance in areas, particularly outside Java. And then what are your thoughts around driving growth in those areas? Second question is on ERP. What are your longer-term plans? How long will this program be continued? And what sort of benefits have you seen in the past? And could you share any color as to what will this program effectively end up giving you over a 3 to 5 years period from now?

Thank you for the question. On the flexibility that we can implement, the flexible tariff in outside Java with the stronger network that we have in the -- outside Java, basically what we see is the flexible tariff we implement this on the dynamic of supply and demand. And we also see the cost of investment [indiscernible] in our cost, along with affordability of the market outside of Java. So we implement it very carefully, they're not to destroy. They are [indiscernible] to us, in which we can be flexible to make the gain of the tariff by doing like occasion, certain events and also certain conditions in which we are not necessarily continuing to increase the tariff. But when I -- we know that the condition is need to be lowering the tariff. We do -- that's for the optimal value. Basically, we still believe this is well accepted by the market. And despite nowadays a lot of talk on this one, we already explained the real situation. And the main objective for us is basically the business and also the service to their customer.

So thanks, Roshan. Regarding the ERP programs, as our CEO already explained to you, that in order to make our company more efficient, getting healthier, we are going to propose next ERP for next year in order that we get more healthier. So in our calculation, the company's number -- the company's employee number has to be getting slimmer. So by 2019, we predict in number around 8,400 something the number of Telkom employees. So getting slimmer and slimmer.

Could you just remind us how many employees you have at the moment?

It's around 16,700 employees. So it's going to be reduced by half by the end of 2019.

This is a rough number.

It's a rough number.

This is a rough number actually.

Your next question comes from Colin McCallum from Crédit Suisse.

Just 2 questions for me. One other follow-up on the ERP. How many staff took the ERP in the first half of the year? If you'd give us the fixed line number and the Telkomsel number, the number of employees who took up the ERP? The second question is just regarding CapEx, the non-Telkomsel CapEx for first half was running above the 20% to 25% of revenue guidance range that you gave earlier this year. Does that mean that you'll spend less on CapEx in non-Telkomsel in the second half of the year? Or does it mean that actually you'll end up spending more than the 20% to 25% already you've guided earlier?

So the total number -- for Telkomsel, it's around -- the number is 576 employees and for Telkomsel, 116 people. So the total Telkom and Telkomsel will peak out around IDR 844 billion. So that's the number for the all our ERP program in Telkom and Telkomsel.

I'm sorry, just to clarify, sorry, I was asking for the number of employees rather than the root charge in rupiah. I think you disclosed the charge in rupiah. I was looking for the number for employees who took the scheme.

Yes. From Telkomsel, we did 116 people [indiscernible] both Telkom.

For Telkom, 576 employees.

Okay. So that is the employee number. All right. And on the CapEx?

So for the CapEx number for Telkomsel, you must be aware, in the beginning of the year, actually, we -- our partners repaired the infrastructure. If we saw physical of the infrastructure, actually more than what we all repaid to the developer. So if you saw that now less than the budget, it's real. On the payment basis, it's below of the budget. But on the physical basis, it's actually around 80% and 85% of the budget. But on the payment basis, around 70% of the target. So that's a liking of the physical and the payment. I think -- is it -- it is clear that after the complete development of the physical infrastructure and then they cannot repeat Telkom, they come to the infrastructure project. So it's always the payment collecting from the physical. Thank you.

Will the CapEx be a higher -- a lower number in the second half of the year as compared with what was spent in the first half?

Of course, higher. I think all the physical will be completed in the second half, and then we will repeat the second half. So of course, higher than the first half.

So then the CapEx-to-sales ratio for non-Telkomsel will be higher than 20% to 25% of revenue?

No, still in the range. It's still in the range, but higher than quarter 1 and quarter 2 on the second half. The proportion of the CapEx is still in the range.

Your next question comes from Suresh Mahadevan from UBS.

I had a few questions. First is on your consumer behavior on the mobile side. It's quite interesting to see actually your voice minutes are still growing in the network despite, I think, data growing very big. So I just want to understand this a little better. Both chargeable MoU as well as total MoUs have gone, gone up year-on-year, so I just wanted to understand is this, I mean, obviously, the data usage growing up, your data payload has gone up by 120-odd percent, so how should we think about the voice cannibalization due to data, particularly now that your work WordZap and Facebook and Viber and all these things are called now. So that is my question number one. The second question is it seems like, clearly, there is a big data boom in Indonesia, both from the traffic and, of course, from your results, having your data revenue has grown by significantly year-on-year. I just wanted to understand how should we think about it in terms of 4G versus 3G because, clearly, your postpaid subscriber base is very, very low, which I think should be the 4G addressable probably base. And is Indonesia going to be primarily a 3G market for the next 2, 3 years? Or do you think it can -- 4G is going to be a big, big part of it. So I would like to understand how you plan to cover Indonesia with 3G/4G and how we should think about this? So those are my 2 questions.

