Research Today: Telkom, defensive quality
Our analyst Wilianto went to Telkom Indonesia (TLKM IJ) analyst meeting yesterday. We believe that domestic demand is still the most defensive story in Indonesia. Mobile subsidiary Telkomsel believes that tariff has reached bottom in 4Q08. Competition will be focusing on promotion, advertisement, brand equity, network quality, and coverage. With the strongest balance sheet in the sector, we believe that TLKM will emerge stronger from the crisis.
Major points from the TLKM report:
TLKM believes tariffs bottomed in 4Q08 and that the price war is coming to an end
Telkomsel subscribers continue to grow
Telkom flexi gain strong traction
Broadband contribution continues to increase
Management acknowledged that they are looking into potential investment in Iran and fully aware of the political risk and potential backfire from its shareholders.
Market sentiment will remain fragile until management decides on Iran.
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