Telkom initiated the 5 Bold Moves Strategy to build competitive advantages in the areas of digital connectivity, digital platforms, and digital services. This strategy aims to strengthen the Company’s position as a world class digital telco company, with long term objective of creating higher value for the Company’s stakeholders. By having this 5 Bold Moves strategy, Telkom Group can diversify and expand its market share form to B2B business while also can defending its position as the B2C Telco market leader.
Fixed-Mobile Convergence (FMC)
The first initiative in 5 Bold Moves Strategy was successfully executed in 3Q23 as IndiHome and its commercial aspects was legally integrated to Telkomsel. The reason and purpose of the Spin-Off are to maintain competitiveness and superiority of Telkom, facing competition in the Indonesian telecommunication sector.
IndiHome B2C segment has been integrated into Telkomsel and serving existing customers without a disruption. This landmark move is an important milestone to leverage leadership both in fixed and mobile to become the largest convergence operator nationwide with unbreakable internet service that allowed customers to have high-quality digital services with enhanced ease and convenience.
This initiative also a foundation to create a sustainable impact on community, supporting the acceleration of digital inclusion and digital economy, increasing the level playing field of the Indonesian telecommunications industry, and strengthening the company's business in the future.
IndiHome services will further strengthen Telkomsel's position in the telecommunications and digital industry in Indonesia by ensuring continuity and value creation as well as grabbing opportunities and capturing customer whole journey thru cross-selling activities, service integration, content synergy, and customer touch point integration without investment duplication.
Data Center Co
As the demand is growing significantly with the rising activities in digital business players, Data Center and Cloud remained as one of the areas that become our focus. As of December 2023, we have a total of 32 data center facilities (27 domestic and 5 overseas) that spread over 4 countries, namely Indonesia, Singapore, Hong Kong, and Timor Leste.
The presence of Telkom data centers is not only in the Western Region of Indonesia, but also in the Eastern Region of Indonesia, such as Makassar and Manado. Our data centers consist of an IT load capacity of 42 MW with an average total utilization level of 70%. In order to capture the opportunity in the Data Center business, we have been investing a significant amount of capital expenditure in this business.
As a result, during the full year of 2023, data center and cloud business booked Rp1.9 trillion of revenue or grew by 14.8% YoY.
Through our subsidiary, PT Telkom Data Ekosistem, with NeutraDC as the brand, we focus on developing business in Hyperscale Data Center (HDC) and Enterprise Data Center to serve large enterprise needs with various customer segmentations. Meanwhile, our Edge Data Centers are aimed to support local government, local ISP, and Small and Medium Enterprise (SMEs) businesses across Indonesia.
In 2024, Telkom has plans to increase its data center capacity from 42 MW to 55 MW. Expansion through NeutraDC, as a Subsidiary that focuses on the DC business, will be driven by an increase in capacity at the Cikarang Hyperscale Data Center by 13 MW. Apart from that, Telkom plans to start collaborating with strategic partners in developing its data center capabilities and capacity.
InfraCo
As Telkom moves forward with its “Five Bold Moves” strategy implementation, the company has established new entity InfraCo, namely Telkom Infrastruktur Indonesia, by the end of 2023. Telkom Infrastruktur Indonesia is poised to boost Telkom’s efforts in addressing Telco business challenges and creating additional values through enhanced network utilization, consolidated capital expenditure optimization, increased external revenue, superior network service offerings, improved operational efficiency, and strategic partnerships.
Moving ahead to 2024, Telkom Infrastruktur Indonesia is preparing for managing Telkom’s end to end network, with a specific focus on optimizing network utilization through the provision of wholesale Fiber-to the-Home (FTTH) services for wholesale businesses (B2B). This significant milestone underscores the company's dedication to provide exceptional service and ongoing innovation, aiming to contribute to the country's economic growth by expanding fixed broadband penetration and meeting the rising demand for increased connectivity.
Tower
Mitratel added 2,596 towers during 2023 from organic and inorganic activities, hence owns 38,014 towers in all regions of Indonesia, maintaining its position as the largest tower provider in Southeast Asia. In the full year of 2023, Mitratel successfully added 5,403 tenants, resulted in improving tenancy ratio to 1.51x compared to 1.47x in the last year.
In addition, Mitratel enjoys site diversification as around 58% of towers are located in ex-Java, while the remaining 42% are located in Java. Therefore, we believe the tower business still has the opportunity to grow, driven by increasing demand for mobile data and the upcoming 5G technology implementation.
On a stand-alone basis, in FY23, Mitratel recorded Revenue of Rp8.6 trillion or grew by 11.2% YoY, driven by tower leasing revenue. EBITDA and Net Income grew by 12.7% and 12.6% YoY, respectively. Both EBITDA Margin is expanding to 80.5%, increased by 1.0 ppt, and Net Income Margin is at 23.4%, increased by 0.3 ppt. Colocation number and the number of tenants grew by 16.9% and 10.4% YoY respectively.
Furthermore, Mitratel has demonstrated a strong financial position with a relatively low leverage ratio of 2.2x (net debt to EBITDA). This allows the company to better weather economic downturns and take advantage of growth opportunities while providing stability to shareholders.
Mitratel is also expanding to the Fiber-to-the-Tower business as part of its strategy to strengthen its product portfolio to become a digital infrastructure company. Mitratel achieved significant growth in its fiber optic network by adding 15,880 kilometers throughout 2023, resulting in a total network length of 32,521 kilometers.
B2B Digital IT Services
During the full year of 2023, Enterprise segment recorded Rp18.2 trillion in revenue, with B2B IT Digital Services and Enterprise Connectivity solutions as the biggest contributors in Enterprise segment. Telkom to keep strengthening their capability in cloud business, including to build strategic partnership with global tech players.
Following the spin-off of IndiHome to Telkomsel and to further implement the 5 Bold Moves Strategy, Enterprise Segment through B2B Digital IT Service Initiative has launched a new umbrella brand namely Indibiz in the third quarter of 2023 to focus on securing SMEs. Indibiz provides connectivity solution as well as digital platform and service to these SMEs and are categorized into Indibiz for Shophouse, Indibiz for Multifinance, Indibiz for School, and Indibiz for Hotel.
In this initiative, there are several areas that we are now focusing on, which are growing business on Government and Large Enterprise, transforming regional resources for B2B Digital IT Service business through Indibiz to capture SMEs market, and strengthening digital IT Services. Telkom to expect these efforts will leverage their capability to deliver digital solutions to our customers. [Source: Info Memo Telkom FY 2023]
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