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Lite Up Your Connection

In recent years, Telkom has undergone a significant transformation. Once dominant in the consumer market, it is now making aggressive and innovative strides into the B2B segment.

With meticulous strategic steps, including the launch of Telkomsel Lite and a focus on FMC, Telkom is poised to tackle challenges and seize opportunities in the evolving market.

Telkom's shift to B2B services marks a strategic move to broaden its service offerings beyond the traditional B2C market. By targeting small businesses and local governments, Telkom provides comprehensive service solutions that cater to a wide array of technological needs.

For instance, Telkom’s offerings for small hotels or local government agencies can integrate internet services with cashless payment systems like QRIS, enhancing user experiences and operational efficiency. 

Telkomsel Lite was launched as a strategic response to the increasingly tight competition in the mobile data market. 

This product is rolled out exclusively in regions experiencing high competitive pressures, allowing Telkom to directly address market challenges. Consequently, the pricing of Telkomsel Lite packages varies from region to region, tailored to meet the specific competitive conditions and consumer demands of each area.

Source: Telkomsel

Telkomsel Lite offers competitively priced data packages, helping Telkom attract customers from price-sensitive market segments without sacrificing profit margins. 

By leveraging advanced analytics and CVM technology, Telkom can provide packages tailored to the specific needs of customers, thereby enhancing customer satisfaction and retention.

Furthermore, Telkom is currently experiencing a stable CAPEX cycle, with major investments already completed. This positions Telkom to benefit in the coming years from reduced CAPEX surprises, focusing instead on reaping the benefits of its prior investments.


Operational costs, particularly in HR, are expected to normalize, thereby enhancing overall efficiency. For example, the business transformation undertaken by Telkom in 2023 has resulted in significant operational cost reductions in 2024, with a focus on efficiency and resource optimization.

Moreover, the FBB segment is poised for consolidation, with many smaller players struggling to compete with Telkom's scale and resources.

With a market share of 67% in the FBB space through its IndiHome service, Telkom's dominant position is affirmed. Although there has been a slight decrease in market share due to competitive pressures, initiatives like Telkomsel Lite are expected to stabilize market share. 

Source: Telkom Indonesia

Smaller operators may face challenges in maintaining their operations, leading to potential mergers or acquisitions. With its scale and capabilities, Telkom is well-positioned to capitalize on this consolidation.

The trend towards FMC is evident, with Telkom leveraging its cellular operator capabilities to enhance its FBB offerings. Only operators with strong mobile and fixed-line infrastructure can successfully implement FMC, creating a competitive advantage for Telkom. The focus is on enhancing fixed broadband penetration through integrated services, making FMC a key driver of growth.

Recently, investigations have been initiated into alleged mismanagement of TLKM’ subsidiary. While this news might appear concerning at first, it is actually a positive step towards restructuring and improving corporate governance.

In our view, TLKM has the opportunity to leverage this situation to enhance its transparency and accountability, which, in turn, will strengthen both investor and public trust in the company.

From an investment perspective, Telkom's current stock price is attractively low, making it a compelling choice for investors. This valuation is also reflected by the decrease in the EV/EBITDA ratio.

Source: Bloomberg

Furthermore, the entry of foreign investors often gravitates towards companies with large market capitalizations, which could serve as a catalyst for TLKM by enhancing stock liquidity and attracting more attention from global investors, particularly if the anticipated US market downturn materializes.

However, it's important to note that though we prefer EXCL to be our stock pick in telco industry, we think that with current TLKM stock price and positive future prospects, acquiring TLKM shares could be a wise investment decision.


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