Good day, and thank you for standing by. Welcome to Telkom Earnings Call Full Year 2022 Results Conference. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Pak Edwin Sebayang, VP of Investor Relations. Thank you. Please go ahead, sir.

Thank you, Amber. Ladies and gentlemen, welcome to PT Telkom Indonesia conference call for the audited results of year 2022. There will be an overview from our CEO and followed by the Q&A after the session. Before we start, let me remind you today's call and the responses to questions may contain forward-looking statements within the meaning of safe harbor. Actual results could differ materially from projections or estimation and may involve risk and uncertainty that may cause actual results to be different from what we discussed today. Ladies and gentlemen, it's my pleasure now to introduce Telkom's Board of Directors who are joining us today: Mr. Ririek Adriansyah, as President Director and CEO; Mr. Heri Supriadi as Finance and Risk Management Director; Mr. Herlan Wijanarko as Network and IT Solutions Director; Mr. Bogi Witjaksono as Wholesale and International Service Director; Mrs. [indiscernible], Consumer Business Director and Enterprise and Business Service Acting Director; Mr. Budi Setyawan Wijaya as Strategic Portfolio Director; Mr. Muhamad Fajrin Rasyid as the Digital Business Director; Mr. Afriwandi as Human Capital Management Director. Also pleasure to have the Board of Director of Telkomsel, Mr. Hendri Mulya Syam as President Director; Mr. Mohamad Ramzy as Finance and Risk Management Director; Mr. Derrik Heng as Marketing Director; Mr. Adiwinahyu Basuki Sigi as Financial Director. I now hand over the call to our CEO, Mr. Ririek Adriansyah, for his overview.

Thank you, Edwin. Good afternoon, ladies and gentlemen. Welcome to our [Technical Difficulty]

Please remain on the line. Your conference will resume shortly. Please continue.

Hello, Amber?

Yes, we can hear you. Please continue, sir.

Okay. Thank you, Edwin. Good afternoon, ladies and gentlemen. Welcome to our conference call for the audited full year of 2022 results. We appreciate your participation in this call. Year of 2022 was marked by economic recovery, postpandemic strike that hurt most of the people around the globe. Indonesia also managed to establish healthier and stable economy in 2022 by growing at 5.3%, with the [indiscernible] and curbing the inflation effect as compared to global peers. This recovering economic situation gives significant positive effect to Telkom's business initiatives to create breakthrough and innovation. Our organic strategy Five Bold Moves both ensure to create economic companies a competitive advantage while keeping overall company's performance in line with the target. The progress of Five Bold Moves has fueled the acceleration of fixed mobile convergence or FMC. Implementation will be the most critical moment for us to successfully capture opportunity in PT Telkom faster. We hope that the first initiative in fruition of the Five Bold Moves could trigger the development of other initiatives. Along with the transfer of IndiHome as part of the initial product of B2C segment managed by Telkomsel, Telkom also concentrate on B2B side of the business by enhancing the B2B capability through organic and inorganic growth. Our initiatives in InfraCo will support B2B and B2C business by providing common connectivity infrastructure to achieve CapEx and OpEx efficiency. Our data center and cloud, we currently have 2 Hyperscale Data Center projects while our B2B and IDD services concentrate on cybersecurity platform and integrated IT services. Lastly, on the establishment of digital initiatives, we will capture more digital investment, create equity story to attract external funds and maximizing ecosystem with tech giants. In the full year of 2022, Telkom still maintained growth in revenue and EBITDA, with increase by 2.9%…

Thank you, Pak Ririek. We will now begin the question-and-answer session. When raising your question, please speak clearly and state your name and your company. Amber, may we have the first question, please?

[Operator Instructions] Our first question comes from the line of Kelsey Santoso.

This is Kelsey Santoso from Goldman Sachs. The first question for me is on guidance for full year 2023 when it comes to revenue, EBITDA margin and CapEx for both Telkom Group as well as Telkomsel. And then my second question would be, in Q4, we saw prepaid subscriber declining less than what we saw in Q3, but what led to the weakness in postpaid top? And my third question would be ARPU did see a healthy increase in Q4. So what led to this increase?

