A good day, and thank you for standing by. Welcome to Telkom Indonesia First Quarter of 2024 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the call over to Pak Ahmad Reza, SVP, Corporate Communications and Investor Relations. Thank you, Pak. Please go ahead. .

Thank you, Jason. Ladies and gentlemen, welcome to Telkom Indonesia conference call for the unaudited results of the first quarter of 2024. There will be an overview from our CEO and followed by the Q&A after the session. .

Before we start, let me remind you that today's call and the responses to questions may contain forward-looking statements within the meaning of safe harbor. Actual results will differ materially from projection or estimation and may involve risks and uncertainties that may cause actual results to be different from what we discuss today. .

Ladies and gentlemen, it's my pleasure now to introduce Telkom Board of Directors who are joining us today. First is Mr. Ririek Adriansyah, as our President, Director and CEO; Mr. Heri Supriadi, as our Finance and Risk Management Director; Mrs. Venusiana, as Enterprise and Business Service Director; Mr.

Bogi Witjaksono, as Wholesale and International Service Director; Mr. Budi Setyawan Wijaya, as Strategic Portfolio Director; Mr. Honesti Basyir, as the Group Business Deployment Director; Mr. Herlan Wijanarko, as the Network and IT Solution Director; Mr. Afriwandi, as Human Capital Management Director. .

Also present are the Board of Director of Telkomsel. First is Mr. Nugroho, as the President, Director; Mr. Mohamad Ramzy, as our Finance and Risk Management Director; Mr. Derrick Heng, as the Marketing Director; Mr. Adiwinahyu Basuki Sigit, as Sales Director; and Mr. Wong Soon Nam, as Planning and Transformation Director. .

I now hand over the call to our CEO, Mr. Ririek Adriansyah, for his overview. .

Thank you, Reza. Good afternoon, ladies and gentlemen. Welcome to our conference call for the unaudited first quarter year of 2024 results. We appreciate your participation in this call. First quarter of the year 2024 will be considered to be an exciting and dynamic year and had to be credited in term of business and economic stability..

We have witnessed the macroeconomic downturn and the direction towards higher inflation worsened by geopolitical situation.

The newly elected government and its administration in Indonesia post-election process will also be considered by our investors as the key player considering that these are our political, social, economic and business stability..

Amidst the potential recession and the rising of inflation as well as continuous increase of commodity, Telkom Group tried to improve the services and serving an even broader segment.

It is resulting in a stable ARPU and the increase of traffic indicating the improvement of customer productivity, supported by leading infrastructure to maintain dominance in the telecommunication sector. .

Telkomsat is becoming the big revenue contributor to the group, which manages B2C business such as mobile and fixed broadband. Telkomsat captured future customers by adopting a strategic localized approach, aim to maintain dominance and sustainable growth of convergence revenue share.

With the integration of FMC, Telkomsel Lite and value become more relevant, allowing guests to use in mass market segments through cross-selling and upselling within of sorts..

Telkomsel also maintained the dominance by implement consumer value maximization or CVM, supported by network optimization and quality leadership. On the B2B business, Telkom consistently implement right business strategy especially in the data center or DC monetization and InfraCo business investment..

We plan to fully unlock our data center business within the year of 2024 by finding strategic partners who could contribute not only capital, but also expertise, management and access to the DC market. The growth of B2B business, especially in data center business is very high.

We are fully aware that the opportunity in DC amidst in timely mark-to-market sizes. Meeting supply will create additional opportunities while lagging supply will absolutely wipe out opportunities. .

We think there is still an important opportunity for value creation at a very good market with extremely strong competition. And I updated to you on the topic of Telkom [indiscernible] in the past. Telkom Group, nevertheless, will implement organic and inorganic effort to pursue the capacity of 400 megawatts within 6 years onward to year 2030.

Infrastructure initiative has also been progressing with our business cycle. PT Telkom Infrastruktur Indonesia will serve as -- is mandated to commence infrastructure asset managed service in 2024 before it assume to have higher duty of the asset owner of Telkominfra further infrastructure in 2025. .

On the B2B digital business, our performance and business process enhancement between our business unit division and business unit subsidiaries produced positive results.

Synergy and efficiency among them have been established and now we are ready to come back with a product portfolio to serve for home and enterprise and small medium enterprise segments. .

During the first quarter of 2024, unaudited financial results, Telkom Group revenue grew by 3.7% year-on-year to IDR 37.4 trillion with EBITDA stood at IDR 19.4 trillion, increased by 2.2% from the previous year. Our successful effort in promoting data and Internet revenue as well as managing our expenses create better line of profitability..

On our operating net income, it grew 3.1% year-on-year to IDR 6.3 trillion after stripping out mark-to-market effects from GoTo. The company recorded positive consolidated revenue growth in first quarter '24 as compared to the same period last year with a good profitability level supported by growth of mobile business. .

Revenue increased 32.7% year-on-year to IDR 28.5 trillion, consists of IDR 21.9 trillion from mobile and IDR 6.6 trillion from fixed broadband business. Digital business revenue after consol remained strong.

Growth rate grew by 8.6% year-on-year and increased its contribution to mobile revenue to 89.9% from 84.4%, in line with the company's strategy to capture new strategic initiative and focus on quality customers..

Telkomsel continues to maintain dominance both in the fixed and mobile with the customer oriented approach and productivity improvement. We have expanded mobile customer base to 159.7 million while reaching 8.9 million IndiHome B2C customers.

Mobile ARPU remained stable with the improvement of payload as we provide better value to stay relevant with the market and grow the profitable revenue shares. .

We capture future customers through Telkom satellite and by youth as we aim to become largest corporation in entire Indonesia, securing the youth and mass market segment is important and part of our strategy to drive sustainable performance.

Telkomsel has prudently designed their products to better cater the customers' needs and experience while ensuring the relevance compared to other offerings in the market. .

Consequently, we believe this tailored products will mitigate the risk of price wars and internal churn given the customization for specific segment and localized quota allocation. We committed to continue the healthy conduct initiative, smart acquisition and securing quality customers as indicated by increased payload and customer consumption.

As a market leader, we aim to maintain profitability and act rationally to continue fostering healthy and constructive competition within the industry. .

In the first quarter of 2024, wholesale and international business segment contributed revenue detectable in the amount of IDR 4.8 trillion, growth by 17.8% as a result of growing international wholesale voice business and digital connectivity infrastructure business.

Data center business has been prepared as our B2B future revenue growth along with the double-digit growth of data center demand in Indonesia and the region with an initiative to find out a strategic partner in data center who owns not only capital, but also management capability and strong marketing channel. .

Telkom Group has initiated monetization and hope that to finish the monetization process by end of 2024. Telkom has provided the data center services with a capacity of 42 megawatts with an average utilization of 70%. During the first quarter of 2024, Telkom has recorded data center and cloud revenue of IDR 449 billion, which grew 6.4% year-on-year. .

PT Telkom Data Ekosistem, which was established in 2022 and operate under the name of NeutraDC as the brand has been working with the local government, various scales of business and even hyperscale companies that need a lot of data space.

Currently, NeutraDC is focusing on expanding its ready-to-use capacity by 18 megawatts by end of 2024 at the Cikarang Hyperscale Data Center with various customer segment, including among others, hyperscalers, banking as well as government. .

Our existing competitive advantages over the competitors, including fiber will further be monetized under our subsidiary, PT Telkom Infrastruktur Indonesia, which has been established since the fourth quarter of 2023. Telkom is focusing towards unlocking new potential or maximizing the value of its fiber to data service.

We will generate additional synergy value by optimizing the network optimization, consolidating capital expenditure, boosting external revenue, delivering premium network services, financing operational efficiency and establishing strategic partnership. .

Telkom Group reduced its remaining idle capacity significantly to [indiscernible] by B2B business areas.

Commencing your preliminary talk, PT Telkom Infrastruktur Indonesia is actively preparing for daily operational readiness and conduct dry run exercise as a learning stage to ensure operational excellence and manage service operation and seamless transaction to -- of Telkom end-to-end network infrastructure assets for the coming year. .

Currently, Mitratel has 38,100 towers after organically added 120 towers in the first quarter of 2024, maintaining its position as the largest tower provider in Southeast Asia. During first quarter '24, Mitratel successfully added almost 400 tenants resulted in improving tenancy ratio to 1.52 from 1.46 in the same period last year.

In addition, Mitratel enjoys site diversification as around 59% of towers are located ex-Java, while the remaining 41% are located in Java..

On a stand-alone basis, first quarter 2024, Mitratel recorded revenue of IDR 2.2 trillion or grew by 7.3% year-on-year, driven by tower leasing revenue. EBITDA and net income grew by 9.9% and 4.0% year-on-year, respectively.

EBITDA margin expanded to 83.5%, increased by 2 percentage point, and net income margin was 23.6%, decreased by 0.8 percentage points. .

Colocation number and the number of tenants grew by 16.6% and 8.4% year-on-year, respectively. Furthermore, Mitratel demonstrated a strong financial position with a relatively low leverage ratio of 1.7 net debt to EBITDA as compared to the industry.

This allows the company to better withstand economic downturns and take advantage of growth opportunities while providing stability to shareholders..

Mitratel continued expanding its Fiber-to-the-Tower business as part of its strategy to strengthen its product portfolio to become a digital infrastructure company.

Mitratel achieved significant growth in its fiber optic network by adding around 3,700 kilometers during the first quarter of 2024, resulting in a total network length of 36,300 kilometers. .

Enterprise segment recorded revenue of IDR 4.5 trillion during the first quarter of 2024 with B2B IT Digital Services and Enterprise Connectivity solutions as the largest contributors in the Enterprise segment.

We continue to strengthen our capabilities in the cloud business, digital IT services and cyber security, including building strategic partnerships with global technology players. In this initiative, there are several areas that we are now strengthening, which are business development in the government segment.

Large enterprise will focus on B2B platform and vertical solutions. [ In the year '23 ], we were focusing on Indibiz to capture the SME market. .

On the ESG side of the initiative, Telkom has launched EXIST, ESG Existence for Sustainability by Telkom Indonesia program in which Telkom's sustainability performance achievements are described in each of the following three sustainability pillars. .

First, right environmental approach, focusing on the environmental aspect, Telkom has proactively taken concrete actions, such as reducing carbon emissions through waste management activities, especially e-waste, and rehabilitating coral reefs.

Telkom Group has used environmentally friendly energy sources such as solar cells, biodiesel and micro hydro. In addition, Telkom Group also supports the use of environmentally friendly transportation by encouraging the use of electric vehicles among its employees..

Second is right people. The efforts to develop HR competency has continued to be strengthened through intensive training and education programs. Concrete steps have been taken in managing the Digital Talent Readiness Program, an initiative aimed at developing employees' digital capabilities to adapt to changes in digital technology.

We focus on developing working environments which support diversity and inclusivity..

Third one is right governance. Telkom consistently implements sustainability governance, business ethics, and compliance with applicable regulations and supervises to ensure compliance with relevant norms and business ethics by establishing a Data Protection Officer or DPO organization with a more precise map of roles and functions.

The company also refers to the provisions of international standards, one of which is ISO 27001, to intensify data protection and security. .

That is the ending of my remarks, and thank you for your time and attention. .

Thank you, Pak Ririek. We will now begin the Q&A session.

[Operator Instructions] Operator, may we have the first question, please?.

Our first question comes from Piyush Choudhary from HSBC. .

This is Piyush from HSBC. Three questions.

Firstly, on the mobile, how has been the impact of Telkomsel Lite plan? And any changes on your mobile revenue outlook for 2024 post this plan launch?.

Secondly, any update on spectrum auction timelines? And thirdly, on IndiHome B2C, what is driving the revenue down quarter-on-quarter and before IndiHome B2C ARPU is also down.

So any reasons for the same? And what's the outlook for IndiHome B2C revenue?.

This is Derrick. Your first question on the impact of Telkomsel Lite plan. The traction of Telkomsel Lite is aligned to our internal plan. We have seen improvement of payloads. We have seen renewal trends in less than 1 month..

However, we are cautiously monitoring progress and we will adjust as necessary with regards to the market movements. I mean we all know that the prepaid market is highly dynamic. So we will always look at whether the impact is still manageable. But our focus is on targeted segments. We are looking at predominantly Java with localized quota offerings. .

So just to add on the one question, I think you can see the results today, both traffic, our traffic profile... .

Hello, I -- lot of echo, we can't hear you properly. .

Yes. To add to what Derrick answers, this is Sigit. For the first question about the Telkomsel Lite. I think if you take a look on our result on Q1.

Today, we see that the digital business of broadband, we are growing about 8.6%, and that is one of the things that we've seen that our productivity of broadband messaging in mobile are showing the positive progress. .

And especially, if you take a look also on the traffic growth, it is 14% compared to last year. I think it is also improving. And on top of that, I think from the Telkomsel Lite perspective, we've seen that this -- our strategy has been right to address various segments, including mass and also youth..

And #3 question on IndiHome B2C revenue as well as ARPU. I think from the point of view of the group, our fixed broadband are a bit stable. However, after the first 6 months of legal day one, we are doing the stability period where we're actually migrating the consumer business to Telkomsel.

And then I think starting to this year, especially in Q1 and probably also Q2, there are still alignment needed between consumer type of businesses as well as the enterprises. .

So if you take a look on certain segments like, for example, consumers in IndiHome, there's a little bit of revenue down on a Q-on-Q basis as well as ARPU down. That's due to the alignment of the customer type.

However, if we see from the progress on the sales side, for example, we're able to add the [ net of IDR 222,000 ] in the quarterly basis in Q1, which showing the positive progress. .

And on top of that, what we can update to you that we are progressively also increasing the penetration by having -- addressing a mid- to low segment as well in order to continue to penetrate our fixed broadband penetration across the nation. .

Yes. To add on the first question about the revenue outlook. This is Ramzy from Telkomsel. We still maintain our outlook for mobile by low to mid-single digits. And on the spectrum auction, till now, I think we still wait for the official announcement from the government as they are preparing the commentation and also the term and condition.

We expect that the option would be at the latest in the second half this year. Thank you. .

Our next question comes from Kelsey Santoso from Goldman Sachs. .

This is Kelsey. My question is on mobile. So both prepaid and postpaid subscribers were quite flat Q-on-Q but ARPU continued to contract. So I wanted to understand what led to the decline and why this hasn't translated into subscriber growth.

And perhaps what you're seeing on the ground when it comes to competition? And how do you expect this to trend in the coming quarters?.

And then my next question is on the cost side. I saw that you managed to drive efficiency in several line items.

Could you elaborate on what led to the reduction in O&M expense quarter-on-quarter?.

I think the people -- Ramzy continue with answer. Let me address about ARPU in mobile. If you see the ARPU in mobile, it is comprised of the digital connectivity legacy -- digital connectivity revenue as well as revenue coming from our legacy and in this case, our voice and SMS, which is also a decline in the same time. .

If you only see the ARPU coming from the digital connectivity, it is supposed to be increased from time to time. I think with smaller contribution coming from the legacy from time to time, we eventually will see the growth in the ARPU. So that's the reason of I think ARPU conversion, as you mentioned. .

Yes. If I may add also, I think, Kelsey, if you compare to quarter-by-quarter, I think there's also a seasonal impact on Q1 compared to Q4 that also impacting the mobile ARPU. And on top of that, I think we see also competition on the ground. Our ARPU effort are still above the peers.

So this is showing that we actually are always able to monitor and maintain the profitability as compared to peers. .

And in terms of competition, where we launched also live and also we have some portfolio that we have. We are actually able to maintain the competition level across the nation, especially in Java, where we have comparison market shares against the peers. .

Yes. To respond on the cost efficiency side in Telkomsel, actually, on the Q-on-Q, we have O&M growth by minus 2.7% which is one of the most dry quarter in last year. Last quarter, we have one-off impact on the surface tower, which is particularly related with the inflation application on the contract.

The other part is also on the WSA contract with parent, which is related with our IndiHome operation currently. .

Next question comes from the line of Marissa Putri of UBS. .

So my first question is sort of a follow-up to the previous question on IndiHome. Granted that ARPU decline as you expand your target market, but decline in ARPU is so far also not offset by growth in subscribers. And you also mentioned about alignment happening during the transition period.

Can management probably elaborate more on this? And what can we do on IndiHome side?.

And my second is, I guess, correct me if I'm wrong, but I think the by.U quota is also not limited by areas or not just for local quota.

So what is group strategy to kind of limit or ensure that there's no cannibalization happening from by.U to main Telkomsel brands?.

And lastly, it's a bit more kind of accounting maybe question. So revenue from nonmobile, I think, has been very erratic on Q-on-Q basis.

So if you see consumer fixed and also enterprise business, I think in the last earnings call, you mentioned that the group deliberately not pursuing some business as you're trying to wind down some segment in enterprise.

So how should we think about these 2 segments? And are there any accounting issues as you are separating IndiHome for the parent as well?.

Yes. Allow me to answer the #1 question on the IndiHome market. I think as we also kind of mentioned to our company strategy to expanding to [indiscernible] of course, the ARPU will also compensate the [ earnings level ]. However, our strategy is not always only doing a location to fit to those segments.

But also we're trying to also add up some in case of the ARPU by shifting the customer and focusing our premium products to the higher speed and higher ARPU from [indiscernible]. .

So remember also to focus on 50 and 100 mbps where we are actually very interested and trying to increase the contribution of those higher ARPU accounts to balance the composition of ARPU decline where we are addressing the lower segments besides the alignment that we're talking about between the enterprise and also consumers. .

This is Derrick. I'll answer the question on by.U. We have not seen any cannibalization of by.U from the customer segment perspective. by.U is our strategy targeting at the youth and the digitally savvy. When we look at the cohort of by.U customers, in fact, we are getting new customers for this group of young customers. .

At the same time, even if there is any migrations from our prepaid to by.U, the ARPU actually increase for this youth segment. So it is something that we will continue to focus on this underserved segment because the youth is our customers of tomorrow, there are specific strategies that we have done to engage this group of unique customer segments. .

Yes. And to add to that, I think for the by.U, besides the branding strategy that we have been continuously monitor, internal rotational terms are limited.

We also limit some area like Papua, Maluku, where we have seen that the price will not -- will be very much needs to be maintained, and we are not having that kind of product or within those typical area that we are actually strong and dominant in those area. .

Yes. To add, the youth segment, it's aligned to our FMC strategy where we look at the household as a segment. So within the household, not only you have the high-value decision maker, the family decision maker, but we're also engaging the more value segments as well as the youth in the family.

So it is part of our strategy to look at household as an account rather than an individual mobile line. .

On your third question, Marissa, I understood that's quite -- I think to see what the revenue recognition coming from the enterprise, especially when -- with regard to the, I think, IndiHome case.

As we previously mentioned in, I think, a previous call, there's an issue of kind of how we recognize the revenue from IndiHome separated to enterprise and also the consumer. .

Especially for the enterprise side, whenever we use basically the brand of IndiHome for connected subscriber from the enterprise. So we need to see from principal and agent discipline on this one. So basically, we need to do a kind of accounting treatment on this one.

We are in the process of fixing this one, later we are going to have the fixed, let's say, answer on how we're going to treat this one in the more, I think, from waste. .

But if you see overall, the revenue that we recognize from this is not changing, whatever the revenue we get from external customer, but from consumer and enterprise altogether becoming total revenue in the group level. I think we're going to answer this to you directly how we see -- how accounting treatment on this side, about this. .

Our next question comes from Arthur Pineda from Citi. .

Three questions, please. Firstly, on mobile competition. Are you seeing any reactions from your competitors following the launch of Telkomsel Lite. It's been a few months since then.

Just wondering if there's any worsening in terms of competition?.

Second question I had is with regard to cost optimization programs.

Are you able to elaborate target cost savings for this year probably from your fixed mobile convergence as well as shared network optimization?.

And third, if I can just clarify, I know this is, you explained on earlier, on the B2B versus B2C revenue. So basically, it's just a reclassification between Telkomsel and Telkom.

Is that correct? In that case, how does this actually impact the transaction value wherein Singtel entered into the deal? Because presumably, there were certain assumptions made on consumer revenue spend. .

Arthur, can you repeat on the third question, please? I think your voice is quite soft. .

Yes, sorry. On the third question, I just wanted to understand, on the B2B -- sorry, B2C revenues, I understand it declined. Is it just mainly a reclassification between consumer and enterprise? So it's excluding the revenues from Telkomsel to Telkom.

If so, how does that actually impact the transaction values wherein Singtel entered into the deal? Because presumably, there was an idea in terms of the revenues generated by B2B -- B2C. .

This is Ririek, I will answer the first question. Yes, Telkomsel has prudently designed products such as Telkomsel Lite. We want to better cater to certain mass value segments, and we want to ensure the relevance of our pricing competitiveness as compared to other offerings in the market.

So consequently, we believe that these tailored products will mitigate the risk of price wars and internal churn. And given the customization of these specific segments, and with very targeted localized quota consumption and allocation, we are committed to continue this healthy conduct initiatives.

The acquisition is sharp, and it is targeted and we want to ensure quality customer acquisition, and it is indicated by the increased payload and the customer consumption. So as a market leader we will strive to maintain profitability. We will act rationally to continue fostering healthy and constructive competition within the industry. .

To respond on your second question on the cost optim. Actually, we continued the effort that we already captured since the beginning of the FMC integration. Last year, we effectively succeed to book for the cost saving around IDR 100 billion plus the uplift revenue about IDR 400 billion.

This year, we expect to expand this cost optimization programs, which includes on the content cost aggregation and also the customer interaction management that we provide the agent as well as the integration of the digital touch point that provisionally conducted through different applications such as my IndiHome, my Telkomsel as well as my Orbit.

This year, we plan to integrate those apps to become one. And also the sales force management that we used the performance-based incentive rather than per headcount base. So all of these initiatives would expect to also contribute to additional cost improvement in our expense, Arthur. .

Any number related to that? Is there any specific cost savings targets?.

We do not disclaim the exact number. But overall, the uplift, both from revenue as well as the cost impact for this synergy, we expect this year around IDR 1.8 trillion. .

So basically while it is supposed to be seen from the group level as well because some of this efficiency going to also happen in the parent company, we also get some efficiency in the CapEx side, the way we basically installed per lines supposed to be also cheaper compared [Indiscernible] and also, I think the cost operation and maintenance per line in [Indiscernible] is also supposed to be a decline as well.

So this is going to accumulate it in the group level. .

Sorry, the third question is probably not answered yet. .

Arthur, your fourth question with regard to B2B and B2C revenue reclassification, and how does that affect the FMC valuation, right? Is that correct?.

Yes. So firstly, is it merely a reclassification that we're seeing. That's why we're seeing that decline on the Telkomsel bookings because you're booking it now as enterprise and 2 how does that relates to the transaction value that was enacted before [especially] there were some assumptions on revenues back then, now being moved on to enterprise. .

Right. So Arthur, thank you for that question. At the point of the valuation of the IndiHome business, it is purely based on the B2B -- B2C IndiHome revenue. So this is purely a reclassification some of the revenue at the time of reporting group under IndiHome, which is consumer.

So this is an exercise to kind of clean it up, to classify it according to the different segments. So as far as the valuation of the FMC business are concerned, it remained consistent, and it does not have any impact. .

Our next question comes from Henry Tedja from Mandiri Sekuritas. .

Perhaps 2 questions from me related to the Telkomsel Lite. So allow me to deep dive on this.

So just curious the response from the competitors in the market, how do you see response on the ground? Do you see any reactions from -- Indosat? And then second, you mentioned how Telkomsel 1 to maintain the profitability, healthy market conduct and basically in the market.

So just curious, is there any solid plan from the Telkomsel to increase our product price this year? Sorry, perhaps one more thing on the data traffic growth, we highlight that you booked a strong data traffic growth in the first quarter, right? What are the key drivers of the strong data traffic growth in the first quarter? And should we expect this figure or trend to be sustainable in the following quarters? So perhaps those are my questions.

.

This is Ririek. I will address your questions on Telkomsel Lite. So Telkomsel Lite is a product, we target at increased product competitiveness in the market while we ensure that the ARPU uptrend remains intact through productivity gains, and this is aligned to the income, and usage and the ability to pay for the value segment.

So we will maintain this subscriber base and growth while adhering to a healthy market conduct, ensuring the profitability remains uncompromised.

So if you look at the construct of Telkomsel Lite, it leverages on local and a little bit of the nationwide quota just to provide the ability for a very targeted rollout to optimize relevance and to achieve yield comparable to competitors, which covers mor than 200 nationwide. So this is our segment of focus here.

As mentioned earlier, we also support the FMC rollout strategy, which as a household, there are layers of different customer segments within the family. .

So this is able to help us grow and serve segment. Your question on competition and response from our competitors.

So I think we will all continue to apply the right pricing and offerings and if we look at -- especially to existing base, we talk a lot about CVM, where we'll be able to be granular, where we are able to be very relevant to the usage of our customers. So that we will expect that the mobile ARPU to stabilize and increase in line with the usage.

So we believe that competitors will also continue to improve profitability and therefore maintain healthy market conduct. So this is our take to the industry. .

Can I add a bit on part, Ririek. I think explanation on this one. Previously, we only have a single brand for prepaid. Basically, it is responsible around 90% of our revenue to that one.

So it is not flexible for us to, let's say, to address what specific reason to address this market, new segment and so on by jeopardizing the one brand that carries so much revenue for us. The second thing that you don't need to worry about, this is mostly in local quota. And this is acquisition package.

After the subscriber need to top up, cannot buy the new one again on this one. So it is also limit basically the internal churn by having, let's say, internal churn [Indiscernible] to our customer base. .

The third is because this is comprised of mostly local quota. It means not going to create the kind of competitive unnecessary in the area in which we are not subjected. So this is also a limit competition in the area that we have targeted. And the third, in terms of price, we are still premium compared to our competitor on this one.

This is also kind of a thing that you need to see -- to worry on this one. The last one, actually, if we compare to many, many years back, maybe about 10 years ago, that's still big elasticity in the market. And we can still adding quite many subscriber base at the time. So when we decrease the price, we're going to have good elasticity.

With the current condition, I think the market already almost mature you, don't expect too much, I think, elasticity on this one. We need to responsible to manage -- I think market condition. I believe other operator also need to see the same way. I think that's an additional explanation to, [Indiscernible]. .

And on your third question on data traffic. I think what we've seen -- the reasons why the data traffic increased in Q1, just one cost, there is increase of data users of 11% compared to last year.

And this equates also come along with productivity of payload per subs that we've seen are also improved which I think is one of the key [Indiscernible] we take a look on our success in our product portfolio strategy today and going forward.

And with the improve of productivity with our offering so far, we believe that if we can maintain those effectiveness and consumptions within the network and within our services, that will also lead to the system... .

Yes. Just to come on the profitability side, I think with all the initiatives that we've done, actually, we want to simulate the productivity of the customer but on that point, I think the resource has already been there. So it doesn't impact significantly to additional costs.

And also from time to time, we monitor our network quality as well as the productivity and for that point, I think we still expect that we can address the profitability level in Telkomsel around 46% to 48%. .

Our next question comes from [Indiscernible] from JPMorgan. .

This is [Indiscernible] JPMorgan. Management, can I just ask, is it possible for you to give us a breakdown of the changes in subscriber in the mobile customer category, meaning you're targeting mass and youth at the moment and you also have your traditional mobile customer.

So what's the increase and decrease in category that gave you a flat quarter-on-quarter mobile subscriber number? And my second question is -- so you mentioned that Telkomsel Lite is currently meeting your internal goal. I'm just wondering if you can share that goal with us.

And looking at the quarter-on-quarter flat on subscriber number, will you in the future, make the plan more competitive because sort of you've reached your market share target. And my last question is, I'm not sure if I hear it right, at the start of the briefing, you mentioned that you are looking to offer data center business by the end of 2024.

Could you just give us more detail on that, please?.

This is Ririek. To answer your question, the profile of our customers. So with the launch of Telkomsel Lite, just to share the traction has been positive.

When we had Telkomsel Lite and By.U as our sub-brands, it helped to serve the youth and mass market segment while leveraging on personalized offers to maintain the dominance in ex Java to drive the ARPU through CVF and we could see the improvement of our Facebook share.

So this strategy was to really target a segment, and it will help us to address future customers. So by adopting a strategic localized approach we aim to minimize competition, impact and sustainably grow our market share. .

We also talk about these new plans, it's really an integration to our FMC strategy. So Telkomsel Lite and By.U will become even more relevant as it allows us to engage in cross-selling, upselling to households where these form the part of the household segment. So we will continue to maintain margin optimization and market share retention.

So it is important to capture these customers of tomorrow, since we aim to become the convergence operator to grab share of these underserved customers.

So this is our approach to expand our fixed broadband business into new segments, ring-fencing existing starts through retention and CVM and to drive better customer journey so that the main objective is to drive sustainable performance while maintaining dominance, productivity as well as to elevate the customer experience. .

So let me answer the second question.

I think [Indiscernible] Q-on-Q subscriber growth is -- one of the things due to the seasonality because we compare Q1 compared to Q4 and if you take a look on what we have so far in terms of our market share and Facebook shares across the quarter 1, there's been internally seen that it's an improvement of what we have done so far, has an increase of Facebook shares as well as the data users.

It also show that there is a traction on the broadband penetration and mobile, broadband penetration and usage across our subscriber. And on top of that, I think we've always been -- I mean, in terms of subscriber base, there's always the customers who have multi [Indiscernible] We always manage to not continue to stay with us.

If there's no more in our networks. However, I think mainly the Q-on-Q flat is due to seasonal.

Can you repeat the third question?.

The third question regarding the data center. .

Okay [Indiscernible] do you want to answer the data center, what is the plan for 2024 on the data center. .

[Indiscernible] this quarterly operate already [32 data center] [Indiscernible] is about [18 megawatt]. So this year, we also have a plan to add more capacity up to 18 megawatts [Indiscernible] will have a 60 megawatt capacity. .

Our next question comes from the line of Sukriti Bansal from Bank of America. .

Just want to, I think, follow up on the previous question on Telkomsel [transaction]. Is it possible for you to just roughly quantify what percentage of your customers, right now are on Telekomsel Lite and where do you see this going as an overall base of your customers, what is your target on Telekomsel Lite.

Also, the data payload increase that we have seen in this quarter, is this naturally driven by the launch of Telkomsel Lite?.

This is Ririek.

You have more questions? One more question?.

Yes, one more question. Maybe I'll just list the question and then you can answer both. So the second question is you said that overall in the year, you expect IDR 1.8 trillion of synergy impact from IndiHome integration.

In 1Q, is it possible to quantify what -- if there was any impact? And is there any way to break up how you see this in the coming quarters through the year? And just one quick one is, we've seen a couple of major reclassifications in the last 2 quarters in 4Q with the voice revenue being reclassified and the B2B IndiHome revenue being reclassified in this quarter? Are the major reclassifications now behind us? Or are there more that we can expect in the coming quarters? That's all.

.

This is Ririek. Just to share some thoughts about our color on Telkomsel Lite. It's still early days for Telkomsel Lite. What we want to share is the traction of the Telkomsel Lite has been positive, and it was really meant to serve the mass market segment, and we want to leverage on personalization to drive our engagement in Java.

If you look at the post Telkomsel Lite, so we have recorded a higher traffic growth of plus 14.4% year-on-year in Q1 as compared to the 9% year-on-year growth in the last FY. We also look at the increase of data user that's plus 11% year-on-year.

So the main objective of Telkomsel Lite is really to maintain and improve our market share, our customer productivity and profitability. .

To add to the data payroll increase, I think besides the Telkomsel Lite initiative, of course, we have a lot of initiatives on our existing customers who also drive productivity on our side.

And I think mainly in these quarters, what we've seen is that the growth of digital business of 8.6% have come from both the acquisition product, which we use Telkomsel Lite as a brand and also others subsequent portfolio in the existing like CVM and all others who also boost up the productivity of our subscribers.

So that's why I think if you can see the increase of traffic have been very positive on our side. .

On the reclassification of the B2B IndiHome from the total IndiHome revenue, we're going to, I think, finalize by next quarter [Indiscernible] the impact of this in mid-second quarter of this year. .

I think if you relate to the reclassification of the legacy business last year, it is a one-off reclassification that we did for the IFRS. And it's a different case on this kind of reclassification that we have in IndiHome. So it is not a rebating reclassification that we did, which is 2 different subject that we are discussing to clarify on that. .

To add on your last question about the IDR 1.8 trillion EBITDA uplift break down. Internally, we have yet breakdown. It's comprised from uplift revenue either from cross-selling or upselling both Fixed and Mobile. Secondly, comes from the OpEx efficiency that some of them already been discussed earlier.

And third is from the CapEx, a lot of that comes from both parties, Telkomsel as well as our parents Telkom. But we do not disclose this in detail to you now. .

We have no more questions from the phone line. I would like to hand the call back to [Ahmad Reza] for closing remarks. .

Thank you, everyone, for participating in today's call. We apologize for those whose questions couldn't be addressed. So do you have any further questions. Please don't hesitate to contact us directly. Thank you. .

That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines..