OSK TLKM (TP IDR8500– NEUTRAL) 1QFY10 Results Review: Lingering Concerns

Telkom’s 1QFY10 results were broadly in line with our and consensus expectations The key takeaways were: (i) the 9% sequential growth in mobile revenue, a reversal from the double-digit contraction in 4Q09 and consistent with management’s guidance of improved revenue momentum from March, and (ii) the recovery in EBITDA margin due to one-off costs and staff redundancy payment booked in the previous quarter. We believe that concerns over escalating competition, sticky capex and rising commodity prices in 2H2010 on earnings would cap stock sentiment.