Ladies and gentlemen, thank you for standing by, and welcome to the Telkom's First Quarter of 2020 Results Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today. .

I would now like to hand the conference over to your first speaker, Mr. Andi Setiawan. Thank you. Please go ahead, sir. .

Thank you, Rachel. Ladies and gentlemen, welcome to PT Telkom Indonesia Conference Call for the First Quarter of 2020 Results. We released our first quarter of year 2020 results on 30 of June 2020, and the reports are available on our website, www.telkom.co.id.

Today's presentation is available on the webcast and an audio recording will be provided after the call for the next 7 days. .

There will be an overview from our CEO and after that, all participants are given the opportunity to participate in the Q&A session. .

Before we start, let me remind you that today's call and the response to the questions may contain forward-looking statements within the meaning of safe harbor. Actual results could differ materially from projections, estimations or expectations [ for ] during today's call.

These may involve risk and uncertainty and may cause actual results to differ substantially from what we discuss today. Telkom Indonesia does not guarantee to any actions, which may have been taken in reliance of the discussion held today. .

Ladies and gentlemen, we conducted our Annual General Meeting on 2019 of our audited financial results on June 19 and the new of Telkom's Board of Directors who are joining with us today, Mr. Ririek Adriansyah as President, Director and Chief Executive Officer; Mr. Heri Supriadi as Finance Director; Mr.

Herlan Wijanarko as Network and IT Service -- and IT Solution Director; Mr. Edi Witjara as Enterprise Business Service Director; Ms. Venusiana as Consumer Service Director; Mr. Budi Setyawan Wijaya as Strategic Portfolio Director; Mr. Fajrin Rasyid as Digital Business Director; and Mr. Afriwandi as Human Capital Management Director. .

Also present are the new Board of Director of Telkomsel, Mr. Setyanto Hantoro as President and Director; Mr. Leonardus Wahyu Wasono as Finance Director; and Ms. Rachel Goh as Marketing Director. .

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

Thank you, Andi. Good afternoon, ladies and gentlemen. Welcome to our conference call for the first quarter of 2020 results. We really appreciate your participation in this call. .

COVID-19 pandemic has impacted overall economies and all sectors are slowing down, including intel communication sector. For Telkom, the degree of impact for each segment is different.

Fixed broadband IndiHome, mobile digital business and wholesale continue to grow well and become our engine of growth as we continue to strengthen our broadband infrastructure. .

While Enterprise segment was more [ industry ] impacted in line with declining business volume in various sectors such as hospitality, tourism and transportation. .

Our well-diversified revenue portfolio allows us to be less dependent on 1 particular segment and weakening segment can be balanced by other ones. .

Ladies and gentlemen, in the mobile segment, [ in the ] business through provision of high-quality mobile broadband and parity of digital services become the main growth driver. Digital business increased significantly by 16.3%, driven by 16.7% increase in data and 13.6% increase in digital service. .

In the first quarter of 2020, digital business accounted for 70.6% of total Telkomsel's revenue, increased significantly from 61.4% in the same period a year ago. .

In the meantime, Telkomsel legacy business continued to decline segment. Overall Telkomsel revenue to grow by 1.1%. Amidst declining legacy business, EBITDA margin improved by 6.9 [ ppt ] to 61.6%. .

Another growth driver was fixed broadband IndiHome that continued its positive momentum. IndiHome posted additional 252,000 new subscribers during the first quarter of 2020 and is relatively on the track with full year target of 700,000 customers. .

In term of revenue, IndiHome recorded IDR 5.1 trillion or some 19.7% year-on-year. IndiHome EBITDA margin continued to improve to 35.9% in the first quarter of 2020, supported by economy of scale and better operating levers. .

[indiscernible] Enterprise segment continued its policy to focus on improving the fundamentals. We prioritized business lines that have higher profitability from with various effort to get better quality revenues. .

In the first quarter of 2020, Enterprise segment recorded IDR 4.3 trillion in revenue. In the meantime, wholesale and international business segment recorded IDR 3.4 trillion in revenue or grew by 15.1% compared to the same period last year. .

Our revenues from total business grew healthily, and we also successfully grabbed the opportunity from wholesale funds. We said being the integral for other segments, wholesale segment also serve external customers. .

The pandemic situation that [indiscernible] for some times has created room for digital accelerations. Telkom sees this an opportunity to provide solutions through various digital services under set of strong digital performance and digital connectivity.