Okay, Suresh, I'll have to address your question. First on the customer behavior, let's allow my colleague, Mas'ud Khamid, Sales Director, will add some color on this one. On the why the voice traffic still increased, one of the main reasons is that we believe that by increasing our quality of our network, we make the opportunity to have that increasing that traffic. So we still believe there's a demand for the voice, despite there's also a sign of substitution for the voice. But most of it substitution right now is really coming through the SMS. That's why actually the traffic of the SMS quite declined compared to last year. But in the voice, it's still quite stable, in fact, by increasing the quality again, we believe that it's a factor that we reckon the traffic increase, okay? I think, Mas'ud, you want to add something here.

Yes, related to increasing voice traffic, we also increased our sales team with aggressive sales. Now we empower our sales team more than 3,000 people every year in the field to acquire our competitor. Number three, we also expand in new cap rates. We are very aggressive, increase our new infrastructure in the new area. This is why our voice traffic still increased.

Okay, they're interesting. How do you see that playing out in the next, next couple of years? Do you see a point where voice grows down?

It's still stable. We try to maintain with our best effort and we are very confident how to acquire our competitor to maintain our performance in our voice growth.

Okay, got it.

Okay, on the 3G and 4G investment. We predict our investment in the next couple of years will be mainly on the 3G. And we'll be growing on the 4G, but 3G will be still the main investment. We predict 3 things for the 4G. One is that we have -- [indiscernible] was around 500 cities and now we have [indiscernible] based on the potential market. Second, we also take a look on the -- how the competitor is actually moving. And the last one is, actually, is we also monitoring on the -- how big is the 4G-capable handset [indiscernible] in its cities. Based on this we will decide whether we will demanding 4G in this area.

But what if you are -- I mean, depending on what you're seeing so far, do you think it's time to make a big push towards 4G or...

Yes, we are monitoring the current position of the 4G service is still quite lowest, but -- around 2%. Well, about 4 million. But we know that there will be 4G tablet service lower price, so we do believe that the penetration of 4G, I said, will be only faster again than 3G if you take a look only couple of years. So we will then decide whether we will invest -- how big is our investment are and in the whole -- how much is the development of the network of the 4G.

Your next question comes from Wei-Shi Wu from BNP Paribas.

Three questions. With regard to the mobile business, you mentioned earlier that in terms of the interconnection regime change, you're expecting asymmetric interconnection to be implemented. Are you also -- I mean, any expectations around rates actually being lowered? And presumably your [indiscernible] form of interconnection, so how do you expect that to potentially impact your financials? Second question is regard to the fixed broadband market. How are you seeing competition among -- and has there been any new players in recent months, and what are pricing trends, et cetera? And then, finally, my last question is -- and I apologize if you've gone through these numbers, but could you just highlight how many 3G BTSs you had as at June as far as 4G BTSs?

I'll repeat my answer on the -- actually, the first question was the same with your question. Basically, we do expect in Java the growth of interconnection will be lower. It's also mean revenue will be lower. Overall, we'll be competitive by the revenue coming from outside the proper interconnection because we do not have -- we have a more extensive network compared to our competitors. But we will make the overall of the impact will be neutral to us. The second also because, actually, their margin for the central interconnection is only about 15%. Again, this is not really a big impact and also in total only 6% revenue for interconnection coming through our total revenue. It's about the interconnection regime impact on our performance. The third question, 3G BTS, currently, we have around 48,200 3G BTS. Meanwhile, for 4G, we have around 1,100 4G BTS right now. It is in conjunction with the purchase question already addressed by our CEO. Basically we have the flexibility to make up [indiscernible] between 3G and 4G, in which we see that actually the market is ready we can accelerate deployment of 4G, but currently, we see that our 3G device a lot. I think appliable -- a lot more compared to 4G. But again, we're quite flexible on that -- right of investment. But for 2G, we expect by starting next year, we are no longer feel that 2G networks unless there is specific demand for that one and also to maintain the quality for our existing one, we all feel that it is.

Just to reiterate [indiscernible]. The current 3G, because of the -- we use, especially based on [indiscernible]. So it's quite easy to confer from 3G to 4G. So it's going to be part of [indiscernible].

The question about...

The second question, it's me Dian from Consumer Services. Let me address your question about the fixed problem. In fact, Indonesian have 60 million household now which is half 20 million addressable market that are willing to pay the fixed broadband services. So what I say is it's quite huge and stable demand in Indonesia in fact. So that's why we come up with the very new proposition, which relies on the Fiber To The Home rollout. So in my opinion is whoever faster deployed the Fiber To The Home, the operator will win. So in my few, there is quite a few capable service provider now [indiscernible] in Indonesia. That's why we are very confident enough to surpass our huge market now. So our lesson learned in the 6 months -- in the first half, we achieved already close to 0.5 million subscriber of triple play, still IndiHome. So I believe in the long run, we are still continuing the -- our rolling out the Fiber To The Home. We are -- we will be winning the mark-up amount to the competition in Indonesia. And we see the good news is there are people who's accepting our high-quality services, include the fiber, because the slow broadband, slower than fiber is really slow to bandwidth hungry services.

Due to time limitation, we will now end the question-and-answer session. Mr. Setiawan, please continue.

Thank you, everyone, for participating into this call. We apologize for those whose questions could not be addressed yet. Should you have any further questions, please don't hesitate to contact us directly. Thank you.

This concludes today's conference. Thank you, everyone, for your participation. You may all disconnect.