PT XLSMART Telecom Sejahtera Tbk (EXCL) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to XL Axiata's earnings call for the first quarter of 2021 financial year ended March 31. My name is Revathi, and I'll be your coordinator today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. Now we would like to turn the conference over to our host, Mr. Indar. Please proceed.

Thank you. Good morning, everyone, and welcome to the call today. Firstly, I would like to apologize for the audio issues we had with the previous call. So today, we have prepared a backup MS Teams link, which was sent out along with the invite to this call, should there be any further issues. If you are using both lines, a reminder that please mute the MS Teams link to avoid any audio overlap or audio issues. Now with me on the call today I have Ibu Dian, our Chief Executive Officer; Pak Budi, our Chief Financial Officer; Pak David, our Chief Commercial Officer for Consumer; Pak -- and Pak Abhijit, our Chief Commercial Officer for Enterprise and Home. Now Ibu Dian will share the highlights of the first quarter of 2021, which we will then follow by the Q&A session. I will now hand the call over to Ibu Dian.

Thank you, Indar, and good morning to everyone. We are happy to report a decent set of numbers in the context of [ a -- seasonal weeks or ] quarter and despite field pricing challenges from both the COVID-19 pandemic as well as the aggressive price competition in the market. This is due to our consistent focus in executing our operational excellence strategy to be the mobile Internet leader in Indonesia. This quarter, we are happy to report sustained profitability, with EBITDA margin rising to 50% due to our focus on cost efficiencies. Our net profit for the quarter has also increased to IDR 321 billion, which is in line with our strategy to deliver improved profitability and returns for our shareholders. Thus, despite our revenue declining slightly by 1.7% versus the previous quarter due to poor seasonality and competition, we were able to report a good performance. However, as we are now 1 year into the COVID-19 pandemic, many Indonesians have been affected with weaker purchasing power and higher unemployment. With the [ passive ] rolling -- rollout ongoing, we expect that the situation soon to improve in the second half of the year. Nevertheless, this has impacted the industry in the short term, where we have seen operators being aggressive in time to win this declining share of wallet with unlimited offering and smaller [ sustained data prices driving data use down ]. We, at XL Axiata, have been active in trying to give our customers what they want through our customer centricity strategy, where we focus on giving our customers the best program as well as the best customer experience and not just the lowest price offering. Thus, we have announced several new products we can aim to do that. For our XL brand, we have launched Paket Akrab as our first offers for family, where you can share quota with your family members. The family are an important segment in Indonesia. And this is an untapped opportunity to offer a unique product to them. In our AXIS brand, we have introduced [ Paket SukaSuka ], which launched customers from the [ use ] segment, which is the target segment, the ability to customize their own offering with personalized capability and main forecast. Finally, with our postpaid brand XL Prioritas, we have introduced more handset value offers at attractive price points. We also continue to develop our analytic capability, which enabled us to successfully upsell our customers to better product proposition, always make sure we deliver the right product for the right customers. Positively, our investment in ex Java continues to do well for us and growth continues to be ahead with data growth rate, increasing its contribution to our revenue to 29% in the first quarter 2021. Our investment that we have made there are delivering returns and CapEx in line with what we had in the same plan. In 2021, we will continue to invest in ex Java guided by our operational excellence principles and strategy and show that we can continue to see growth and deliver returns for our stakeholders. Our network rollout and upgrade continues to be on track. And thus, we continue to rollout our network on schedule, with our biggest count now above 147,000 which only present in 458 cities across Indonesia. We also continue to fiberize our network to manage the accelerated growth of data trading and ensure our customers would continue to enjoy good network experience. Our balance sheet remain strong with net debt-to-EBITDA of [ 0.1x ]. We have no USD debt, and we have also secured committed facilities with the bank that we can have anytime if we need additional funding. Our results so far this year has been impacted by the situation in the market [ which remains down ]. COVID-19 continues to have an impact in economic stability, resulting in weakening pricing [ products in communities ], which has prompted aggressive price competition in the industry. Nevertheless, we are seeing some initial positive signs from our new product launches, which have gained traction in the market so far and a slight easing in competition as we had in Lebaran this season. Positively, COVID-19 has accelerated our transformation agenda for our long-term goal of becoming a fully digitalized operator. This is true of faster digitization of our business processes from the front end through distribution and our internal processes. This will create long-term benefits in the form of business and cost efficiencies. Additionally, we see opportunities in the medium to long term, as demand from data continues to grow with an increased digital way of living and working. Industry consolidation would also be a positive if it happened. And it will reduce the competitive intensity and improve the pricing dynamics due to less players in the market. We see a window of opportunity as well as over the next 2 years to take market share while the merger processing is ongoing, if it happened. The Omnibus Law was passed at the end of last year would also be long-term positive for the market. Finally, we would like to reiterate our guidance for the year. In 2021, we are guiding for revenue growth to be in line with markets. EBITDA margins in the low 50s and CapEx to be around IDR 7 trillion for the year. Thank you, and let us proceed to the Q&A session.

[Operator Instructions] We have our first question coming from the line of Arthur Pineda from Citigroup.

I have 2 questions. Firstly, on competition. You mentioned the elevated competition in the market causing stress on the revenues. Can you elaborate what products are coming out from period, which has caused the strength that you've mentioned? Second question I had is with -- is in regard to the dividends. You paid out maybe 90% in -- of FY '20 numbers versus averaging around 30% in the prior year. How should we view your payout levels going forward?

Arthur, so I will take the first one regarding the competition, David here. So as you know, the competition has been quite challenging in both quarter 3 and quarter 4 since the incumbent entered also their unlimited products. So they had [ the unlimited max ], where they offer high quotas with unlimited applications and then [ unlimited -- the rest ] as well. At the same time, they also entered the low-denomination packets with cheap prices. So I think that has been the case in the first quarter. Especially in January and February, they have still a stress in those products. I have to say, though, that starting in March, we are starting to see some smoothening and some changes in benefits of some of these products that I have said and in the projects in the correct direction, which we also have done some changes as well in our prior portfolio, right? So I think that's what we mean. The first couple of months, a stress competition, especially from the incumbent with those unlimited and low denominations. Of course, you can imagine that from the rest of the competitors, it's always been quite challenging, right? So they still are playing their low denominations, low prices game and they keep doing that. But at least, the incumbent has started to move in the correct direction at the end of the quarter. Hope that answers your question, and I will give it to Budi to answer your second question.

[Indiscernible] which is pushing it up, not in the tax, which is driving competition?

So sorry, if I had heard -- you asked about Celcom sale and Indosat?

[ No. The first one ], basically, when you said your competitors have been driving these unlimited plans, I take it you're referring to Celcom sales, which has been driving competition, not in Indosat. Also Indosat's actually the one who's growing faster.

Correct. So I think the competition, the incumbent has been entering the unlimited game since quarter 3 last year, and that has been a strong competition. Indosat has always been challenging, has always been a low price, more in the lower end. And they also have their unlimited product, but they have been quite consistent with them in the last couple of quarters.

Okay.

Okay. Arthur, I will take your second question here, regarding the dividend. For 2020, we pay dividends, 50% of our normalized net income, whereas as you know, per our dividend policy is minimum 13% of normalized net income. But for -- because of our strong performance in 2020 and also the extra cash that we get from the sale of our noncore asset, so we decided to pay 50% of the normalized profit. And you asked about how -- is it going to be the new base? Currently, we're still looking at our dividend policy to transition towards potentially higher payout ratio in the future, higher than our current policy, but that one's still in the review. Answering your question, Arthur?

Good.

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

Two questions from me. First question with regard to the drop in prepaid subscribers by nearly 2 million in the quarter. [ Were these long-term ] subscribers to competitors? And is it a concern for XL? Do you think you need to do a bit more to retain subscribers going forward? That's the first question. And second question, could you give us an update on the discussions with the Ministry on the rollout of the 4G coverage to the villages? And do you think that there will be some risk to your CapEx guidance of IDR 7 trillion pending the outcome from this discussion with the Ministry? Yes, those are my 2 questions.

Thank you, Raymond (sic) [ Choong Chen Foong ]. So I will take the first one regarding the prepaid stuff. So as you might be aware, the Q3 last year, September, there was this school program. The school program that was until December more or less and then restarted in March. So during that period, we saw a huge increase in our subscribers, very clearly not natural growth and not restarting from organic or from more unique users in there. It was clearly dual SIMers, which we believe has to happen to everybody else as well, right? So we saw a lot of dual SIMers taking advantage of this school program keeping their old SIM and using another SIM for the school program, et cetera. So we grew our subscriber base very significantly, especially in those 2 to 3 months. It was like very sudden. Since that moment, it was starting to normalize. So we have been consolidating. That has -- it has had consolidation in this one, which you can see also because it's proved that we reduced the number of shops but the ARPUs increased. So it has been very clearly that some of the school program dual SIMers have been consolidated. And now the ARPUs are [ healthier ] and the -- but the number of subs reduced a little bit. In any case, if you check our number of subs as of quarter 1 2021 versus the quarter 2, quarter 1 last year, we are still in a positive trend. And we are still seeing a positive trend in our subs acquisition and the number of subs that we have. So I think that -- I hope that answers your question.

I guess if that -- if I can just follow up, the prepaid subscriber numbers, right? You mentioned earlier on that your team, the incumbent are moving in the right direction without giving out the offer towards the later part of the quarter, but I think [indiscernible] came up with some attractive offers in March and April with regards to the [ weekend plan ]. So is there any plan to sort of also go to revise the office to be heading in the same direction as this happened [indiscernible]?

Yes. Actually, that's a good point. If you see, we have already given a couple of steps in that direction. So our unlimited products are no longer that -- are all [ reliable ], which is a bigger step in the correct direction. And we have adjusted the benefits of some of our products. Yes. I mean we have reduced the number of gigabytes in some of our popular products, moving in the -- in that direction as well. So we hope that this is the start of the recovery of the industry.

Okay. Yes. I will take the second question. So it is true, that's how we operated it in this fashion, with the Ministry under rolling out the upgrade in the remote villages. So the Ministry understand very much that offering those remote village, actually, will make a lot of challenges, yes. So that's why the discussion with them now is with the focus on how to help operators in this project in the most economical way. So in terms of CapEx, the requirement for investment in these remote villages will be included in the [ second -- 3 years ] CapEx guidance.

The next question comes from the line of [ Raymond Kosasih from Nomura ].

I have a couple of questions. First one, you mentioned earlier in the half, if there is a merger, you could expect an improvement in the competition [ basket, yes? But if those happen ] -- merger were to happen, your total spectrum market share will be kept comparable with the largest players like Telkomsel. And keeping them, say, a year to integrate the network, they could significantly, in our opinions, improve the quality, capacity and has taken over better value propositions to their customers. Yet, the average -- that [indiscernible] actually second keepers -- generally is the result of the major second keepers. And certainly, from the customers' point of view, they can offer better value propositions. And if -- I read an article recently, those are expecting a 3 percentage point jump in the market share after the merger. How do you see this [indiscernible] to XL, in particular, because technically, XL will have at least spectrums among the GSM operators, yes. So that's my number one. The second one is actually related to your plan to go into the fixed broadband. Yes, I don't know if it's still ongoing or not. Going to fixed broadband organically will likely going to take a long time, not to mention the major competitors coming from -- I'm sorry, [ in the home. And on top of some ] -- with the recent spectrum additions that they get, 20 megahertz will actually going to ramp up more on the wireless broadband businesses, which could, to some extent, cannibalize the cellular services, not just for themselves but also for the other operators. Maybe you can give me [ your thoughts on expansions ].

Okay. Thank you for the question. So as I mentioned in my speech that we are positive on the merger because we believe that it will ease the competition as it will reduce the number of players in the market. So then, we believe that the industrial structure will be much healthier. We are confident like in our company's ability to compete with [ the merchant NPE ]. And we see a short-term opportunity of 1 to 2 years if the merger happens, where we can drive market share while the present process is ongoing. But you are right, the [ most scope we'll ] have a much higher spectrum and will be probably even higher than Telkomsel. And with the spectrum, they can offer more services, a better quality and so on and so forth. So now we are tracking a long-term strategy on how to compete with the [indiscernible] in the future, after they are stabilizing the integration activities and whatever activities or initiatives that they need to take in terms of having a stabilized [indiscernible]. We understand from our previous exercise in this kind of M&A activity that there are a lot of things to be done. It's not only on the aligning organization, but it will be also alignment required for the distribution system, brand, network, IT and so on and so forth.

So Raymond, this is Abhijit. I will take your question on the fixed broadband. Actually, our fixed broadband business did very well in 2020. Some of the main drivers were both from home, school from home and also an increase in the digital lifestyle. And we see that this trend has continued in Q1 '21. As of today, we have around 550,000 homes passed, and we are witnessing a very good penetration rate, on an average around 30% across our footprint. We are also seeing a lot of demand takes job, some of the areas over there here, where the penetration and growth rate has been very strong. The strong performance is a combination of a couple of things, right? So first, there is ability to offer superfast broadband, a reliable kind of product. And the second thing is a bit beyond connectivity, having a strong product strategy, where we have leveraged our partnerships with different content providers such as Netflix, vidio.com. And we bundle these content propositions into some innovative packages. You also mentioned about competition and outlook. Well, our plans in 2021 are to continue to build all the momentum that we have achieved and to continue to increase our footprint. Every option is on the table. We are looking at organic, inorganic partnerships. But certainly, we are finalizing and getting the buy-in from the major shareholders to crystalize the long-term plans for the business. Hope that answers your question, Raymond.

Yes. On the first one if I may, follow up on that, yes. I understand that most of the numbers going to cut right with the [indiscernible] but with expected improvement on the policy postmerger. Mind you, I think this is different than -- in my opinion, than the previous corporate action that we lost -- have taken place, yes, because at the time, it was an acquisition, this time is for merger, whereby we expect the balance sheet of the merchant billing would be significantly better and the network policy of merchant will be significantly better. And as I mentioned, they're looking to increase market share by about 50 basis points. I mean -- so clearly, somebody is going to lose market share here, right? I don't know who is that. But from Indosat's perspective, they don't really have to cut prices. In fact, they can actually keep up prices, which will still be cheaper than either XL or Telkomsel. Why you wouldn't expect that competition [ really picking up ]?

Yes. Actually, I believe that any merged company -- any company who are going into a merger, of course, they really -- they want to get the benefit out of the one who is [indiscernible] and the other one is in the business upside. So to get the most awarded, most of the financial upside, going into still price game probably will not gain the optimum situation. So yes, I don't think that they will not do that. But I think the most logical thing is to be more rational in the price game, yes. So in net of lowering the price, increasing the quality is a more difficult to do or more -- or associate more sensible strategies for the new merged co. And I believe also this initiative will be with the thought that the industry needs to be much healthier for all of us, be more profitable in the future, yes. But I think I do not rule out the possibility of them still playing aggressively in the market. And as I mentioned previously, currently in XL, we are correcting a long strategy on how to operate in the market once the -- we're so -- already established.

The next question comes from the line of Alex Goh from AmBank.

I have 2 questions. The first, I just want to [ correct with the subscribers ], which are for the past 4 quarters, you have been adding to your subscribers. Only in this quarter, you have dropped by almost -- by [ 1.9 million ] subscribers. Going forward internally, do you expect the trend to go back to increasing trajectory? Or do you think it is -- the competition is such that pandemic -- it's very hard to move upwards now, right? But yes, [indiscernible], what is your own management expectation on where the trajectory is going for your prepaid segment? The second question is regarding your operating cost. It is down by 6% year-on-year or 6% and that's largely driven [ by -- in fact better ]. Moving forward then, how should we see the trajectory? Should we also be moving downwards? Or do you think that your cost reduction has keep bottom -- when we expect the cost [ to flatten up over ] the next few quarters?

Okay. Thank you, Alex. So I will answer the first question. So let me answer it directly first, and then I will give the explanation. So yes, we expect the number of subs to keep increasing. So we believe that in quarter 2, we will have more subs than in quarter 1. So that's the short answer. Now as you were saying, we were growing, we were in a positive trend until now. And in this one, a decrease in quarter 1. But if you see the trend, you can feel that the quarter 3 and the quarter 4 increase was, how to say it, abnormally high. So the number of new subs that we were acquiring, we were seeing internally that was very high. And that, that was coming from a very specific event, that was the school program, and that was bringing very specific subs that were dual SIMers. So since those consolidated, we saw that, that -- how to call it, that inflation of subs that happened during those 3 months, it started to normalize. It started to normalize and came down to the number that you can see now. Now I can tell you that we are still seeing that positive trend, natural trend that we were seeing. So answer it again to your question, yes, we expect to have more, that the number of subs will increase in quarter 2 and that it will be positive, yes.

Yes. On the second question, Alex, as to our guidance, right? We're -- in terms of revenue, we're going to grow the market. And then the margin EBITDA going to be at the level of 50% -- low 50s, right? 50%. So if you compare with 2020, [ that's one over the same ]. The cost structure that you're seeing, that's going to be the benchmark for us for the rest of the year. We continue having some opportunities on [ cost saving ], mainly on the tower lease renewals because -- I think we indicated before as well, that around 30% of our sites going to be coming up for renewal in the next 2 years. And we're already in the [ lower record ] of rental. [Indiscernible] is about 10 million per month now, while coming quite significantly compared to the [ past ]. So this is one of the source for us to maintain our cost structure. Despite some increase on the costs, we also indicated before that we're going to incur higher frequency fees because of the onetime adjustment for the 10 years' renewal of our spectrum. So the other setting that we're also looking at is on our A&P, as a result of more digitalization on our A&P activities. So those initiatives that we will do to ensure our renewing the cost structure that we have in Q1 will be dedicated for the rest of the year to ensure we're keeping this 50% -- low 50% EBITDA margin. Answering your question, Alex?

The next question comes from the line of Vida Cornelius from JPMorgan.

Just 2 questions from my side. Can I just clarify on the OpEx side, is there a one-off during this quarter? And also, second is can you share on -- your market growth rate expectation?

Sorry, if you can -- I couldn't catch the second question. What was the second question?

Second question is can you share on your market growth rate expectation?

Market -- industry growth rate expectations for this year?

Yes, that's right.

Okay. We can do this.

The first one is -- the first one on the OpEx, just to clarify, so there's a bit of one-off adjustment related to -- we received some provision on labor. But the rest is business as usual. So like interconnect costs coming down because the reality people -- we have people [indiscernible] because this infrastructure costs on the rent that lower [indiscernible] indicated because of the new rates. And the marketing A&P expenses are lower. So the one-off is on the release on the provision for labor.

Are you mentioning the amount of the one-off?

Currently, we cannot go to the details. But as indicated, it is not material enough to be disclosed on the one-off adjustment.

Okay.

Yes.

Okay. On the second question, regarding the expectation for the industry growth, so it's difficult for us to say, and you want to ask me why, right? So I think there are a couple of topics that are ongoing, as you know. One is the potential merge co, merger that is going to happen, the second is the COVID and the third one is the stiff competition that happened during the quarter -- the first quarter that looks [indiscernible]. So we expect that the half 1 is going to be a smooth growth. So that's a little bit the expectation. Nevertheless, if these things clarify for the second half, which should, we expect that the second half will be better than the first one. So again, we cannot give clear guidance because of the uncertainties that I already mentioned, but we expect the first half to be a smoother -- smoother than the second half, where we can start to see a bit more higher growth.

[Operator Instructions] The next question comes from the line of Kresna Hutabarat from Mandiri.

Two questions from me. My first question is on spectrum. [Indiscernible] option as completed, is there an opportunity for more spectrum acquisition over the next 12 to 18 months? [ Regulate -- retention ] plans to auction out the [ 700 you said ] potentially for 2022. Do you see any progress on that front? And related to that, would you mind showing your thoughts on XL's appetite for the spectrum? And how should we view the opportunity for [ 700 and ] acquisition in the context of maintaining XL's structural competitiveness in the market, especially in the face of [ a -- the merger ahead ]?

Okay. Kresna, thank you for the question. Okay. So with the spectrum that we are [ closing ] right now -- actually to cater for the credit projection of 4G, we will still be able to [ do it with ] our spectrum for the next 2 to 3 years. [Indiscernible], we will require a spectrum [ to be able to launch 5G and CCs ]. And the 5G spectrum will be available at the earliest in the 2022 for [ 700 ]. And then for 3.5, probably a little later than that. So of course, for us, we will try to get this additional spectrum for us to be able to launch on 5-gig service, yes. But again, for 5 gigabytes, it's actually required the right spectrum band because if we can't utilize the current spectrum band, the customer will not enjoy the real 5G services. 5G services will require a quite wide band of the spectrum, so we really hope that the government will be able free up those spectrums and auction the spectrum within 1 to 2 years from now.

Okay. So sorry, can we -- take one off on that. So would it be fair to assume that -- you can assume IDR 7.0 trillion CapEx this year, but CapEx intensity will likely head up '22 onwards here? That should be the [indiscernible] for the next 2 to 3 years?

Yes. That's a [ fine observation because of all ] within the network for 5G services. It will be quite a new investment, not only for the revenue network, but also to build new fiber and [ transport lanes ] that will be required to deliver 5G services.

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

Two questions. Firstly, can you please elaborate on how competitive dynamics have improved from March and April? Like you mentioned that there have some change in pandemic, so if you can elaborate on that. Secondly, on your fixed broadband, can we understand that your noncomp strategy or investment would be contingent upon whether or not it's a mobile consolidation of if merger goes through or not? Like how would that change your capital allocation mainly in the fixed broadband segment?

Okay. Thank you, Piyush. So regarding the competitive dynamics, starting end of March, beginning of April, there have a few movements, mainly from the incumbent and also ourselves. So the incumbent, Telkomsel, has redefined the unlimited March proposition, where they have put an FUP to their unlimited, so it's fully speed up to certain gigabytes and then they decrease the speed, which is already one step in the correct direction, right? So I think that is one of the things that they have done. The other in different products, they have also adjusted their prices a little bit up. So for the same benefit, you need to pay a little bit more, right? So I think these 2 movements -- and one, it was reducing via FUP the unlimited benefits of certain of their products; and number two, increasing the pressures in certain way. At the same time, we have gone in a similar way. So we already started last year by taking out the YouTube from the limited and making it only redeemable. In November, December, we did the same with many of our products. And in March, we have continued doing so. So we have taken some of the unlimited applications out of the products and make them only redeemable, so that's number one. And we have also adjusted some of the benefit in the number of gigabytes in some of our products, being a little bit more stringent. So I think those are the big changes in the value propositions from the incumbent and ourselves. From the rest, I have not seen so many changes. To be honest, I think they still follow, more or less, the same strategy of low price, low denominations, but more or less consistently. So I think those are the biggest changes in the competitive dynamics. In any case, I would also like to underline like previously, Ibu Dian mentioned in the beginning that we are also trying to avoid entering in this [ first 4 gigabyte wars ], and we are truly designing new experiences like our new family Paket Akrab that is completely a new direction for a family target segment, which we have successfully launched 2, 3 weeks ago. And that will be another thing that you will see from us, right, that we will start moving into products that are pretty much gig-oriented to family experience, products that are more rewarding the family experience moving forward.

[Indiscernible] -- can I just check on this, like are these changes nationwide or these are more, again, concentrated in a few regions?

Yes. So as you know, most of the operators will have like different areas. The changes that I'm mentioning are mostly nationwide. Although it's true that in specific areas, there might be some changes here and there, but there was -- the big ones that I mentioned are nationwide.

So Piyush, your question on fixed broadband, the short answer is no. Our fixed broadband strategy is not predicated upon the merger at all. This is a long-term business and the ground work for this business or plans were laid more than 2 years ago. And the stand-alone opportunity in Indonesia is still strong, and we intend to prosecute it as far as strategy.

[Operator Instructions] I now like to pass back the call for a close.

Actually, hang on, Revathi, I see we have a question from Prem. Can we just take that as maybe our last question?

We have a question coming from the line of Prem Jearajasingam from Macquarie.

A couple of questions from me, please. First of all, do you think all these price adjustments that have taken place over the last couple of months are a function of operators trying to boost profitability? Or do you think it's coming from a network congestion forcing them to actually adjust this? That's number one. Secondly, with regards to the ex Java of business, how's the profitability of that? Have we come to that breakeven point? Are we close to a point where we can start -- I mean EBITDA and profit positive from those investments? And finally, since we started talking about 5G, would you be able to have a guess of maybe between the '23 to '25 -- 2023, 2025 period, how much incremental CapEx do you think we will need to send as we embark on the 5G journey?

Thank you, Prem. So I'll take the first question regarding on the -- why the operators are increasing the prices now. Is this because our networks are congested and we don't have any other option? Or is it because we are aware of the situation, how we want to boost profitability? So I can tell you that it's the second one. It's a profitability decision. So our network is still -- I can talk about ours, but I'm sure competitors as well, our network can still bear more traffic. So it's not a congestion issue or a quality of experience of our customers' issue, it is a decision made thinking of profitability.

Yes. On second question, Prem, regarding ex Java, as you know, we've been interesting to this ex Java since 2017, and we targeted to 2, 3 years in line with our operational excellence principle. Most of area are already profit or reaching profitability. However, as a whole, ex Java not yet profitable, as we continue building up the scale because [indiscernible] is on scale. We expect over the next 2 years, ex Java as a whole can be so comfortable [ as for profit ]. I think that's what -- how we see ex Java as of now. On the last question regarding 5G, how much 5G CapEx, incremental, that way you should look at in the next few years, especially the next 5 years. We are -- currently, as Budi had mentioned, still are crafting what are we going to do and [ a grand plan ] on this 5G and also the reaction to the merger [ once it happens ]. So I think at this point, we cannot share more detail to you on that one, Prem.

All right.

Okay. As I believe there are no further questions on the queue, I would like to end the call here for today. Thank you, everyone, for your participation in today's call. And as always, do get back to us if you need further information or clarifications. Please stay safe, stay healthy, and we will speak to you next quarter. Thank you.