Therefore, we continue to invest in the first quarter of 2020 to spend around IDR 3.7 trillion in capital expenditures. .

In mobile services, CapEx is utilized to further improve 4G network quality and capacity as well as IT system enhancements. .

While in fixed line business, CapEx was primarily utilized to deploy fiber-based access and backbone infrastructure, data center and small percent for other project size towers. .

Starting first quarter of 2020, we adopt a new Indonesian accounting standards for PSAK 71, 72 and 73, which are mirroring the IFRS of 9, 15 and 16 that we already adopted in our IFRS reporting.

The adoption of the new standard mainly has impact to lower operation and maintenance costs, higher assets and higher liability, higher depreciation and higher interest charges. .

On 19th of June 2020, Telkom conducted an Annual General Meeting for our shareholders with the 2 key decision, they were dividend distribution -- change of Board of Commissioner and Board of Directors. .

Regarding with the dividend. The AGM has approved to distribute dividend of IDR 15.3 trillion or 81.78% payout threshold. The dividend amount equal to IDR 154.1 per share. That is ending my remarks. Thank you. .

Thank you, Par-Ririek. We will now begin the Q&A session. [Operator Instructions].

[Operator Instructions] Your first question comes from the line of Colin McCallum of Crédit Suisse. .

Thanks for the opportunity and congrats on a good set of numbers. Two questions from me related to IndiHome for Pak-Heri.

First of all, I think in the previous call, you'd kind of implied and your guidance kind of implies that despite quite a strong start to the year and a strong April, you kind of believed that the demand for IndiHome will dissipate or maybe reverse a little bit given your relatively modest full year targets.

Is that still the view? Or are you maybe more optimistic that some of these new customers will stick with the service? That's the first question. .

My second question is somewhat related. What's the current status of operations with Netflix and negotiations with Netflix? If you could update us on that, that would be helpful as well. .

Thank you, Par-Colin. Regarding the IndiHome, yes, I think our guidance, still the same, that we are focusing to basically to try to meet the demand that we have. We try to optimize, I think, home part that we have to be home-connected, simply to give us the benefit from that one.

But in this time, we do need to be, I think, quite a bit conservative, although the first quarter already saw a very good result. We know the COVID started in Indonesia in the end of the March. Sometimes, we have some obstacle in the field and the ground in which we need to bit more careful on that one. .

And on the other hand, also, we need to, however, to be more conservative by things. How long this COVID is going to impact us? Of course, we are still very optimistic, try to maximize our assets that are already in place.

But that's to be -- I think, to be more better for us to give you kind of -- what is the situation we are facing now, what is our view on that one. .

And the second one on the, I think, negotiation with Netflix. The situation already very close to come to the agreement. Our first priority definitely to becoming impressive for us to protect our customer. And so basically to ask also Netflix to meet all the regulations, to encourage the local participation on this one. We are very close to that one.

We do expect soon, we'll have, I think, kind of mutual benefit agreement with Netflix. .

Your next question comes from the line of Ranjan Sharma of JPMorgan. .

Hi. It's Ranjan from JPMorgan. A couple of questions from my side. Firstly, there has been a change of Board members. How does that -- how should we think about the change in strategy of Telkom as a group? And how does your capital allocation change with that strategy? So if you can share some details on that, that would be helpful. .

The second question is, I see you have seen a big drop in customers in the first quarter. If you can explain what's happened. I see in the info memo that you talk about a reinforcement in prepaid SIM registration policy.

Can you share some details on that as well?.

Okay. Thank you, Ranjan. Let me take on the first question. Basically, we have 3 pillars, which is -- this is with our digital connectivity, the -- what we call digital platform and digital services. Our best strategy actually remains the same. We will be -- of course, as the core business, we will enhance the broadband as a part of the connectivity.

But then, we also will be expanding toward the -- what we call the digital platform and even with [ other ] digital services. But of course, it's going to be very selective. .

One of the new Board member is coming from the digital part, so that hopefully that we can -- we can move toward a direction a bit faster. And we do believe that digital is at one side is disrupting us on certain services, but on the other side, providing us a new big opportunity, not only for the company but also for the country.

So we will be pushed toward that direction with selective strategy. .

Okay. On the capital, let's see, let's see. We're open to any investment, but we, of course, as I said, that it's going to be very selective. It's not going to be the same as I saw in the other OTT companies are doing by spending money. That's not the way that we will take. .

