Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (TLK) Q1 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and thank you for standing by, and welcome to the Telkom's First Quarter of 2017 Results Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, Tuesday, the 2nd of May 2017. I would now like to hand the conference over to your first speaker today, Mr. Andi Setiawan. Please go ahead, sir.

Thank you, Koda. Ladies and gentlemen welcome to PT Telkom Indonesia conference call for the first quarter of 2017 results. We released our results on the 20th of April 2017, 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 today's call and 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. 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 the Telkom Board of Directors who are joining us today: Mr. Alex J. Sinaga as President Director and Chief Executive Officer; Mr. Harry M. Zen as Finance Director and Chief Financial Officer; Mr. Zulhelfi Abidin as Network & IT Solutions Director and Chief Technology Officer; Mr. Abdus Somad Arief as Wholesale & International Services Director; Mr. Dian Rachmawan as Enterprise & Business Service Director; Mr. Mas'ud Khamid as Consumers Service Director; Mr. David Bangun as Digital & Strategic Portfolio Director; and Mr. Herdy Harman as Human Capital Management Director. Also present are the Board of Directors of Telkomsel: Mr. Ririek Ardiansyah as President Director; Mr. Heri Supriadi as Finance Director; and Mr. Alistair Johnston as Marketing Director. I now hand over the call to our CEO, Mr. Alex Sinaga, for his overview. Please, Alex.

Thank you, Andi. Good afternoon, ladies and gentlemen. Welcome to our conference call for the first quarter 2017 results. We really appreciate your participation in this call. Ladies and gentlemen, in the first quarter 2017, Telkom continued its strong momentum by delivering remarkable performance, recorded triple-double-digit growth in revenue, EBITDA and net income of 12.6%, 14.7% and 45.8% year-on-year, respectively. We were also able to maintain a healthy level of profitability with EBITDA margin of 54.2%, improved from 53.2% last year; and income margin and -- 21.6%, better than 16.7% last year. Data, Internet & IT Services was the engine of growth. It jumped 25.4%, with contribution to total revenue reaching 41.6%, increased from 37.4% last year. On the expense side, our total expense only increased by 3.1%, in line with manageable operations and maintenance and a couple of one-off cost items in the first quarter last year. Operating and maintenance expense grew by 8.5%, lower than revenue growth. Operating and maintenance expense growth was in line with the continuous infrastructure deployment, both in cellular and fixed line businesses, in an effort to grow Digital Business. Operation and maintenance accounted for 44.8% of total expenses. Ladies and gentlemen, in the mobile business, our Telkomsel continued its strong performance in the first quarter of 2017 by delivering another triple-double-digit growth in revenue, EBITDA and income of 10.4%, 13% and 17.8% year-on-year, respectively. This solid performance was a result of continuous effort in growing Digital Business as the engine of growth as well as a successful strategy in maintaining Legacy business performance, in particular, POTS. The revenue growth was driven by Digital Business, which increased by 22.5% year-on-year. It consists of data service, which increased by 21.3%; and digital service which jumped 34.8% year-on-year. Digital Business accounted for 37.7% of total revenues, increased from 34% a year ago. Voice revenue was still growing by 11.1% despite lower voice traffic as a result of successful execution of advanced cluster-based pricing strategy and successful migration of customer from Pay As You Use to package. In SMS, however, we saw revenue decline by 15.1% due to cannibalization from Over the Top services. Profitability improved in line with manageable costs. EBITDA and net income margin were higher by 1.4 points and 2.2 points to 59.2% and 34.5%, respectively. Telkomsel recorded total subscriber base of 169.4 million as of March 2017, an increase of 10.3% year-on-year amid the saturated SIM card penetration, which was attributed to effective sales and marketing programs. During the first quarter of 2017, we deployed 7,060 new BTSs, all of which were 3G and 4G BTSs to ensure the customer experience in data service. We will continue our strategy to provide leading network supply as data traffic growth is very high. Our data traffic increased by 115.5%, fueled by fast-growing 3G and 4G capable device adoption that already reached 83.8 million or 49.5% of our customer base. By end of March 2017, our BTS on-air reached 136,073 (sic) [ 136,093 ] units and 23.1% growth year-on-year, and 63% of which were 3G and 4G BTSs. Ladies and gentlemen, in the fixed line business, IndiHome recorded total subscribers of 1.78 million, representing 32% growth year-on-year. And IndiHome Netizen, a dual-play service that we launched in December 2016, saw strong traction, contributing around 12% of total subscribers in only 4 months after it was launched. We expect IndiHome Netizen customers to continue growing significantly going forward as complementary to our IndiHome Triple Play product. ARPU for IndiHome was IDR 360,000 in the first quarter 2017, improved from IDR 341,000 in the previous quarter. In order to further improve IndiHome ARPU, we encourage subscribers to migrate to a higher speed with various services or purchase various add-ons. Separately, we started to pursue a new revenue stream from advertising. We keep enriching content to make IndiHome more attractive. In first quarter 2017, we added video streaming platform, HOOQ, in our content list in addition to existing video streaming platforms such as iflix and CatchPlay as well as various movie, music, sports, kids, knowledge and news programs. Ladies and gentlemen, Telkom 3S Satellite, our new satellite that was launched on 15 February 2017 has commenced full operation in times, starting from 17 April 2017. After successfully passed all the process of traffic transfer without interrupting the customer, the satellite is now managed by Telkom Satellite Main Control Station in Cibinong, Indonesia. We plan to launch another satellite in the third quarter next year. It will carry 48 C-band and 12 extended C-band transponders and cover Southeast Asia and South Asia regions. Currently, the progress of the satellite construction reached 53%. We believe that satellite is still important in Indonesia, given its unique geographical characteristics. Telkom aims to become one of the largest satellite operators in Asia. Ladies and gentlemen, on 21st of April, we held Annual General Meeting of Shareholders with the following key decisions: distribution of 70% dividend payout for 2016 fiscal year, increased from 60% payout in the previous fiscal year. We will distribute a cash dividend of IDR 11.6 trillion or equal to 60% of net income, inclusive of interim dividend which has been paid in December 2016; and special cash dividend of IDR 1.9 trillion or equal to 10% of net income. All this total dividend, including the interim dividend, represent IDR 136.7 dividend per share. The cash dividend and special cash dividend will all be paid on 26 May 2017. Appointment of 3 new Board of Director members and a new assignment for 2 existing BOD members. And the new BOD members are Mr. Mas'ud Khamid, who was previously Sales Director of Telkomsel; Mr. David Bangun, who was previously President Director of Mitratel; and Mr. Zulhelfi Abidin, who was previously IT Director of Bank BRI. After AGMS, Telkom's BOD members and titles are: President Director, Alex J. Sinaga; Director of Finance, Harry M. Zen; Director of Consumers Service, Mas'ud Khamid; Director of Human Capital Management, Herdy R. Harman; Director of Network & IT Solution, Zulhelfi Abidin; Director of Digital & Strategic Portfolio, David Bangun; Director of Wholesale & International Service, Abdus Somad Arief; Director of Enterprise & Business Service, Dian Rachmawan. The AGMS also replaced Mr. Pontas Tambunan with Ms. Devy Suradji as the Commissioner and appointed Mr. Cahyana Ahmadjayadi as new independent Commissioner. Now let me reiterate our guidance for the full year of 2017. With the expectation of rapidly stable competition in mobile space and continued expansion in the fixed broadband business, we expect both Telkom and Telkomsel's revenue to grow better than the industry rate. We estimate the industry will grow at around 8% to 9% in 2017. EBITDA and net income margin are expected to slightly decline as Telkom is shifting towards digital telco company, with a higher proportion of revenue from Digital Business and continued strategy to enhance infrastructure. The capital expenditure for the group is expected around 23% to 25% of revenue, with investment focused on mobile and fixed broadband infrastructure. That is ending my remarks. Thank you very much.

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

[Operator Instructions] We will now take the first question from Roshan Raj from Bank of America.

Roshan from Merrill Lynch. First one on Telkomsel subscriber trends, looks like it's gone backward. Some color on the reasons for this and the expectations for the coming quarters will be helpful. And second, on IndiHome, any sort of sense for the ARPU trends because of the launch of dual-play, how's the ARPU going to trend? And could you remind us on the subscriber target for 2017 and maybe the medium term? Also related to IndiHome would be some sort of color on the profitability and the level of customer base wherein those profitability levels will be hit. And finally, on the interconnect revenue and costs at the group level, revenue is up but costs are down on a year-on-year basis. Some color there will be very helpful.

Heri Supriadi speaking from Telkomsel here. On the subscriber number of Telkomsel, the higher number in the last quarter of 2016 was mainly because of -- we have quite a strong demand for the seasonality of year-end. So we sell a lot of packages that are with a short period of maturity. So that number was expiring during the first quarter of 2016. But overall, despite -- '17. Overall, despite this quite short period of the lifetime, that number still gives us quite good value.

Okay. Do IndiHome.

IndiHome.

Yes. On the second question, the ARPU trend towards the end of the year would really depend on how much the growth of the 2-play. As for end of March, the triple-play ARPU was -- stood at IDR 353,000, whilst on the 2-play ARPU, it was on IDR 320,000. And as per Q1 this year, the 2-play represents about 12% of total IndiHome customers. But then, obviously, we would continue to pursue -- to approach the existing 2-play customers to gradually increase the speed of the Internet they are using in order to increase the ARPU. In terms of IndiHome profitability, it's something that we still do not disclose as of now, particularly given that the business is relatively new. But if you see from the experience from the other telco operators who have revitalized their fixed broadband business, in average, they needed around 5 to 7 years to start seeing the stable profitability profile of the fixed broadband business. Obviously, we would like to be faster than that. And so far, the progress has been quite encouraging, so hopefully, our ambition can be realized. In terms of the interconnection revenue, the increase is attributable to the increase of the voice traffic, whilst the decreasing expense was because of the lower outgoing traffic in SMS and in voice. Sorry, just one more thing. In terms -- to remind you on the target in the home subs, as we have mentioned in the previous call, it was around 1.3 million to -- the additional subs is 1.3 million to 1.5 million additional subs for full year this year.

We will now take the next question from Koh Miang Chuen from Goldman Sachs.

Three questions for me, please. The first is in terms of the voice revenue, seems that the driver for the good numbers is mainly due to pricing. Just wondering, do you see more room to raise prices? And is this largely an opportunity outside of Java only? And on that front as well, do you expect voice -- when do you expect voice revenues to start declining? The second question is on data use, which has been falling quite rapidly each quarter. So your peers have stated their intention to raise data use. So what kind of impact do you see on your own data use given their actions? And lastly is on fixed broadband. You mentioned that the improvement -- ARPU improvement was due to more add-ons inside your [ info memo ]. Can you give any data on this, for example, the percentage of subscribers picking add-ons in first quarter versus previous quarters?

Okay. It's Alistair Johnston here from Telkomsel. On the first one, voice revenue. Yes, I mean, voice revenue continues to show great performance and -- 11% year-on-year. I think you're right, it's -- volume has been declining, price has been increasing. I mean, the question is how long that can continue. Very difficult to say. We have a sort of zonal pricing strategy, where we look to optimize the price to get the right balance between volume and rates. And so far, I think we've done that pretty well to generate positive revenue. But I mean, looking ahead, obviously, voice is going to be under structural challenge by OTT services. One thing that we are doing is we're increasing the amount of voice packages we sell. That's a pretty good way of keeping the voice traffic going in our network. Second question was around data yield. Absolutely. I mean, our growth in data traffic year-on-year is about 115%. But our revenue growth is much less than that, around -- less than 30%. The market, especially in the second half of last year, is very, very competitive. And also we have to participate -- we still charge a premium to our competitors, but we still have to compete. So we would love the market to become a bit more rational, a bit more healthy. I know what you're saying about the competitors' comments, but the comments aren't always backed up by actions. We have -- already this year, we've taken a lot of steps to reduce 4G bonus and to price up. And to some extent, we've had some negative feedback about that, but we'll continue to price up, but the market remains pretty competitive.

Yes, on the last question, we will give you, after this call, the exact number of the customers who purchases add-ons, but the number is still actually relatively small. And it's actually not just add-ons that contributed to the increase of ARPU, but also there are more and more customers using higher speed, even up to the top speed of 100 megabytes.

And also the second distribution.

And also more and more customers have installed a second set-top box at their homes.

Okay. And just to be clear, those who have a second set-top box, that still counts as one customer?

Can you say again?

Yes, the same customer.

The account number is still the same. But obviously, the revenue is increased from that particular customer.

We will now take the next question from Gopakumar from Nomura.

