THE BUZZ
Telkom released its FY09 results yesterday. Its headline profit came in at IDR11.3bn on the back of revenue of IDR64.6bn, representing a 9.4% and 6.7% y-o-y growth respectively.
OUR TAKE
Numbers marred by higher cost and weak mobile revenue. Core FY09 profit, strippingoff
forex gains of IDR973bn, was 15% below our forecast and 14% under consensus estimate as ballooning costs in 4Q09 led to severe EBITDA margin erosion q-o-q by 12%-pts
to 46%. Operating cost surged 27% q-o-q, driven mainly by the 42% q-o-q rise in staff cost and operating and maintenance expenses (+37% q-o-q). Surprisingly, mobile revenue plunged 18% q-o-q from +7% q-o-q in 3Q09, a sharp divergence from the 12%-13% q-o-q growth posted by its 2 rivals, exerting further pressure on revenue share.
Improved data traction. Telkomsel, Telkom’s 65%-owned mobile subsidiary, posted
revenue growth of 12% y-o-y on the back of a 25% y-o-y growth (+15m) in its subs base.
Consistent with industry trend, Telkomsel’s data revenue grew a strong 20% y-o-y, eclipsing the high single digit growth in voice revenue, contributing 29% of overall mobile revenue. It added 1.9m subs in 4Q09 (+16.3m), driving total subs 2% higher q-o-q to 81.6m at end-2009. Growth was driven in the main by strong take-up for the simPATI prepaid pack, which netted 1.1m new subs in 4Q09 in FY09. We estimate Telkomsel’s subscriber market share at circa 49% in 4Q09, a slight deterioration from 50% in 2008. The guidance is for mobile revenue to grow at high single digit in FY10, a slight decline in EBITDA margin and capex of around USD1.4bn.
Under review.
We are maintaining our NEUTRAL recommendation and target price pending
the conference call with management this morning. Given the disappointing numbers, we are likely to revise our target price downwards.
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