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Telkom: In The Right Position To Capture An Attractive Opportunity

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Vektor Research


  • Moderate internet penetration rate and low data consumption suggest that the telecommunication industry in Indonesia has not yet reached its mature phase, in our view.
  • While internet speed is slow, we think 5G technology may not be popular in retailers due to possible high tariff, at least in the short term.
  • Being the incumbent, we believe Telkom is attractive due to its dominant presence in the growing industry.
  • Telkom’s TTM EV/EBITDA is trading at around 5.6x, higher than peers, but we think its fundamentals justify the premium.
  • Risks to our thesis include the lower-than-expected industry growth, Indosat's aggresive expansion, and possible M&A schemes.

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Investment Thesis

According to our analysis, Indonesia has a telecommunication industry that has not yet matured, yet it presents an attractive opportunity for growth going forward. Despite TTM EV/EBITDA trading at around 5.6x, higher than its peers, PT

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Analyst’s Disclosure: I am/we are long TLK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Research reports are written based on analysis and expectations of the analyst(s), and the analyst(s) is required to include sources for external data included in the analysis. Research analyst(s) is not responsible for any inaccuracy caused by human errors, but Vektor Research will make sure, with reasonable efforts, to reduce such errors as minimal as possible. Please note that the forecasts do not guarantee any future performance and Vektor Research, along with the analysts, is not responsible for any loss, expenses, and the reader's decision making, as the reports are not made to force readers to act towards any securities.

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