A few questions. Firstly, on dividends, how should we look at your payout policy going forward? If you can remind that, that would be good. Secondly, you mentioned on something -- some measures you're looking at sustaining voice revenue. So can you please elaborate a bit on how you plan to manage this transition in Java and outside Java? And related question to data, do you think that your current pricing premium is at an optimal level? Or is there more room to either lower this premium to be more competitive on the data side?

Yes. As you may be aware, dividend is -- the decision of dividend is really in the hands of the government as the main shareholder. The last time we paid 70% was 3 years ago, in 2013. And the main reason why we proposed -- and the government finally agreed to pay 70%, obviously, given the tremendous outperformance of the company. But obviously, if we keep doing the same performance like this, we would like to see this dividend payout to be kind of sustainable. But again, it's really up to the government.

[indiscernible] voice, to elaborate a bit more, I think 2 elements. Number one is smart pricing, where we continue to price cluster by cluster according to the market conditions, number one. Number two, it's really all around packages. In fact, if you look at our voice traffic, about 30% of our traffic is consumed in packages. And actually, that overall number has actually increased over the last year. So we're seeing that if we can persuade a customer to buy a voice package, then we tend to grow the usage. I think it's not just voice packages, it's also the combo packages, where we combine voice and data and possibly SMS, possibly some digital content, into a single package. That's also a good strategy for maintaining revenue. I think on the data premium, I mean, I think I described before that there's a lot of downward pressure on pricing. And I mean, our average customer usage in 1 year has doubled. And obviously, for customers, that would be a doubling of their expenditure on data if our pricing wasn't coming down. So that would be quite a big thing for them to swallow. So there is consumer pressure right there for us to lower our prices, even though that on an international kind of benchmark basis, they're pretty low. My hope is that we can improve the health of the pricing. It kind of depends on the overall market dynamics and to some extent, what our competitors do. Having said that, Q1 has been all about trying to increase price and trying to improve price and health, but time will tell.

We will now take the next question from Arthur Pineda from Citi.

Three questions, please, for me. Firstly, can you talk about the provisions in 1Q '17 under SG&A, what drove it? And are other any one-offs booked for the quarter as well? Second question I had is with regard to IndiHome. This seems to have slowed in terms of net adds given the focus on quality and ARPU. How does this impact your rollout and CapEx spends if these subs take ups may not be as strong? Could you reduce spending? Last question I had is with regard to mobile. Can you talk about mobile ARPU trends and data monetization? Of course, your competitors have all talked about this. Are you actually seeing this materialize? Or do you find that competitors are not actually walking the talk? And related to this, could you actually see ARPUs expand? Or should we just see volumes on data rationalize at reasonable levels?

Okay. On the provision, the number in Q1 this year, it was IDR 479 billion. We expect -- and last year, the total provision was around IDR 730 billion or IDR 740 billion. So we expect this year the total number would not be as different as the one we had last year. So the expectation is towards the end of the year, we would likely accrue another about IDR 300 billion or so. And for IndiHome, the focus -- in terms of CapEx, the focus is really to monetize the existing homes passed, which is around 16 million homes passed that we have. So not so much of building new homes passed in that regards for this year.

Service spending, home reached.

Yes, so the CapEx for fixed broadband is more towards the home reached.

Okay. On the ARPU trend for the data monetization, we see the market right now, as you may be aware, are quite -- very cheap compared to, I think, regional peers. And the good sign right now is actually the penetration of smartphone already about 50% for all operators. Basically, this is the right time to really consider monetizing the data. So again, as mentioned by my colleague, it also depends on the dynamic of the market. If we can sustain the price and by lowering the quota -- free quota, I think that's already the sign of rationalization of the competition in the data or price war in data. We expect this trend will continue along with the data consumption growth and also smartphone growth.

Sorry, just to clarify, was there any one-offs booked in 1Q? And secondly, why push for more home switch if demand is not really strong for fiber?

In the first quarter, the one-off was only that provision that I mentioned earlier, which amounted to IDR 479 billion. And I think in terms of the home reached, the demand, in particular in the past few months, we see the acceleration in demand in terms of 2-play. So that's why we think it's -- we stop adding more homes passed and starting to focus building homes reached.

Our next question comes from Ranjan Sharma from JPMorgan.

It's Ranjan Sharma from JPMorgan. Just a couple of questions from my side. Firstly, on the voice revenues on the mobile side, you did see some quarter-on-quarter decline in revenues. Was this mainly seasonality? Or could this be the beginning of voice revenues coming under pressure? The second question is, are you anticipating any regulatory changes to be introduced in the next 12 months or so?

On voice, yes, you're quite right, there was a quarterly decline. I think I would probably put that down mainly to seasonality. However, there's no coincidence that half of our base now have smartphones, half of our base now actively using digital services data. So I think it's only natural that they'll be using WhatsApp and the like, not just for messaging but also for voice. So I think we know over some period of time, that's going to have a big impact. I think the impact has started. I think we have some strategies -- as I outlined in the previous answer, we have some strategies to mitigate it. But I mean, we should have no doubt that ultimately, it will be hard for us to sustain voice on our network.

Okay. On the [indiscernible] side, this is really from [indiscernible]. There are 2 points that we can see for the foreseeable future. One is on the spectrum auction. We do hope that the decree will be signed by the Minister sometime in Q2 and then will be followed by the spectrum bidding. The second point was on the interconnection. We just started to -- the government has been appointed by state of the art to be the [ verificator ] for the cost calculation of the interconnection. Based on this then, the government will establish new numbers on the interconnection. We don't know yet at this point how it will go, but we do hope that it will be more rational for us.

Can I just have a quick follow-up? On the spectrum auction, can you just remind us how much spectrum is going to -- expected to be auctioned? And [indiscernible] if you look -- sorry, if I can just finish, on the interconnect changes, do you know when this would be implemented? If not, by how much the change would be?

Okay. On the spectrum auction, we have 2,100 -- 2 blocks of 4, 5 megahertz. And then we have 1 block of 30 megahertz or 2 blocks of 50 megahertz for the 2,300. On the interconnection, we don't know yet at this point how the change will be because it will depend on the verification result of the cost of its operator.

We will now take the next question from Choong Chen Foong from CIMB Malaysia.

This is Foong from CIMB. Three questions for me. Firstly, on the IndiHome business, the net adds for the quarter was 150,000. But you said that Netizen was about 12% of your total subs, total about of 214,000 over a 4-month period. So I'm just trying to understand if you've seen some of your 3P subs down-trading to 2P. And can you provide more color as to the profitability of 3P versus the 2P product? When a sub goes from 3P to 2P, does it also come with reduction variable content cost? And therefore, does that offset the reduction in revenues? So that's my first question. Second question, also on IndiHome, regarding the ARPU increase Q-on-Q. You've mentioned about additional services and upgrades, but I also wanted to know if you have removed discounts as well that helped the ARPU for the quarter? And thirdly, for Telkomsel, just wanted to understand on the cost front whether you have -- do you see any sort of big or major potential cost savings coming through in the next 2 to 3 years? Because some of your peers are talking about potentially quite a bit of saving coming from tower rental costs as contracts come up for renewal. I'm wondering whether you're seeing the same as well.

Yes, we don't have the data whether there are any customers downgrading from 3P to 2P. Let us check and get back to you on this. In terms of the profitability, it's still something that we do not share as of now. I'm not sure whether you joined from the beginning, but the ARPU for 3P in Q1 was IDR 353,000 and for 2P was IDR 320,000. Can you explain your second question in terms of discount on increasing ARPU?

Yes. I just wanted to understand, because I understand that some areas you are -- you have actually offered your promotions, your packages with a discount, whether you have also reduced the discounts and that has led to your ARPU increasing.

Yes. Most of the discounts have been stopped. But this is rather kind of, like, opportunistic. And if it's something that we could start again if we feel the need to do so. But as of now, most of the discounts have been stopped. But not just because of this that contributed to the increasing ARPU, but also, as we mentioned earlier, there are more and more customers using higher speed, for instance, and there are more and more customers purchasing add-ons.

Okay. For your question on the cost saving for the next 2 or 3 years ahead. Firstly, I would like -- you may also be aware, the operation and maintenance costs, I think, are contributing about 55% of our costs. And the biggest chunk of that, first, transmission cost; second, on the tower cost; and then the third on the power cost. This cost actually is very much related to our design and also where we -- what is the kind of equipment we put in. On the tower cost, basically, we follow the market price. We cannot really expect that price per unit will be lower, except our design will be -- we'll make it more efficient because now I think our land lease is also quite high compared to 5 years ago, say it that way. But whenever we're adding 4G BTS, it only maybe consumes about 2/3 of the cost of space. And also, the power can be a bit less. And then on the other costs, that may also -- giving us some efficiency when a further spectrum becomes much more applicable for us. That, in general, will reduce, I think, the number of sites we need for providing the service. This also will generate efficiency for all the customers with the same services. That, I think, is the basic that we see how we're going to manage the costs in the future.

[Operator Instructions] We will now take a follow-up question from Roshan Raj from Bank of America Merrill Lynch.

Just on comments about the cluster-based pricing strategy that you have kind of developed. Just trying to understand, how is it different from how your competitors price their products? As in if you change price, would they not also be changing price in a fixed zone or location? Or is it a different approach from them? What I'm trying to understand is, do your competitors not respond to you at a localized level? Second is, what are your key concerns for 2017?

Yes. I mean, the cluster-based pricing -- I mean, truthfully, I don't know technically the capabilities of our customers in terms of cluster-based pricing. Our IT systems enable us to price differently across all 500 cities in Indonesia. I know the competition have regional pricing, but whether they can achieve the same micro-clustering that we can, I don't know. I mean, in terms of pricing, we look at market share, we look at market share momentum, we look at penetration of data services, we look at momentum of data service usage, smartphone usage, network condition, so we look at a whole variety of factors so that we are making decisions on the trade-off between price and volume. We're making that on a sort of city-by-city basis and not on a nationwide basis, where, obviously, those things I just mentioned can differ quite significantly from place to place. Are we constantly adjusting pricing? Yes. Is our competition also adjusting pricing? Yes. But I think doing it this way, you get a much better result.

Just as a follow-up on the pricing, what's the trend you see on the ground in terms of the dealer commission in the recent months? Has it stabilized? Or you see some of your peers being aggressive in terms of commission?

Yes. I mean, generally, the last few months has been characterized as aggressive, both -- particularly, among sort of starter pack introductory offers. So there's a lot of good value in the marketplace for customers who want to take a SIM card, use it, discard it and take another SIM card. That's something we have to work at to change. I mean, obviously, again, we don't know in detail our competitors' commission structures, but it's pretty aggressive right there at the moment, I'd have to say.

Okay. And just the second bit on the key concerns or challenges that you possibly see for 2017.

I think, definitely, first, the challenges have come to the data monetization, I think. And then second -- this is also back to the competition. And then the challenge for us also to bring this -- to smooth mitigation the voice revenue reduction to be coming to data and digital services. Regulatory, we do expect that we have additional spectrum in which giving us more capability and also capacity for giving better service. I think that's 3 challenges that we are going to face this year.

I can add on the fixed broadband side. I think the main concern is, obviously, in terms of the pickup in demand on our IndiHome product. We obviously would like to see the demand would still be strong towards the end of the year.

We will now take the next question from Hussaini Saifee from Citi.

Two questions for me. Firstly, on the IndiHome. As I see you added around 150,000 subscribers in first quarter, but you maintained the full year net adds guidance of around 1.3 million to 1.5 million. So are you expecting a strong surge in demand in the next 9 months? That's question number one. The related question is on the competition on the fixed broadband side. So how do you characterize the competition vis-à-vis mobile? Is it more rational? Or is it as competitive as the mobile segment? The third question is on the Mitratel. How many towers do you hold on the Mitratel site?

Yes. Okay. Yes, it's been rather a slow quarter, to be honest, for IndiHome this first quarter. Obviously, we do expect there's going to be a pickup in demand towards the end of this year. In terms of the characteristic of the market of fixed broadband, it's somewhat different than if you compare with cellular. We are obviously not the first entrants in the market, but we've been leading the market in the past couple of years since we launched the product. And most of the other players, they focus only on selected areas and only on some specific segments in the market. It's literally only us that cater to the nationwide market and cater into all segments of the market. The third question in terms of Mitratel towers, currently, Mitratel has around 9,100 towers.

As there are no further questions at this time, Mr. Setiawan, please continue.

Yes. I think if there are no more questions, we can conclude the call, Koda.

Thank you, sir. Ladies and gentlemen, this will conclude today's presentation. All today's presentation will be made available on our website, www.telkom.co.id. Thank you all for your participation today. You may now disconnect.