1、1 August 2024Deutsche BankResearch Asia Indonesia Telecommunications Telecommunications Industry Indonesia Telecoms Date Forecast Change Flattening of competitive landscape hinders TelkomMarket seems stable-creating a base to build fromIndonesias telcos reached the halfway point for the year in mixe

2、d fashion,with Indosat doubling underlying NPAT YoY,while Telkom was flat.Revenue growth is decelerating,with Telkoms service revenue up just 1%in 2Q and Indosat up 11%,representing a 4pp and 5pp slip from 1Q growth rates.This isnt surprising of course considering the pricing promotions which have d

3、riven cannibalization at Telkomsel in particular.We think theres an understanding that market share losses will not be tolerated,which we think sets the market up for price stability over the next year,if not incremental pricing improvements.Management messaging on pricing was fairly muted,noting no

4、 real change in pricing recently.We note inside however that Telkomsel has retaken net add leadership,which we think is a precondition to it attempting to lift pricing at some point.We assume little changes in making our forecasts.However,there is the longer-term trend,of Telkoms premium image and p

5、ricing being under threat from peers.Indosat has done well since its merger in lifting service levels and perceptions,and should further consolidation happen in the market,that pressure should rise.However,we believe this is now well understood,and Telkoms share price is reasonably attractive,in our

6、 view.We cut our target price on Telkom from IDR4,300 to IDR3,700,due to its sluggish revenue growth causing us to reduce our NPAT estimates by 5%and 8%this year and next.Our TPs are based on our DCF valuation(risk-free rate 7%,risk premium 4.5%,beta 0.75-0.8x;WACC 9.9%-10.1%,and terminal growth of