Thank you, Kelsey. This is Heri Supriadi from Telkom. I will [indiscernible] your question [indiscernible] EBITDA margin, and then what is the CapEx for the group and also for 2023. First, on the revenue. Are we going to address the revenue growth around mid- to high single digit in the group level. We do expect that the margin -- the EBITDA margin is going to be the same that we did last year -- of this year. And then on the CapEx side, we do expect the CapEx to be spent around 22% to 25% of the revenue, with the distribution of CapEx: 40%, goes to mobile, and then 35% goes to the [ fixed ] broadband and the balance with the data center and then subsea cable. And totalize that, I think, the composition of the CapEx. For come Telkomsel, please, Pak Ramzy, if you could explain.

Yes. Thank you, Pak Heri. For our guidance, on the revenue side, we have some low to mid-single-digit growth in some of revenue. And also about the CapEx, we will allocate almost the same as the previous year and around 14% to 15% of the revenue. On the next question, Pak Ririek?

On the prepaid sub decline, we actually align with our strategy when we protect our market conduct with healthier product. In this strategy, obviously, there's a natural change that's happening on the market. And we are focused on more healthier subs in this case. And if you can see that we saw also in healthier ARPU as well as improving -- or maintaining our RPMB. With that, I think the market -- healthier market product also being followed by others.

We need to add more color to the ARPU healthy increase. If you look at the positive performance, it's really our right pricing implementation. We have promoted healthy conduct towards renewal of the behavior as well as customer value management, which we call CVM. It really led to this improvement of ARPU. You could see there's also an increase of traffic. The RPMB is our main key driver, which we monitor very closely, which help us to indicate the productivity of the healthy sub. At the same time, we were able to manage the declining of the legacy revenue through very personalized offers so that customers will find relevance in our offer. So we will continue to focus on this driving of market repair. We will continue to nurture the experience, retention and digitalization of the customers.

Okay. I hope that answered your question.

Our next question comes from the line of Hussaini Saifee.

A few questions from me -- from my side. The Telkomsel revenues have stabilized in the last 2 quarters. So just wanted to understand how should we see the market share going forward for Telkomsel. And second is on the Orbit revenues. So just wanted to understand, were there Orbit revenues included in Telkomsel revenues? And what was Orbit revenues and subscribers at the end of 2022? And finally, on spectrum auctions. Any update on the spectrum auctions and timing related to that? And just a housekeeping question. Were there any one-off cost bookings in quarter 4?

Okay. Thank you for the questions, Hussaini. On the revenue side, clearly, along with the relaxation of the people mobility post-COVID-19 and also the potential of digital economic growth, I think we should expect to have -- to grab more opportunities supported by better economic condition. However, we will also monitor the development of the market, including on the macro as well as the inflation impact on that side. On the strategic actions that we have implemented, as I already mentioned before, actually, we will maintain our market relevancy protecting our dominant market share position as the current, at least about 50%. In terms of the second question about the Orbit revenue. Our Orbit revenue already include in the broadband revenue recognition. And currently, our Orbit revenue is to serve the area that have the requirement of the broadband but not easily accessed by the IndiHome coverage.

I will update it to the spectrum auction. Last year, November 2022, we have been officially announced as the winner also [indiscernible] for the price mix and we use currently for the 4G. And I think most importantly, we just completed the refunding on 2.1. And as I mentioned before that we use our 4G or 5G for the 2.1. And maybe to the 700, I think we are still working from the [indiscernible], so [ with luck, hopefully ] first half this year or second half of this year that the government will announce for the auction for the 700 spectrum. I think that's all from my side.

Okay. On the cost side, there's no one-off cost booked in the last quarter of 2022. That's, I think, our answer on your question.

Our next question comes from the line of Choong Chen Foong.

A couple of questions from me. Firstly, on the mobile subscribers decline of 11% in FY '22, can you help me understand a little bit more on the impact that it has had on your revenue and EBITDA for Telkomsel? I mean are these revenue-generating subscribers that we have lost? And if so, what sort of ARPUs were they at? And in terms of the impact on the EBITDA, I'm thinking here that these subscribers probably were buying your SIM cards and you were incurring costs on those SIM cards and dealer commissions. So net-net at the EBITDA level, was it a net positive or net negative from losing these customers in FY '22? That's question #1. Second question for IndiHome. I wanted to get your thoughts on the outlook for net adds this year. And any plans -- or do you think there's any room to raise prices on the dual-play packages? And if we are banking on add-ons, what is the average speed for IndiHome subscribers as of the fourth quarter? And then my third question, how many staff retired in FY '22? You mentioned that there was quite a fair bit of natural retirement. And how many are expected to naturally retire? And in terms of salary increments, what are you budgeting for FY '23? Those are my 3 questions.

All right. For the mobile subscriber decline, as explained before, this is as a result of our [indiscernible], which we actually focus on our healthier subscribers. And as your question is that we have a positive impact since the September decline is the one that are actually not healthy or the ARPU are in the low ARPU. So basically, this will help us to improve our ARPU as you also see the result. And in terms of EBITDA, it's also impacting since with this, you are right that it's also impacted in our -- how we manage the cost, especially on the [indiscernible].

Yes. To add some color on the impact of EBITDA, actually, it has some positive impact to us and, actually, on the acquisition cost, is much lower before we entered this strategy to have better and healer market conduct. Thank you.

On the IndiHome, the outlook of net adds in 2023 by assuming that we're going to complete the fixed mobile convergent by 1st of July, effectively, we're going to have around, say, 1 million additional subscribers for home broadband, basically. That can be a combination of fixed wireless assets and also fixed broadband. And then any plan -- room to raise price on the dual play. Actually, we are planning to improve the quality, to improve the stickiness. That's our plan. So that's going to already give us value-added, in our opinion because we are also facing quite [ a bunch ] in terms of competition in some areas or cities. And then what is the average speed of IndiHome subscriber? Around 30 meg per subscriber. And then on the -- your last question on how many staff going to -- retired in 2022. The normal retirement in 2022 around 300, and in 2023, I think about the same number that's going to retire.

And if I can just quickly follow up, what would you be budgeting for in terms of salary increments this year? I mean would we need to adjust the salaries upwards quite a fair bit for higher cost of living? And also just going back to the -- and if I can add one more question on dividends. Will Telkom be proposing to pay dividends based on the operating net income or on the reported net income?

Okay. On the -- I think on the salary, we can say, actually, we basically have a natural increase based on the inflation rate. So I think our -- basically, our salary already competitive in the market. And then we pay also based on the performance, what is the performance going to be that's going to add some bonus on that one. And I think that's about how we see the salary [indiscernible]. And then on the dividend, we're going to propose -- of course, we need to pay a dividend based on the -- what is the reported net income. But we do calculate what is the dividend supposed -- dividend yield supposed to be in order to competitive in the market to the investors. So we're going to calculate what is the yield that's supposed to be provided to the shareholders. Based on that one, actually, we're going to increase the dividend percent this year compared to what we did last year. What we're going to propose is dividend by [indiscernible] based on the reported net income, around 75% to 80% of net income. That's what we're going to propose. This -- with this, although based on the, I think, reported net income, this is going to increase compared to last year, I think.

[Operator Instructions] Next we have a follow-up question from the line of Hussaini Saifee.

Maybe just one follow-up question on the recent partnership of Telkom with Ericsson on 5G, and it was linked to fixed wireless access. So maybe if management can throw some color on that side, that what will be the priorities on -- of the 5G rollout and how will it be monetized. Will the focus be more on the mobile side or will be on the fixed wireless sector?

Okay. I [ would like to repeat ] that our partnership toward Ericsson for the 5G, for the FW, currently, we work together not only with the Ericsson, also with the [indiscernible] to try the -- use the millimeter wave in the high-frequency band from the 60 gigahertz in 2 cities that we have there. And the other one related to the 5G rollout.

Currently, we selected to deploy 5G based on business feasibility and economic market condition. And also, we take a look at the post-spectrum [indiscernible] that we have, also relevant use case and device affordability in each city. Currently, we already have around 284 5G BTS, more than 40 cities that we're focusing on mid- to high residential area. And also in the enterprise market then that we built last year, we, altogether with Freeport, developed smart mining with the 5G standalone. And also we do the digital concept ecosystem with Java data as well as there also we deploy 5G. So case in Mandalika -- at Mandalika and G20 Summit. I think that's related to the 5G.

Just to confirm, is the trials being done on millimeter wave spectrum or 3.5 gigahertz spectrum? And the related question is, any timeline of the 3.5 gigahertz spectrum auction?

Yes, we use the millimeter wave. But for the 3.5 giga spectrum, we are waiting from the government, from ICT minister the time line for the spectrum auction.

Not yet clear from the government.

Our next question comes from the line of [ Aurelia Luz Sofia Budi ].

Two questions from me. So I would like to follow up on the revenue breakdown guidance that has been stated for the group level. It's mid- to high single digits, but the consol is low to single -- or mid-single digits. So I would like to ask what's the driver to achieve this higher revenue growth in 2023? That's the first question. The second one, I would like to ask on the update regarding the FMC integration with Telkomsel. Do you have any specific time line on when this will be completed? And what is the stages that's currently being conducted by both IndiHome and also Telkomsel? And probably you can share more about the structure that's likely to be implemented during the integration. And my third question will be on Telkomsel. How much has the company increased for mobile data pricing year-to-date? Or maybe do you have any color on the -- a range that we are looking at in terms of the increase in terms of mobile data pricing?

Okay. Thank you, [ Ibu Aurelia ]. First, on the revenue outlook breakdown. I think my colleague already tell you about the revenue of -- in mobile. That's going to be around low to mid-single digits. And then I think what we do expect from IndiHome, the same growth rate like we hit last year. And then we're also going to have, I think, healthy growth coming from our tower business as well on this one. And then we also having some business in data center that we do expect to grow at around 15% year-on-year. And then some remaining business also to grow, for example, in the Enterprise and so on. That's, in combination, going to give us the growth around mid- to high single digit of revenue. And then on the FMC update, currently, we are in the, let's say, final stage of negotiation with Singtel. Soon if we close that one is also stipulated as our obligation to the market, we're going to basically announce in the market whenever we get to the agreement and all the government that we need to follow on this process of transfer of our business to Telkomsel from IndiHome. This -- I think that's what we can say to you about the process of the transfer itself. And then during the process, just to smoothen the implementation of the -- what we already planned in this integration, we also already established not only [ explaining ] that carry this corporate action but also to go to the market strategy. We already run this team jointly with Telkomsel in able to make the maximum execution by the time this business can be integrated. So that's about FMC of that. And then I think in the mobile data pricing, my colleague, Ririek, gave the explanation on that.

Yes. Thanks, Pak Heri. So just to add more color to the increase of mobile data pricing. If you look at Q-on-Q, we saw positive traction from the increase of Digital Business revenue. That was plus 4.8% Q-on-Q. Data revenue was up plus 5.7% Q-on-Q. And from an ARPU -- blended ARPU perspective, we are looking at a plus 1.3 year-on-year, plus 7.3 Q-on-Q. Even with this, we had an increase of payload of plus 18.7% year-on-year, plus 3.6% Q-on-Q. And the payload of data user is around 12 GB. So if you look at this, we are still seeing positive traction as prices -- data prices in Indonesia is still low. We will look at ways to continue to drive market repair. But at the same time, you want to simplify and drive product differentiation and scaling up content to be more relevant to our customers as well as provide similar services in accordance to market needs.

[Operator Instructions] I'm showing no further questions. I'll turn the call back to Pak Edwin for closing remarks.

Thank you, everyone, for participating in today's 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.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.