Ladies and gentlemen, thank you for standing by. Welcome to Telko's 9 months of 2020 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like to hand the conference over to your first speaker today, Mr. Andi Setiawan. Thank you. Please go ahead..

Mr. Setyanto Hantoro as President 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, Pak Ririek..

Thank you, Andi, and good afternoon, ladies and gentlemen. Welcome to our conference call for the third quarter of 2020 result. We really appreciate your [indiscernible] in this call.

In the 9 month of 2020, Telkom has successfully managed business performance amidst the prolonged COVID-19 pandemic on the back of excellent IndiHome performance, healthy mobile data growth, strong wholesale segment as well as improvement in enterprise business. As a result, Telkom recorded IDR 99.9 trillion in the consolidated revenue.

With the [ successful ] cost control, our EBITDA grew by 7.1%, with the EBITDA margin increase by 10.1% to 53.6%. And the bottom line, net income increased by 1.3% to IDR 16.7 trillion, with a better net income margin at 16.7% from 16.0% last year.

Ladies and gentlemen, in the mobile segment, Telkomsel continued to post growth on Digital Business in effort of -- to compensate the decline trend of Legacy business. Digital Business revenue increased by 10.6% year-on-year to IDR 47.7 trillion, representing 73.2% of the total revenue, significantly higher compared to 63.1% last year.

The data payload grew by 39.6% year-on-year, with the average data user consumption increased by 42.5% to 7.09 gigabyte per data user per month. In the fixed-line segment, IndiHome continued its strong momentum and provide a higher contribution to Telkom consolidated revenue.

IndiHome recorded revenue of IDR 16.1 trillion, growing 17.1% with the contribution to TelkomGroup increased significantly to 16% from 13% in the same period last year. IndiHome new customer increased by 17.1% that made total customer to reach 7.76 million by the end of September 2020.

We believe that the IndiHome customer could reach close to 8 million by end of this year. IndiHome ARPU in third quarter '20 improved to IDR 253,000 compared with IDR 241,000 in the previous quarter as we encouraged new customer to subscribe on higher speed and for existing ones to purchase various adds-ons, such as Minipack and speed upgrades.

Revenue from add-on grew by 38.2% and contributed to -- 15.7% of IndiHome revenue in this period.

In the Enterprise segment, our strategy to strengthen business fundamental and providing enterprise solution by reducing low-margin business and prioritizing our business lines with higher profitability, such as data center and cloud and enterprise connectivity, seemed to work well.

Enterprise segment posted IDR 11.5 trillion in revenue and saw an encouraging trend amidst fundamental improvement and our COVID-19 pandemic situation.

The segment is on the right track and significantly improved by only declining 23% year-on-year from 35% decline in the second quarter or grew by 9.4% in the third quarter compared to the second quarter of 2020.

Toward end of this year, we will continue to strengthen our fundamental with focus on more profitable business and expect Enterprise segment to turn around in 2021. Wholesale & International business shows its resiliency during the pandemic situation.

Revenue from Wholesale & International business segment rose by 24.9% year-on-year to IDR 10.2 trillion driven by the healthy business in the tower, data center, international wholesale voice and SMS A2P.

In an effort to create value for the company, we are in the process of unlocking tower asset and have done the first step, that is to consolidate tower within the group by transferring part of Telkomsel tower into Mitratel.

We're of the view that our tower business still opportunity to grow, supported by the upcoming 5G technology, which will require higher density. Ladies and gentlemen, the healthy fixed-line business with a diversified segments helped us going through the very competitive mobile business and the pandemic situation.

In the past 5 years, we've seen revenue portion from fixed line increase from 28% in 2016 to 37% in the 9 month of 2020. Its contribution to net income also increased from 5% in 2016 and soared to 30% in September 2020.

Going forward, we will strengthen the synergy between the mobile and fixed line through various business model in an effort to maintain sustainable growth with a healthy profitability for TelkomGroup. That's 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 Arthur Pineda from Citigroup..

Two questions, please. Firstly, on the Enterprise segment, what's driving the jump in the Enterprise side in the third quarter? Is this just lumpy because of contract bookings and should correct in the fourth quarter? Or should we expect momentum to sustain into the fourth quarter? Second question I had is with regards to mobile.

I'm just wondering on the mobile revenue softness in third quarter. This contrasts sharply with the subscriber net adds momentum.

Why is there such a divergence? Is this just a timing issue? And should we expect things to pick up in the fourth quarter?.

Okay. Thank you, Pak Arthur. I am Heri from PT Telkom. On the Enterprise segment, the improvement in the third quarter of this year actually is a result of the fundamental improvement that we frequently mention that are already been started since third quarter of last year. So we focus on the more profitable segment and more recurring segment.

We basically reduced the segment in which we provide such as the equipment and so on that provide us with lower margin. So this fundamental improvement already saw the, I think, positive impact on us. We believe they most foresee resulting to be started next year. [indiscernible]? Second question..

Yes. Second question..

Okay. For the second question, that with the -- what is the contrast between the revenue growth and also the customer growth, actually if you look at the fundamental of Q-on-Q, in term of the customer base and also the pilot is increased.

But if you look at the -- our revenue, yes, it has slightly declined, but I think this is a good momentum for us because actually we need the time to have the positive impact of our revenue side. But for me -- for us, if you look at the operational side, there is a good thing because the pilot is increased in Q-on-Q by 7%.

Now our customer base also increased by 6% in Q-on-Q. So it's mean this is only the time matter. We can monetizing in the next couple of quarters..

Okay. So it's a timing issue. Okay..

Your next question comes from Pang Vitt from Goldman Sachs..

Just 3 questions for me. Just firstly on the -- can you give us a little bit more update on the current competitive landscape? Last quarter, you're mentioning that you launched the unlimited data plan in order to better defend the market share. Any more color on that? Second question is on the IndiHome. So the target for this year is 8 million.

How about heading into the 2021? Would you be able to give us a little bit more color on that? And do you see any changes in the subscription pattern if -- once that COVID remain better? As in like would you foresee some of the subscriber drop post that? And lastly, on the cost control, you have done very well in that.

And you mentioned furthermore about, it seemed, the distribution costs and high usage of modern channel. Do you expect this to be around in the longer period as well? So those are the 3 questions..

Okay. I'm Rachel from Telkomsel. So I'll address your first question regarding the mobile competitive landscape. So in the cities which we have launched -- where we have launched the unlimited plans and also new combos, over 180 cities, which we started in July, have done well. We're seeing double-digit growth in payload and data users.

We're looking at about 13.4% and 20%, July to September, respectively. And looking at benchmarks in data subscriber market share, we -- you have seen an increase in our percentage points here. But more importantly, in the process, we have gained a very strong understanding of what our customers want in this current economy and have a consensus.

And this now allows us to simplify our product offerings and improve our customer engagement even better. So we retain our strategy to focus on 3 anchor points, which we mentioned the last time. Number one, the current economic situation under COVID that affects affordability and mobility of people.

Customer needs and wants are changing because of the norms that they have to comply with in this current situation.

And number three, the most important one which you mentioned is Telkomsel's network advantage and available capacity, yes? So this formula so far since we've launched has been good in helping us achieve our aim of stabilizing data stock share and growing our payloads in those selected cities, and we will continue to focus on execution plans, which is customer-centric, and leveraging our network strength, right? So we think -- outlook point of view, we think we might need another 1 to 2 quarters to see a rebound on the data revenue share.

We'd certainly like to shorten this period for sure. We would like to dial down on unlimited and find opportunity to price up and improve the overall value of the industry soon or later.

But we are also watching very closely for the others on the intent towards preparing this market where we can all regain healthy growth again in 2021 when the economy picks up and when COVID is under control.

I hope that addresses your question, Pang?.

Yes. That's really great..

Okay. On the second question, on the IndiHome update and prospect in 2021, in Indonesia there's about 65 million of household. 1/3 of it, we believe, is a quite addressable market for us. Currently, we have around 7.8 million of subscriber base. So we believe we still have quite plenty room for growth coming from the additional subscriber.

In addition to that one, we continue customer education. We basically try to stimulate our customers to use higher speed of our services. So we ask them to adding some suite of the services we provide. So mostly, they already, let's say, add on the suite of the quality of the IndiHome.

This also going -- give us additional actually revenue coming from this. This year, basically around 15% of revenue contribution also coming from add-on service that we already experienced.

So we believe in the, well, let's say, medium term, there's plenty of opportunities still exist with us with our strength in the, I think, our capital and also our corporates. We believe these are going to be our backbone for growth..

Number three, related with the mobile cost efficiency related to modern channel, yes, I -- we saw the shifting from the traditional towards modern channel happened during the COVID period. And we see also that the -- that there was some efficient distribution impact to our marketing expense is decreasing by 19.9% year-on-year.

Or if we compare with revenue, there was 4%. So it's been -- we saw the -- also the shifting from the traditional to modern. Before it's 60% to 40%. Currently, it's become 33% to 67%. And we believe this is going to be continue in term of the using of our modern channel.

But however, we are still maintaining the traditional channel as part of our representative in certain area like in rural area who have -- not covered by the modern channel. So I think in the future, we believe the efficiency in term of this efficient channel and modern channel is going to be contribution a lot.

And we are maintaining the traditional channel to the part where the area that cannot covered by modern channel..

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

It's Ranjan from JPMorgan. I have 2 questions. Firstly, on Mitratel. If you can share any tentative time lines for a potential IPO.

And also for Mitratel, as towers are being transferred from Telkomsel to Mitratel, can you share thought process around how you're deciding which transfer -- or which telco -- or which towers to transfer and lease back from Mitratel? So that's the first one. The second question is on the omnibus law.

Do you have any idea on the time line of the introduction of the implementing regulations? And do you think that the omnibus law will be supportive of consolidation in Indonesia?.

Thank you, Pak Ranjan. I think I take the first question on the Mitratel IPO. We believe we bring Mitratel to the IPO in the horizon of time 12 to 18 months.

So during the time, we need to improve Mitratel operational performance as well as the financial performance by adding the size and then also tenancy ratio and some efficiency we need to make in Mitratel.

Whenever the market is, I think, supportive and also like whenever 5G coming, that also can be another, I think, trigger to have a good time line for the IPO. We bring this Mitratel to the IPO. That's about the time line. And then how to determine which tower we transfer to Mitratel? Basically, we see from 2 sides.

First, our opportunity to, let's say, operate that tower to third parties. Second, to also maintain the competitiveness of Telkomsel itself. We do it, I think, carefully in managing both ways. We try to do as many as possible but with that consideration. And then about omnibus law. I think omnibus law -- we see omnibus law as positive for the industry.

This is going to, for example, for the, I think, potential consolidation, bring, I think, a good environment to the, I think, consolidation. Beside of this, we're still waiting for the, I think, more technical regulation. For example, ministry decree, how this consolidation -- guideline for the consolidation.

And then we also are not seeing only omnibus Law that are going to trigger the consolidation. I think with so many player right now, with, I think, limited spectrum that we have, and then potential, I think, for 5G, I think this industry is supposed to be -- for the healthier industry, supposed to be considering the future.

We always support also because we believe this is going to be betterment for the industry and also for us..

Well, just a small addition on the omnibus law. I think from the omnibus law, the government now is -- I think almost all of the minister office is working to propose what we call this kind of government regulation. And then in some certain issues, they will be further regulated in the kind of Ministry of Duties.

So I think the omnibus law will be put into force as early as going to be Q1 of next year..

Your next question comes from the line of Choong Chen Foong from CIMB..

I'm Foong of CIMB. Three questions from me. Firstly, a question on the bad debt provision. Even though the economy remains pretty soft, you've seen lower bad debt provisions into the third quarter.

Any one-offs in the quarter, reversals or anything like that? And does Telkom expect bad debt provisions to stay low in the last quarter of the year? That's my first question. Second question on the CapEx. The year-to-date spend seems a bit low versus the full year guidance.

Are we expecting the CapEx in the fourth quarter to rise significantly to meet the full year guidance? Or have we successfully achieved some real savings for this year? And my third question for mobile. With the tariff adjustments that you have made in the third quarter, the data you have now go up 35% premium to your peers.

And you also saw double-digit growth in your data subscribers. Are you comfortable with Telkomsel's market positioning currently? Or do you see a need to extend your offers to more geographies or to narrow the premium further? Or do you think that it's now time to focus on monetizing the subscribers [indiscernible]? Yes, those are my 2 questions..

Okay, Mr. Foong. First, on the bad debt provision, we don't have any, let's say, kind of one-off adjustment in the third quarter. If you address the Enterprise segment, what we can say, yes, in fourth quarter, there are some, I think -- most, I think, will come due in fourth quarter. So that may impact, I think, the collection for us.

For right now, we're still in the process of, I think, collecting the revenue. Hopefully, the performance is going to be better, I mean, as we have today. But to be a bit conservative, some of the Enterprise segment also have -- I think, will come due in the fourth quarter. So this kind of the thing that we need to be aware on this one.

Beside this, I think some adjustment -- also waiting for the, I think, kind of audit from the auditor for the fourth quarter, what is the result going to be.

But the trend that we see from the operation now that we have today, the company already in the, I think, a good position to improve the fundamental and bottom line, especially coming from the operational -- good management in operational cost for this one.

We hope this going to -- whenever some one-off of the cost is coming, this is not going to be a kind of continued process, only a limited time, and then going to be reduced from time to time as well. And then -- and the CapEx, do we going to meet the CapEx guidance? Still low right now.

Actually, we tried to accelerate the absorption of the CapEx as we also try to do kind of, I think, ready supply, basically preparing for our first quarter of 2021. So we do have -- we do expect acceleration of CapEx spending in the fourth quarter so -- closer to our guidance that we already provide to you. The third question? From Rachel, any....

Rachel, please..

Yes. Yes, I will. Okay. So I'll address the question regarding competition. So I think we will come back to the same principles of -- we're looking at current economic situation, the customers' affordability.

We're looking at the customer needs and the competitive state and, more importantly, where we do have network advantage and our capacity is still available. And we will make decisions on whether we will continue with this or not. But we are generally comfortable with the current situation and current conditions.

We see that the slight decline in RPMB -- even though the decline in RPMB has been there from -- for us, but the gap between us and the competitors is still between 62% to 65%, not the 30% you mentioned. So I think the price gap, premium gap is still quite wide, and we have seen a strong pickup in terms of payload as well as data users.

That tells us that the market likes what we have done.

I hope that addresses your question, Foong?.

Yes, it does. I think it was fine..

Your next question comes from the line of Piyush Choudhary from HSBC..

Two questions. Firstly, on Mitratel.

Could you help us understand what were the pro forma number of towers, tenancy and lease rental per tenant? And also, given Telkomsel has sold towers for IDR 10.3 trillion, what is the likely use of funds for Telkomsel? Can Telkomsel declare a special dividend? And secondly, on mobile, given the strong growth in subscribers, and you mentioned monetization can come probably in the next quarter, can you share what is the exit month ARPU like September month ARPU for mobile?.

Heri here. On your question on Mitratel, first on the pro forma, I think they have around 16,000 tower right now before the acquisition of the transferred tower from Telkomsel with tenancy around 22,000 or can appraise the tenancy ratio of around 1.58 per tower.

So in term of the, I think, the rate, I can tell you the rate is -- there's a differential based on how many antenna you put in the tower, on the space you have leased from the tower. But basically, the rate is comparable to the market. I think it's comparable to what Protelindo and also [ CVG ] has, the rate. So that's about the rate and performance.

From time to time, we try to increase the -- I think, the tenancy ratio because we believe these tower are well positioned in the potential market. And also, I believe some of the operators also need these tower. So this is going to be improved from time to time. And then about how to fund this, I think corporate [indiscernible].

Basically, we can simple see this one. Actually, the -- 65% of the, I think, ownership from Telkom, it is going to be transferred to Mitratel. So we're going to, I think, ask for dividend, special dividend from Telkomsel. So we basically don't really need to finance the 65% of the value of the tower.

The remain 35% are also going to be, I think, paid to Singtel as also shareholder of Telkomsel. So the additional financing that we need is coming from that one. This -- we can use, I think, financing coming from external parties, from bank loan, for example. So that's how do we finance this tower transaction..

And the new towers which are coming from Telkomsel, is it fair to assume that it is one tenancy? Or what is the tenancy ratio over there?.

Not really. The first one that we plan -- the first phase that we plan actually already have almost 2 tenancy right now in operate. So this has already been resell so far by Mitratel. And then I think the value for Mitratel previously, Telkomsel don't pay anything for that one. Now Telkomsel need to pay to Mitratel.

And then they need to have additional tenancy from that one. The second one, the penalty -- the tenancy ratio lower than that. So these are going to have also a bigger opportunity to have new tenancy work..

And just -- and on the mobile?.

Okay. Yes, Rachel here. I'll take your question on mobile. So our Q3 ARPU is looking okay at IDR 44,000, and our outlook for September onwards looks to be good for us. I'll also [indiscernible] about MBJJ. Has been good for us. So I think our Q4 should be looking good for ARPU..

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

This is Prem Jearajasingam from Macquarie. A few questions from me, please. First and foremost, can I just clarify that Telkomsel in the medium to long run is going to continue to see itself as a market leader and therefore continue to price at a premium? Or have we changed our strategy to become a price leader? If you could clarify that, please. One.

Secondly, with regards to the Enterprise business, is it a change in the products that we are selling that's causing this revenue decline and margin expansion? Or is it just a change in the way we sell, i.e, we no longer book the revenues from the equipment portion of any contract with that being passed straight through to someone else? If you could clarify that as well, that would be great.

And finally, on the omnibus law.

Do you see the potential for spectrum sharing as something that should or should not be part of the final outcomes on this one?.

This is [ Yanto ] from Telkomsel. So from Telkomsel point of view in the medium and long term, we will maintain as a market leader and maintain our position as the premium price compared to the market, but the premium will be not as high as previously to maintain our leadership in the market.

Heri?.

Okay. On the Enterprise, before my colleague adding this one, definitely, COVID gave some pressure on the Enterprise segment. There is some, I think, impact on the -- our customer from this COVID.

Second, on the, I think, the business model that we see, what we want to have is actually the business model that provides some of the -- I think, mostly the recurring revenue in which we try to operate one kind of contract that are no -- projects that provide enough margin on this one.

The third, yes, some -- in the past, we also -- in order to increase, I think, the salable of the service that we provide, we also are selling the equipment part of the -- I think, to enable our customers to consume as early as possible the services. But we know this, I think, impact of the profitability as well. So we reduced that part.

That's making us a betterment in position of the fundamental of this Enterprise business..

Sorry, if I could just clarify on that?.

Yes..

The -- so do you let them buy the equipment separately? Or your partner sells them the equipment separately?.

Both way. Actually, we encourage them to buy that one. And also, if we find our partner to provide that one for the end customer, we prefer that way..

On the omnibus law probably, as you may aware, the spectrum sharing is allowed as long as for the new technology. And we interpreted that new technology as should be 5G onward..

All right.

So nothing to do with 4G or 4.5G?.

So it should be -- so it's not the case. Maybe that -- what we believe is the interpretation of the omnibus law. But of course, it will also depend on other things. But there are supposed to be the correct interpretation of the omnibus law..

Your next question comes from the line of Kresna Hutabarat from Mandiri Sekuritas..

Sorry if any of my question is repeated. I had some call disconnection earlier. I have 2 questions, please. My first question is on the non-Telkomsel's businesses. If you look at the quarterly cash OpEx and quarterly EBITDA run rates at non-Telkomsel level, they have been less volatile in the past 9 months versus in previous years.

Could we expect relatively stable quarterly cash OpEx to continue in fourth quarter 2020 and going forward? And is the stability more due to cost savings or due to IFRS 16 or due to the lower IT procurement business? And along the same line, could we expect the 40%-plus EBITDA margin at non-Telkomsel level year-to-date will be sustainable in the coming quarters as well? If yes, why so? My second question is on IndiHome.

Can you give some color on the quality of IndiHome revenues? You mentioned the current crisis.

How has revenue collection and receivable trended so far? We also understand that the new Consumer Director is from Telkomsel, right? So will this influence how Telkom structure IndiHome home product and maintain growth going forward, especially in terms of fixed and mobile collaboration as well as residential broadband market segmentation with Telkomsel? I think I'll just stop there.

Just those 2 questions, please..

Thank you for the question. First, on non-Telkomsel business cash OpEx, I think what we did in the last 9 months representing, I think, all the maximum effort that we try to do with regard how to make this business becoming more efficient, using a lot of, I think, technology, IT and so on to answer the way we address the market more efficiently.

But internally, we think most of the activities are for digital pay. So this contributes to the savings.

In the same time, I think using technology and then also the economic of scale coming, for example, IndiHome and also more, I think, diligent and robust in, I think, addressing Enterprise business segment provides us with that -- all the efficiency. So this in cash operating costs, we believe that the trend that we try to maintain.

Of course, there are some of the costs going to be related to the revenue. But in term of the profitability level, we try to maintain that one. So this is, I think, about the situation we try to manage. In fourth quarter, as previously mentioned, maybe we still need, I think, audit process. Some of the enterprise also [indiscernible] some of the bill.

We do expect a good collection on that one. So we don't expect from operational-wise any kind of bad things on this one. So what we do expect in the future? At this time, we expect to be continue in the future as we continue to expand our business and having, I think, bigger economic of scale on this one.

About the EBITDA margin of the 40%, I believe, if we -- in that direction, we can, I think, continue to improve our EBITDA margin. And then -- but I think Hui will kind of -- you want to answer number 2 because EBITDA. [indiscernible] the question..

Okay. okay. Actually, IndiHome will work with Telkomsel for the fixed wireless for the area that IndiHome cannot penetrate. So easy for us to accelerate the penetration because all of us know that our penetration is still less for the fixed broadband. So we will work together with Telkomsel for this..

And so if I may have a follow-up question.

Is it possible to distinguish how much of your IndiHome customers actually come from the SME categories, especially like people who use their houses as their working place as well like shop houses and small, medium enterprises? Is it possible to distinguish the split? We have the breakout?.

Oh, from the -- oh, this -- this is just from Enterprise end. Actually, IndiHome is really for the retail customers. This one was different. This is your question or....

[indiscernible]..

Yes, [indiscernible]..

[indiscernible] anything here. And in the [Technical Difficulty] customer. So around the 100,000 customer who -- in the SME but also the corporate customer in the special [ JP ] services..

Okay? Yes. Thank you..

[Operator Instructions] Your next question comes from the line of Niko Margaronis from BRI Sekuritas..

This is Niko from Danareksa. I would like to ask about the omnibus law with relation to -- that to the product tariffs, minimum prices for products. How do you see this being implemented? I understand there has been some already some work from before.

Do you expect to see prices changing significantly, going -- perhaps moving upwards following the implementation of omnibus law? I would like to hear your thoughts on this. Also, may I add a second question? With regards -- again, following up from from Kresna on the quality of IndiHome subscribers.

What is currently the generate on the IndiHome subscribers? Yes. I mean -- and the ARPU going up to IDR 253,000 on a monthly basis, do you see this as being sustainable? Or -- yes, maybe some -- provide some trajectory going forward..

Let me answer on the first question, on omnibus law. Well, as I said that in general, we expect that the interpretation of omnibus law will make the industry healthier, and one of them is probably the price can be more, as you know. But the detail of it, we don't know yet. It's being stipulated in [indiscernible].

Probably the latter step will be included in the ministerial decree. I think the Minister [indiscernible] are still working on it. And soon, they will probably have the kind of draft of the regulation ready for the public comments..

Number?.

Number 2..

Okay. For number 2, how about ARPU is going to phase 3, where it's stable? Yes. It's will stable because now we only sell for the -- IndiHome with -- the lowest is 20 Mbps. Previously, we sell 10 Mbps, but now it's 20 Mbps. And our churn rate is stable, about 1% until 2%..

You have a follow-up question from the line of Arthur Pineda from Citigroup..

Just one follow-up question with regard to the Enterprise segment. I know that you had mentioned you pivoted to more profitable enterprise streams, which focuses on recurring. But if you look at your segmental results in your FS on Note 34, it seems that the operating losses have actually expanded on the Enterprise side.

What's driving this? Or is it just intercompany bookings that we're missing? Is Enterprise actually profitable as a stand-alone entity?.

I think that's what we mean with our focus on improvement of the fundamentals. Some of this business in the past years are actually profitable, but the collection sometimes takes time. That make becoming less profitable as we, for example, goes with selling, including of the equipment on this one.

I think this is the figure that we aim to improve from time to time. In term of -- I think we cannot disclose that detail in the monthly basis. But from time to time, we see that actually a positive trend on that one. For example, [indiscernible] connecting between margin, and then what about service margin that we are now experience. We....

[indiscernible] -- sorry, go ahead, please..

You go ahead, Pak Arthur..

I'm just thinking because I'm trying to figure out how you look at profitability for this. Because if you look at it year-on-year, it seems that the losses have actually expanded. And even versus the first half, losses have expanded.

Is there some booking issue where some of the expenses are being booked on Enterprise and the benefits are being booked in other segments? I'm just wondering why the losses are being reflected as such..

Okay. Okay. Pak Arthur, maybe on the detail, I think we can discuss further after this one with you to give some more color on this one. Well, not yet on this one..

Your next question comes from the line of Sachin Mittal from DBS..

Three questions. Firstly, when you started the unlimited data plan, it was launched in 65 cities in July, covering less than 15% of your population. Has it changed now? Have you expanded into more number of cities? Or you have share -- added some more plans on top of it? That's question number one.

Secondly, can you confirm if telco tariffs are you even part of the omnibus Law? Or is it something -- there's nothing official on this and whatever we hear on the upper and lower limits on telco tariffs is still just -- there's nothing on the table for that? And thirdly, on the -- your Telkomsel revenue is declining quarter-on-quarter basis despite a very healthy subscriber addition.

Does it show that your strategy is not really working because ultimately, your revenue is declining despite unlimited MAX plans and something that you will have to review in the near term?.

So Rachel, if you can address, yes..

Rachel here. Yes. Yes, I'll pick those questions up. Okay. So first question is unlimited data plans. Yes, we launched it in 65 cities accounting for about 15% of data revenues. For that category of product, Pak Mittal, yes, it's been in that cities.

We have also expanded it to another 67 cities partly focused on the higher-value denominations, not low ones. So....

Sorry.

So you're saying that 65 cities and another 67 -- but another 67 cities are more -- the plans are on the higher denominations?.

So that's on the high -- yes, high denominations. So we're not going for the low prices, yes. It's more for addressing our existing [ HTCs ] who are keen to also get similar kinds of product constructs, yes..

I understand..

Okay..

Well, on the second question, the omnibus law, there's a clause on the omnibus law which will allow the government to decide the minimum and the maximum price. But how the -- will the effectiveness of that rule is going to depend on the detail of the decree of the ministerial decree.

So let us see what the government will talk in more detail on that soon..

Pak Sonny, if you don't mind, the third question..

Number 3, related how we're going to define our strategy. Actually, if you look at the impact of our fundamentals, which is our payload also our data user, and -- our customer is increased. This is the fundamental for going forward.

If we're talking about the revenue, actually we need the time to recover because the program just launched in last 3 months. So it means we need the time to recover. If you look at the indication of the September/October, there is some good news in the top line.

So I think we still continue to have the strategy by putting the first to match with our retail customers. The second is to see the competition happen. And then the third is we -- we're going to optimize our network quality and our network utilization to strengthen our position in the market again..

Just a follow-up on the first question. Because a medium denomination for the unlimited MAX plan was IDR 20,000 earlier.

And in the new cities, what is the minimum denomination? Is it more than IDR 20,000? And how much did it start from?.

I believe 70,000?.

Oh, It starts from IDR 70,000?.

Yes, at least IDR 70,000 for now..

At least IDR 70,000 in the new cities and the -- okay, great..

Your next question comes from the line of Navin Killa from UBS..

I had a couple of questions. So I just wanted to get a sense of your CapEx budget for this year and next year. I know you have not changed guidance but just to think about how you're looking at CapEx. And secondly, I mean, your net income is obviously flat on a year-on-year basis.

How should we think about dividends? Would you consider lowering the payout as something we have seen other telcos do, I guess, given the challenging macro? Or given the flat profit, do you think you can keep a flat EPS?.

Okay..

Okay. Pak Navin, thank you for the question. First, on the CapEx guidance for 2020, we are still maintain that one. We try to, I think, push further in the remaining months of this year so we can, well, come to the guidance that we have previously provide to you.

And then on the -- in the 2021, we believe we still have -- going to spend about 25% of our revenue as our CapEx, which is, again, I think the portion going to be around 40% to Telkomsel and then about 35% to IndiHome and the remain for the rest of the business. It is about the same figure we have now.

It is because we still see the strong growth in IndiHome. And also, we believe the payload growth in Telkomsel are still quite strong as well on this one. So we need to, I think, then still spend CapEx with the same, I think, provisional. And then about the dividend.

I think dividend, if we see -- I assume that we are going to have, let's say, flat but fine on this one. What we aim is to provide, I think, basically the same return to our shareholders. Definitely, we need to discuss also with the main shareholders in this one, but we believe they're going to agree.

And how to, I think, basically to spend CapEx with, I think, a flat condition of the revenue. You can see actually our operational costs also quite well maintained on this one. And also, our leverage ratio is still very healthy. So we still have, I think, quite plenty room for financing our CapEx. So that's our plan now..

Sorry. Can I -- sorry, can I just follow up? I think on dividend, you said same return to shareholders. So I just want to drill into that.

Are you looking at similar payout as last year's? Or are you tracking like a similar dividend per share number? Or are you targeting a yield number? Because I guess given the share price has gone down, I mean, the yield number becomes a little tricky to think about.

So what is the parameter you're focused on?.

I think more to the dividend per share, not the yield. So that -- okay..

With that, I think we can conclude the discussion if there is no more question. Well, thank you, everyone, for participating in today's call. We apologize for those whose questions could not be addressed yet. Should you have any questions or further questions, please don't hesitate to contact us directly. Thank you, everyone..

Thank you..

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Thank you, everyone..

Thank you..

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