Adding to explanation from Par-Ririek, what we believe we have said in term of customer base in our -- in term of our channel. And also, I think, network that we see also as our assets really coming to the digital business rather than just spending as much as possible, CapEx on the digital. I think we operate that one to create the ecosystem.

Overall, about the commitment on CapEx, still about the same in the infrastructure as well. On the customer base, I think my colleague... .

[indiscernible] from Telkomsel. For the customer base in Telkomsel, the drop in Q1 2020 is actually, it's -- Telkomsel is always try to more focus on high-value customers. So and also, this is because of the natural cleansing due to the SIM card registration. This is a part of it.

And we are more focused on higher-value customer rather than selling to the new customer that is not so high value. So that is the main reason of it. .

Yes. Maybe I'll put some additional answer from Par-Leonardus, the new CFO of Telkomsel. Actually, this is aligned with our strategy in the customer acquisition during 2020. Despite the saturated market and reinforce of prepaid SIM card, we are also tried to manage the high quality of customers. So that's why we also have the impact also in our O&M.

This is some saving related with the cost when we are maintaining the high quality of customer. Thank you. .

Sorry, can I have a quick follow-up? In terms of prepaid registration, has anything changed recently, which leads to the customer drop?.

No. .

No. .

No, nothing there. .

I think no, but a bit I think in the customer side, they consolidate the number that will have -- basically have -- probably becoming to and so on. I think that in terms of, I think, unique customer base actually remains fixed, especially in the high-value customers. .

[Operator Instructions] Your next question comes from the line of Piyush Choudhary of HSBC. .

Two questions. Firstly, on the CapEx outlook, are there any changes for 2020? And any changes in your capital allocation strategy for going forward? The reason to ask is because if you look at first quarter, CapEx is down 50% year-on-year. So just want to hear your thoughts over that. .

Secondly, in the mobile business, can you give an update on how competitive environment and pricing environment has been and even in the latest kind of quarter kind of feedback?.

Hi, Par-Piyush, Heri here. I think on the CapEx outlook, yes, if you compare to previous year, it is a bit lower. But overall towards 2020, we're still about the same, I think, headline that we already provide to you, going to spend about 25% of our revenue to CapEx. It is still indexed.

The reason of quite slow in the first quarter, we already the plot some of our, I think, capacity, quality and everything we need in the network in the end of 2019. So we optimize that one. As you all know, the big demand coming to us during the year-end and also the some modern system, so that meeting that one.

We do expect in the second quarter and toward the end of the year to actually be about the same 25% of revenue that we're going to spend. It is to ensure that the quality and capacity that we provide in line with the demand that we already predicted in the market. .

On the competitive environment. Okay, Piyush, I'm Rachel, the Chief Marketing Officer of Telkomsel. .

So on a competitive environment, I'll say that it remains highly competitive, and we are seeing that competitive intensity, especially that each job is commensurate with our competitors' network expansion.

And of course, with that, it comes to their low price approach for quick wins on the customer share there, particularly the price-sensitive segment. .

However, if you looked at the Q1 results this year, you see that even with this, there wasn't any significant monetization of data revenues of our competitors. We saw Telkomsel gaining 70% of the Q-on-Q incremental data revenue share growth than in Q1. .

Looking out in the recent quarter was looking at, I think with the COVID situation and the economic pressures in the country, I think price sensitivity would increase.

So we will take a multipronged approach in terms of managing competition, which is to continue to focus on our high-value customers as well as adjusting and calibrating our price and calling to the [indiscernible] levels of the other segments in the market. So you will see us continuing with our sachet products, which is our Kuota Ketengan.

We also continue to push, adjust our combo packages and make sure that we remain relevant to our customers in the current environment. .

Rachel, if I may follow up, last year you had embarked on this strategy to improve your youth segment market share.

So internally, how -- based on your assessment, how has been that tracking? Like what market share gains you would have witnessed in the youth segment? And anything which you can share over there?.

I think in terms of the youth market share, it might be good to take a look at the digital segment actually. So if we could use the pickup rate or the active usage of My Telkomsel app, it has grown very significantly. In fact, we are probably the second largest in terms of active users in Indonesia now for My Telkomsel app.

We're also seeing large growth in terms of the gamers on our network under the Dunia Games Community, it was exceeding 15 million in the recent month. So I think those are a good indicator of our foray into the youth and millennial or digital segment. These are very strong indicators. .

Your next question comes from the line of Arthur Pineda, Citigroup. .

Several questions, please. Firstly, on mobile. Is it possible to talk about the consumption trends into the second quarter? I'm just wondering how April, May and June is faring, given the impact of quarantines.

Are you seeing normalization towards the latter part of the quarter?.

Second question I had is with regard to the Enterprise segment and the margins. So previously, you stated that there was a pivot away from the low-margin segments and that drove down the revenues for Enterprise with a focus on profitability. But when you look at your FS 34, it seems like the margins were actually worse year-on-year.

What's driving that?.

And last question I had is with regard to Colin's earlier question on Netflix.

Can you elaborate on what you mean by it being mutually beneficial? Are you looking for compensation coming from Netflix? What needs to happen for this to push through?.

Okay. [indiscernible] On the mobile side, the consumption trend impacted by quarantine. Actually, in Indonesia, the quarantine is starting on second week of March. So the impact will be not in Q1 but in Q2. Until now, we see that the trend is -- payload is increasing. .

But are you seeing reductions in terms of pop-ups? I'm just wondering how we should view this as impacting the company.

Hello?.

Ladies and gentlemen, your speaker is currently experiencing some technical difficulties with their line. Please stand by while we address the situation. Your line will be placed on music until the conference resumes. Thank you for your patience..

[Technical Difficulty].

Hello, can you hear us?.

Speakers, you are now back on the main room. .

Okay. Okay. Sorry for the drop. This is Setyanto from Telkomsel. .

Regarding your question, Arthur, mobile consumption due to the quarantine. So the quarantine in Indonesia start on week 2 of March. So the impact is starting on March, April and May and until now. The trend -- the consumption is on the payload or the traffic that our payload is increasing more than 40% compared to last year.

And the other consumption behavior that is changed is the consumption usually, on the day, usually, it's in the office area, in the business area, now moved to the residential area. So it's -- that is the behavior of the customer. .

The other behavior that is changed is how they consume. Previously, the -- our customer is buying our packages or recharge our packages through -- most of it through a traditional channel. But during this quarantine, because of the quarantine, they tend to buy it from our modern channel, which is increased our digitalization channel.

So -- and this is in line with our O&M, where our sales cost is decreasing due to this condition. .

And the second question, why we are saying that actually, we are focusing the more profitable segment of the enterprise, but the margin is still not really improving? What we can emphasize to you, that we believe that strategy is still intact. But it will take some time to really come in to the -- what is the turning point for this one. .

But we believe we are on the right, right? I think over the time, you can see the improvement from this one.

For example, we -- I think, except from the service, which we also provide the customer premise equipment for this one, which we believe is not really profitable for us on that one, but it takes some time to really quit from that kind of business until we finally can only coming to the -- provided the service that make better margin for us.

We do expect, over the time, this can improve the margin in the enterprise. .

On the mainly mutual benefit, we're not only talking about, I think on the financial benefit. But you will note, we are the largest operators here. We also stay on we need to [ already in the ] example as well.

For example other content that may impact our reputation and so on we need to have that a good, I think, agreement, how we handle that whenever that kind of content we need to so. And I think that's kind of mutual understanding and benefit that we want to have with Netflix.

So far, Netflix very cooperated with us, including also advanced the publication [ or total control ]. That's what we are speaking. .

Your next question comes from the line of Norman Choong of CLSA. .

Two questions from me. First question is back to IndiHome again. So in the last result call, I remember you guys mentioned the run rate for April and May, which was around 5,000, 6,000, and then at one point increased to 8,000 to 10,000 a day.

Can actually is this run rate of 5,000, 6,000, still the case based on your latest data? And its receivable risk for IndiHome since its postpaid model. .

My second question is on Enterprise segment. So in the last result call, actually, you mentioned you couldn't quantify what could be the potential earnings strat from Enterprise. Do you have a projection for maybe revenue growth rate, at least for the Enterprise segment? And should we be modeling some provision for receivables, for example? Yes.

Those are my 2 questions. .

I think on the -- I think your first question, this is with regard to IndiHome, our daily rate on the new additional line. In the second quarter this year, we are still in that COVID situation. Even right now, it's still in the COVID situation. In some area, in this recategorizered area of that COVID impact. .

We bit more careful on this one. So I think we need to be a bit just more conservative on this one, although we are trying to maximize again whatever the potential in terms of mainly as possible in a subscriber business because that creating value.

But [ more could I say ], our conservatism approach in considering the prevailing condition in Indonesia. .

And then the second potential earning threat from enterprises. Okay. I think on the enterprise, if we focus on the -- I think what we -- our expertise and our asset on this one, we believe that this sector is still very much... .

[Technical Difficulty].

Are you still listening?.

Line is breaking up. Yes, I couldn't hear the answer for the second question, sorry. .

Okay. On this Enterprise, I think as long as we ever continue with our strategy in which we have assets in competitive position and also our expertise and capability to provide this kind of B2B digital solution and platform solutions and so on, we believe that going to be a better month for us in the long run. And how we really now facing this one. .

The question [indiscernible] in saying that this segment is quite, I think, under pressure right now.

So I think the allowance that we provide to this business offers was, I think, conservative following the IFRS line in which we need to be more careful for calculating what is the trend and then prevailing condition and provide such profit on positives.

So again, whatever we report will to reflect the real situation and potential, I think, kind of risk in this business.

Am I answer your question?.

Yes. I understand this along... .

Yes. You can always follow up with that with giving us call or any kind of follow-up questions later on. .

Your next question comes from the line of -- sir, go ahead. All right. The next question comes from the line of Kresna Hutabarat of Mandiri. .

This is Kresna from Mandiri. Firstly, congratulations to everyone on the appointment of the new directors at Telkom Group -- Telkomsel level. .

I have 2 questions. Firstly, on leverage. And secondly on taxes. My first question on leverage.

How should we see the leverage trend out at Telkomsel and non-Telkomsel level in the next 1 to 2 years?.

Particularly, net debt to EBITDA at non-Telkomsel level is already at 2x if we exclude the finance leases. Can I get some color on the level of leverage where management would target or be comfortable with over the next 1 to 2 years? That's my first question. .

My second question is on taxes. The effective tax rate in the first quarter '20 was at 24% at group level. Can I just please check if the effective tax rate should converge to the statutory rate of 22% for full year '20 or higher? Because if you look at the past effective tax rates, it has always been quite higher than the statutory rate.

So can you just give some color on how effective tax rate should trend going forward?.

Okay. On the tax rate, as you know this, the tax rate applied to each entity for Telkomsel because Telkomsel is unlisted company, so we have tax rate around 22% today as compared to 35% last year. So I think we already calculate this one based on that one. We believe it's going to be -- the effective rate are going to be that much. .

On the parent companies, I think the tax rate that we have today, about 22%. But we have another in certain base [indiscernible] in which we again have over 3% lower tax rate based on the several conditions we can meet here. We believe we're also going to have that I think, similar to the tax rate that, as you mentioned, as metal tax rate.

I think later on for the year, you can see that one. .

And then [indiscernible] leverage in Telkomsel... .

I think for [indiscernible], if you see that Q1 actually lower trend is declining, but if you look at the net of the Telkomsel, I think the leverage is -- will be similar within 2 years. So we will spend based on the recruitment of the -- like the dividend also recruitment for the investment.

So we [indiscernible] is almost quite similar with what we managed by this year. .

And then the second related to tax rate. So the tax rate, actually the [indiscernible] some something related -- some strategy related with the acceleration of the payment of the tax, so the right look at Q1 2020, the tax rate is higher [indiscernible]. But going forward, there'll be similar with [indiscernible] for the future. Thank you. .

About the leverage on non-Telkomsel level, would you mind giving some color on that part?.

Yes. I think most of our leverage in the -- I think in the parent company and some other subsidiary like Mitratel, which is related to additional assets that we've put in place. So if you see our -- speaking of our network right now, debt-to-equity ratio around, I think, 44%, it is slightly lower compared to, let's say, [indiscernible], this one. .

We believe that's still quite conservative, while it's not too late really as well as this one. So we are going to maintain the last year in the right level and also, whatever we're going to borrow is supposed to be reflected, also the feasibility of the business. So maybe with, for example, the paygrade career and so on.

We do expect this going to contract [indiscernible] gain in the capital -- cost of capital that we need to export that. .

Your next question comes from the line of Niko Margaronis of Danareksa Securitas. .

Two questions basically on issues that you mentioned already. Just to clarify, on the Enterprise segment, in the next couple of quarters, what do you expect to be the trend in your results? That's -- yes, that's one.

Maybe in addition, do you see increased competition, I mean in terms of data center services coming from foreign players?.

And on the second question, the second question would be on IndiHome.

Can you give us a picture on how do you see if the ARPU will be trending going forward?.

Thank you, Par-Niko, for the question. First, on the Enterprise segment, we believe in terms of, I think, the margin to be better [indiscernible] as we're becoming more selective and we mentioned require revenue more, I think, healthy segment.

So however, we also do have challenge in this segment as the COVID impact some of the -- I think our customers, for example, as you know, in the hospitality industry and relative almost every, let's say, are impacted by this one. I think that's maybe the pressure coming from.

But overall, in terms of the selection of the, I think, quarter for year in this segment, we believe we on right track. .

And then on the data center services, we, I think, currently have as many data centers with utilization of 75%. We are also in the process of adding some the presenter as interns more use and also for external services.

We are also quite often to example to have any kind of, I think, partnership with others, but especially whenever we come to maximize the benefit of data center, there's some I think we provide the service above of the data center itself. .

And then IndiHome, going forward, I think we can see the potential of ARPU improvement coming from the add-on, I think add-on services that we provide, either in the term of the packages that we provide, for example, [indiscernible] and then Mobi and so on, or before, I think, increased quality or speed of the services they need.

That can create additional. But in the same time, we also see more, I think, demand coming from the world I think and demand that we also need to entertain and expect in the long run, going to provide so additional ARPU increment of this one. So what we believe in this time, the level that we have is quite healthy level. .

Can I follow up on the enterprise business. So you expect to be -- to have -- to post a positive growth for this year for Enterprise segment.

Is that doable?.

I think maybe my colleague from Enterprise can help provide you better picture. .

Edi speaking from Enterprise side. I think in terms of the opportunity of the Enterprise side in Indonesia, I think we have huge opportunity, let's say, for the addressable market, for the government and also the corporate enterprise, I think we have optimism to get better in terms of volume and also the margin. .

So until year-end, this year-end in 2020 in this segment of Enterprise, we believe that we have optimism to make it better. Thank you. .

Your next question comes from the line of [ Sebastian Deebob ] from Citi International. .

This is [indiscernible] from PT International. I have 2 questions. One is about expenses. Do you think you can make even more cost savings in the second quarter? And then for the outlook, I have been listening to all your comments on Telkomsel and Enterprise and everything and on broadband.

But for me, still unclear, what do you expect for the second quarter? Yes, will we see kind of an improvement? Or will we see a deterioration versus the first quarter? And that's one. .

And then the second question was basically expenses. How much further can that slow down? Because I guess you have highly end marketing and promotions. .

On the expenses, you know some of our expenses is kind of already capacity as expensive, example in cellular regarding spectrum costs and then regarding the tower cost in within can be said fixed costs relative only to the -- how many additional tower that we put on place.

But some of the more, let's say, variable cost for example in the marketplace with regard to the current situation in which I cannot be making kind of a physical contact and so on. We really approved digital channel on this one. So we have kind of efficiency in this one. .

Moving forward, I think we still try to maximize any kind of cost efficiency that we can have from that variable. But in the fixed cost, I think some fixed costs that we can benefit is coming from the spectrum that we have.

[indiscernible] because if we maximize, for example, the pattern that we have, although the additional capacity report, the growth going to be incremental. So we do expect this one out of the time, as we maximize, this, I think, cost potential efficiency, we can manage the cost and, I think, same level okay. .

Setyanto here from Telkomsel. For the broadband in Telkomsel for the Q2, as I mentioned previously, the payload is increasing and revenue also increasing. But on the other hand, our legacy business is decreasing. So these 2 trends will create 10 to flat on overall revenue. .

Okay. Maybe for the [indiscernible] for the Telkomsel, I think for Q2, so we are in the tapping mode as well because some shifting or channel addition now to motion channels increasing in quarter 1 is around 57%. And then also deleveraging our channel, we use the app. So currently, it's around 30 million customers using our app.

So that one is making the provisioning by the size, replacing the cost. And also cultural system for the [indiscernible], which is for the customer service as well. For that one also decreasing our costs. And reallocation, the expense for the physical even that one is become virtual. So I think like the O&M, the TAs become decreasing.

And then also the focusing of toward tenor given benefit to reduce acquisition activity. So this, we have -- we can have the citing 10% of our acquisition costs. .

Yes, clear. And then in your operating expense, there was basically operating maintenance and telecom services was also down 23%. Is that all related to telecommunication services then? Spectrum? Or why is that down so much? I understand marketing very well, but why is operating and telecommunications services... .

So I think for the O&M, like the Telkomsel, the big changing because we applied the new accounting system using IFRS 9. So we [indiscernible] before is allocated in the operational expense, so now we are locating the depreciation and interest. .

Your next question comes from the line of Prem Jearajasingam of Macquarie. .

Two questions from me, largely linked around COVID.

Could I check if the restriction, the quarantines, et cetera, has changed your user profiles in any significant way? So first and foremost, do you think that this recent quarantine has potentially accelerated the decline or the shift from voice to data-related services, right? So you -- some color around how significant a drop in your voice and legacy revenues you expect for this year?.

And secondly, have you seen any significant shift from a market share perspective because as people move back to their home villages, et cetera, they learned that your network was far superior to that of your competition and therefore you may have permanently gained some subscribers.

Do you think that's also played out in the second quarter?.

I think on the first one, accelerated -- basically the decline on the voice to -- voice revenue to data, it has happened actually in but time of the when the COVID is coming to this one. So because more people using data but I think video conference and also using data also for the voice communication. I think that's the real trend.

Data consumption definitely increased, for example, in cellular, that increased about 43%. In our -- I think in the home water, we can see the traffic is still more people using the IndiHome at home for the, I think, data connectivity as well. So that is the trend. But we also have some strategy.

We do expect that to provide us a good result in the, I think, voice revenue projection and to moderate the impact on that when we already provided some packages on that one. That's the situation that [indiscernible] may be [indiscernible] if you want to add some color on that one. .

Okay. So let me add to this. On the legacy, as Heri mentioned, we managed to provide a special ticket to retain the drop in legacy. So I think we can manage it quite well in Q2. .

For the market share, until now, we don't see any significant move on the market share due to the quarantine period in Indonesia. .

Your last question comes from the line of [indiscernible] of CIM Investment. .

[indiscernible] from CIM Investment. I would like to clarify one thing, follow-up from previous Danareksa question in regards to enterprise business.

I'm sorry, I may have missed this information before, but can you please refresh me on what is -- what causes the significant decline in the first quarter Enterprise business performance?.

And second of all is, would you mind -- I understand that you said before that you still have a huge market, but then would you mind sharing in the sense of what kind of trend should we expect for this Enterprise business? Is this going to be like the legacy business? Or how should we treat this one?.

Okay. As previously mentioned by my colleague, Par-Edi, that actually, the market for this one is quite promising in the private sector and also in the, I think, government sector. We can provide the service to them.

But sometimes this also kind of cyclical as well as we now in Indonesia in the first quarter, supposed to be most of, I think, enterprise still in, I think, planning space. So the real demand coming in the or following that. .

And then in the same time, as we mentioned to you, we focus on the more, I think, value-added, I think, more healthy margin on this one. So if, for example, in the past, we provide also a TCT customer premise equipment. We -- I think we already got some of that kind of business.

I can make quite a lot of adjustment in terms of the, I think, the revenue we generate. But in the same time, this [indiscernible] ongoing to give us better, I think, profitability figures. That basically the situation that we are now, I think, earning [indiscernible] on this Enterprise. .

Okay.

Who would you consider your competitor in this space?.

I think many, basically, in this one, but quite a -- yes, many depend on really the portfolio, we are particular that we see, for example, in the other center, even if our competitor is the global player as well. But some of the, I think, segment basically, we can feel like we almost very [indiscernible], and that's one.

I think Edi to have some -- to provide some more color on the, I think, picture of our segment. .

Basically, in the bright side, we have more 7 recalls it's a business line, we already identified that we, again, I think as my previous comment that we believe we have opportunity youth Indonesia. So I think this is momentum for us to make a better in terms of the volume and also the margin of the Enterprise segment. .

There are no further questions at this time. Presenters, please continue..

There are no further question at the time. Presenters, please continue. .

Thank you, everyone, for participating in today's call, and we apologize for those questions could not be addressed yet. Should you have any further questions, please don't hesitate to contact us directly. Thank you, everyone. .

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect..