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

Good morning. It is welcome -- it is my pleasure to welcome everyone to XL Axiata Fourth Quarter and Full-Year 2024 Earnings Call. I'm Christopher, Investor Relations, who will be coordinating today's call. Allow me to remind you that this call will begin with a presentation from the management, followed by a hybrid question-and-answer session. If you would like to put forward a question, you can type it in the Q&A box. Please state your name and the company name that you are representing and we will read it out to be answered by the management. If there is time, we will open your line for any live follow-up questions. As a reminder, this session is being recorded. I would like to introduce the esteemed members of the management team who will be joining us for the call today. Ibu Dian, President, Director and Chief Executive Officer; Pak Feiruz, Director and Chief Financial Officer; Pak David, Director and Chief Commercial Officer for Consumer; and Pak Abhijit, Director and Chief Commercial Officer for Home and Convergence. I would now like to hand over to Ibu Dian to present the management highlights. Ibu Dian, you may kindly proceed.

Thank you, Christopher. Thank you, everyone, for your time to join our call today. Allow me to begin with the key highlights of our full-year 2024 results. We are pleased to report that we have successfully delivered on our commitment to profitable growth while maintaining a strong financial foundation. Our disciplined financial management has yielded robust profitability metrics, with full-year revenue increasing by 6% year-on-year. EBITDA growth outpaced revenue, rising by 13% year-on-year, driven by our unwavering focus on operational efficiency. Through rigorous cost management, we achieved an EBITDA margin expansion of nearly 3 percentage points, reaching 52%. These efforts ultimately translated into a significant 45% year-on-year increase in full-year profit after tax. In addition, we have made meaningful progress in monetization with mobile ARPU increasing to IDR 43,000, supported by strong traffic growth and an expanding base of high-quality subscribers. A key milestone this year was the successful completion of our structural transformation initiative in September 2024, marked by the acquisition of fixed broadband customers from Link Net. This strategic move strengthens our foundation for future growth in the fixed broadband segment and accelerates our convergence strategy. Furthermore, on December 11, 2024, we announced the planned merger between XL Axiata and Smartfren. Upon completion, this transformative combination will create a leading player in the Indonesian telecom market, significantly expanding our subscriber base and enhancing our network infrastructure. The merger is expected to unlock substantial synergies, driving long-term value creation for all stakeholders. Next slide. As part of our commitment to strengthening monetization and expanding our high-quality subscriber base, XL Axiata has embraced digitalization and personalization to drive sustainable revenue growth. This strategic focus has supported consistent ARPU growth over the past 4 years, contributing to market recovery. The adoption of our proprietary application, which are MyXL and AXISNet, continues to gain momentum, with the number of active users reaching 33.1 million. Today, more than 56% of our subscribers regularly engage with our digital platforms, fostering stronger customer loyalty and enabling us to deliver more tailored and seamless experiences. This growing engagement has directly contributed to increased revenue from our own app channels, which now account for over 35% of total revenue. Recognizing our customers' demand for greater flexibility in personalizing their mobile experience, we introduced the Bebas Puas package last year. This offering provides affordable and customizable plans that cater to diverse customer needs, while further driving digital engagement. Available exclusively through the MyXL apps, Bebas Puas has enhanced user interaction within our platform, reinforcing our digital ecosystem and strengthening our value proposition. In 2024, we successfully completed our structural transformation through the acquisition of 750,000 fixed broadband subscribers from Link Net. This milestone has solidified XL Axiata's position as the second largest Internet service provider or ISP in Indonesia, with a subscriber base exceeding 1 million. Building on this momentum, we continue to strengthen our strategy synergy with Link Net to expand our market presence across Indonesia. With First Media now integrated into our ecosystem, we are well positioned to offer a fully converged fixed mobile convergence package, seamlessly combining broadband and mobile services with premium content. This integration marked a significant step in redefining convergence and enhancing the overall customer experience. As part of our commitment to continuously enhancing the customer experience, we are leveraging our strategic partnership with Link Net to provide seamless connectivity and a richer content offering. Through this collaboration, we now deliver a full entertainment ecosystem, offering access to 149 linear channels with a diverse range of content tailored to meet the preferences of our users. This partnership strengthens our ability to provide a truly integrated digital experience to our customers. Now, we move to the financial and operational numbers. Through the collective efforts of our business units, XL Axiata has successfully delivered on its objective of achieving profitable growth, with key profitability metrics demonstrating strong improvements. In full-year 2024, revenue increased by 6% year-on-year, while EBITDA grew at an even stronger rate of 13%, reflecting our disciplined focus on operational efficiency and cost optimization. This resulted in an EBITDA margin expansion to 52%, further strengthening our profitability. Ultimately, these efforts translated into a significant 45% year-on-year increase in profit after tax, reinforcing the resiliency and sustainability of our growth trajectory. Now, let us review our operational performance. Despite a dynamic economic landscape last year, XL Axiata has continued to deliver steady progress, demonstrating resiliency and adaptability in a challenging market environment. In 2024, we expanded our mobile subscriber base by 1.3 million, bringing the total to 58.8 million. ARPU growth remained resilient, supported by moderate traffic expansion and our continued efforts to enhance customer engagement and monetization. On the fixed broadband front, we achieved remarkable growth, with our subscriber base increasing by 336% year-on-year, surpassing 1 million subscribers. This milestone reinforces our strong positioning in the FBB market and underscores the success of our strategic initiatives in driving convergence and digital adoption. XL Axiata's disciplined approach to cost management, coupled with strategic asset productivity initiatives, has been instrumental in driving profitable growth. Throughout 2024, we successfully maintained a flat cost base, driven by improvements in sales and marketing efficiencies. XL Axiata continues to lead the industry with its pioneering initiatives in optimizing distribution channels, the first of its kind in Indonesia. Our ongoing focus on digitalization and the expansion of our own app ecosystem has further contributed to lower sales and marketing expenses while simultaneously enhancing user engagement. Additionally, we have made significant strides in optimizing network and infrastructure costs, one of the larger cost driver in telecommunication industry. This was achieved through optimizing asset utilization, redistributing capacity and AI-driven enhancements, reinforcing our commitment to sustainable and efficient growth. We continue to expand and enhance our BTS footprint across Indonesia, with the total number of BTS now reaching 165,000, reflecting a 4% year-on-year growth. While the absolute number of BTS sites has seen major expansion, this is a result of our strategic focus on network optimization and efficiency. By prioritizing asset productivity and capacity enhancement, we ensure that our network remains robust and capable of handling increasing data demand while maintaining cost efficiency. A key milestone in our network transformation is the fiberization of 63% of our sites. This marks a significant achievement as it not only enhances network quality and reliability, but also lays a strong foundation for future technology upgrades, including the evolution towards 5G and next-generation connectivity. Our continued investment in fiber infrastructure reinforce our commitment to delivering superior customer experience while driving long-term sustainable growth. To conclude, we would like to provide an update on the progress of the XL Axiata and Smartfren merger. Following the signing of the definitive agreement and merger announcement in mid-December last year, we have submitted the required application to both OJK, Financial Service Authority of Indonesia and MOCD, Ministry of Communication and Informatics. The approval process are currently ongoing, and we anticipate the regulatory review process to take approximately 3 months from the date of the definitive agreement. Once regulatory approvals are obtained, we will proceed with securing shareholders' approvals to finalize the merger process. We currently remain on track to complete the transaction within the first half of 2025. This concludes my summary of our full-year 2024 results. Thank you. Back to you, Chris.

Thank you, Ibu Dian. Ladies and gentlemen, we will now proceed for the Q&A session. As a reminder, the Q&A session will be a hybrid mode. To ask a question, you may type it in the Q&A box. Please ensure to type in your full name and company name. If you'd like to further clarification after your question is answered, kindly use the raise hand button and we will proceed to unmute your microphone. The first question comes from Kevin Jonathan Panjaitan from Bahana Sekuritas. There are 3 questions. The first one, despite the flat revenue and subscriber growth, revenues still increased quarterly. Was this solely driven by the Link Net customer acquisition? The second question on -- is a new fixed broadband player is offering 100 Mbps for only IDR 100,000. So, what's your view on this? Do you see it leading to more intense competition in the fixed broadband industry? Or do you think such a low price is sustainable? And number 3, are there any plans to sell XL's shares in Link Net? That is question number 3. For the first question, I would like to invite Pak Feiruz to answer. And then second and third, I would like to invite Pak Abhijit to answer.

Kevin, thank you for the question. With regards to the first question, quarter-on-quarter, the revenue growth is not only solely driven by Link Net's customer acquisition. Yes, that's partly due to that. We've also seen growth in the mobile because you will see also traffic has also increased quarter-on-quarter. I think this is partly due to the year-end festivities. We've also seen also growth contributed by the enterprise segment. So, that is, all in all, has provided the revenue growth in the fourth quarter. Abhijit, maybe the second and third question.

Yes. Kevin, thanks for the questions. In our industry, whenever the basis of competition moves to price, it is never a good thing. And unfortunately, what has transpired over the past few quarters is in response to the [ rday ] problem that we had discussed in the previous call. Some national players have decided to take this kind of a step and move to price undercutting as a basis of competition. I personally feel these kind of prices are unsustainable in the market. I think it's counterintuitive, right? We always talk about Indonesia being an underpenetrated market. So while there is a huge potential for growth, why are we competing on the basis of price? Doesn't really stack up. But I think in the longer term, things will stabilize and the basis of competition will move away from the price. Your third question is about XL's shares in Link Net. Well, to be honest, our stated strategy is that to be a ServCo. And this is where we will expand our business. As such, we are always open to looking at any strategic options that are on the table that will help us fulfill the strategy. Thank you.

I would like to open the line to Kevin Jonathan to please ask if you have any follow-up questions.

Could you hear me?

Yes. Yes, Kevin.

Okay. I have a follow-up question regarding the fixed broadband. Could you share your fixed broadband ARPU and also maybe the convergence penetration rate right now? And if you may please also share your EBITDA margin in FBB business right now?

Yes. I think previous -- in one of the previous calls, I had mentioned that our ARPU is closer to 300. And we have kind of managed to keep that. As you will notice, we do not have a product which we sell at 100,000 for 100 Mbps. I think the margin, we don't declare. So, I'll hand over to Feiruz, right?

Yes. I think margin on the home front, we've given an indication probably around mid-20s, right, the margins for the home business. I think there was another question, I think you asked, Kevin. I think there were 3 questions, right? What was the second question? Can you repeat it?

Yes, about the convergence penetration.

Convergence penetration, is it?

Yes. Yes, convergence penetration after you acquired the B2C from Link Net.

Yes. So if I hear you correctly, you're asking about the convergence penetration. So, we are around 83% of convergence penetration. That is 83% of our installed home customers are using our mobile services as well.

Next question comes from Henry Tedja from Mandiri Sekuritas. Okay. Can you share the revenue growth, CapEx and the EBITDA margin for 2025? And also, how about the ARPU guidance for the revenue and CapEx? I would like to invite Pak Feiruz to advise. And then ARPU guidance, I would like to invite Pak David to provide the answer. Go ahead.

Henry, thank you for the questions. With regards to the guidance, I think we are in the midst of this merger process. So currently, we are not able to share the guidance, right, for 2025 because of the moving parts, right, that potentially will impact the numbers. So at this moment, we're unable to share the guidance for 2025 just yet. Maybe on the ARPU question, I'll hand over to David.

Well, I think similar, right? So, I think we are now during the integration period. So, we'll give the guidance for 2025 in a further stage.

Henry, do you have any follow-up question?

Yes. Perhaps 2 follow-up questions from me. First one regarding the mobile competition landscape. Do you mind to share the latest competition landscape perhaps in the past 2 or 3 months? How do you see the progress so far? And even after the merger announcement with the Smartfren, how do you see the landscape after this announcement? And the second question, perhaps on the home broadband business or the -- like the ISP business. So, we heard some rumor in the market that perhaps there might be some 1.4 gigahertz or 1,400 megahertz of spectrum that might be opened by the government. So, can you provide some color on that perhaps?

Okay. Let me take the first one on the mobile competition. So as I mentioned, I think, in the previous call, during quarter 2, quarter 3 last year, we had tough competition, to be honest, with a lot of very cheap SIM cards arriving to the market and quite flooded. Unfortunately, that has continued. So, now we have the market incumbent also being very aggressive with acquisition package. So, we are optimistic for the future to a certain extent. But to be honest, the last 3 quarters have been tough regarding competition, and we truly hope that the market can go back to a better situation.

And next question, I think, about the spectrum. I would like to invite Ibu Dian to provide the guidance.

Yes. Henry, thank you very much for the question. It is true that the auction of this 1.4 gigahertz spectrum has actually come suddenly to the industry. But if we're talking about 1.4 gigahertz spectrum, actually, it comes with fixed wireless access licenses. So it is not a full mobility licenses. Hence, probably in terms of competition or segment different from the mobile segment. Currently, we are assessing whether we will be in the auction or not. But any spectrum available is actually an opportunity for us to expand our businesses.

I hope that answered the question. Okay. Let us move now to the next question. Next question comes from Eunice Goh from Sixteenth Street Capital. I think there is a question on mobile ARPU, I think which David already answered, but there is a follow-up question. Despite increase in the pricing in 4Q and 4Q typically being a higher season than Q3, why was the blended ARPU still flat quarter-on-quarter? I would like to invite Pak David to provide the answer.

Yes. So as I was mentioning before, a few things that are affecting the market, right? So, one is the aggressivity of the market incumbents that we see with very cheap acquisition offers in the market. On top of that, we still see some weakness in the purchasing power of the customers, plus the Wi-Fi players keep increasing. That made -- that even though we increased prices, it's true that there has been some kind of -- some segments of subscribers that might have higher ARPUs that have lowered their usage or the traffic, and that made that the ARPU quarter-on-quarter is been flat.

I would like to open the line now for Eunice if you have follow-up questions. Eunice from Sixteenth Street Capital, please.

No, thank you.

Now let's move on to the next question. The next question comes from [ Arvind Vijay ]. The question is, do you intend to offer the fixed wireless access wireless broadband in addition to the FTTH, particularly with FREN spectrum. I would like to invite Pak Abhijit to provide the answer.

As I've stated in the past, when it comes to us, we are technology agnostic actually. While addressing the fixed segment, we will take the best available technology at that point in time and target that customer base with that. It is fiber with the Link Net acquisition. It is some coax as well. So, we are open to looking at fixed wireless broadband as well. And as Ibu Dian just mentioned in her answer to the 1.4 gigahertz question, we are assessing that too. Having said that, it's a bit premature to discuss the Smartfren spectrum at this stage. I think as things move along, the Mergeco strategic plans will be developed, and then this will be crystallized then.

I would like to open the line for Arvind for a follow-up question, please. It seems like Arvind has no question. Let's move on to the next line. The next line from Niko from BRI. Could you share the revenue from the fixed broadband in the fourth quarter 2024? For this question, I would like to invite Pak Feiruz to provide the guidance, please.

Niko, thank you for the question. As in the past, we've always had a very convergent approach, right, in terms of our revenue portfolio. But indicatively, we can probably share the contribution is probably still single-digit percentage.

Okay. Niko, do you have any follow-up questions to the management? No? Okay. Let's move on to the next question then. Okay. The question comes from Etta Putra from Maybank Sekuritas. There are 3 questions. The first question is what is your product positioning post-merger? And second one is about the 5G development plan related to the letter of intent that was signed in 28th of January in Kuala Lumpur. And the third one is about the key focus for expanding the frequency in future auction or network upgrade? For the first question, I would like to invite Pak David to provide the answer. And then second and third question, I would like to invite Ibu Dian to provide the guidance.

Yes. So regarding the product positioning post-merger, I guess that we are talking about the branding or the brand positioning. So as you know, after the merger, we will have like 3 main brands. One is XL, one is Axiata and another one is Smartfren. The idea is to keep those 3 brands, at least for the next couple of years. I don't think we will see any changes into that. So, each of those brands will be tackling in a specific customer segment. And yes, that's the positioning that we will take.

Okay. So on the second question on the 5G development. So, of course, with the spectrum that XL Axiata will obtain after the merger, actually, will open the possibility for 5G development plan. And also with the other resources in terms of infrastructure that we will have after the merger, the development of 5G is much more possible for the company. The question number 3, on the key focus, whether the company will expand the frequency in the future or network upgrade. So currently, we have -- after the merger, we will have enough spectrum to actually expand the network and also expand the capacity and also coverage for our subscriber. So the network upgrade will still be done, but will be limited because we have to realize the synergy from the network integration from both companies.

I would like now to open the line for Etta Putra, please, to have any follow-up questions.

No further questions.

The question comes from [ Sabrina ] [indiscernible]. Okay. The question is about the mobile package price. There is around 1% to 2% increase in prices across the board for XL packages. So, what is the rationale for increasing the price despite the purchasing power is still weak? So for this question, I would like to invite Pak David to provide some color with regards to the question from Sabrina. The question is about the pricing increase across the board for XL packages just to repeat.

Yes, correct. So, I think our price increases, as we mentioned, last September, we did a price increase that was even higher than the 1% to 2%, and we keep doing price increases in those products or segments where we believe that we still have some room to monetize our customers better. The reason why we did the price increase in September last year also was because we thought that was the correct thing to do. And we were expecting also, or we were hoping that the market could react in the same way, which didn't happen. So, that's for the last September. Now having said that, again, we are always looking for opportunities to monetize or to optimize the pricing of our subscribers. So, we keep doing that in -- if we cannot do it in a broad type of thing like we did in September, we still do it in more localized or personalized type of way.

Now, I'd like to open the line for Sabrina, if you have any follow-up questions to our management team.

I have one follow-up question, but it's not related to my earlier question. So regarding the spectrum allocation post-merger, will there be any obligations or plans to return any of the spectrum assets to the Ministry of Communications following the merger?

Okay. Thank you for the question. So, currently, we are still in the process of getting the approval from the Ministry of Komdigi. So at this point, of course, the aim is to actually retain all the spectrum that we will have. However, the -- because it's still under process, so we still do not know what will be the approval from the Kominfo, whether we can keep the whole spectrum or as the previous merger, be IOH or the previous AXIS merger that the Kominfo actually obliged us to return a certain part of our spectrum. But the aim is to keep the whole spectrum.

Now let's move on to the next question. The question comes from Eunice Goh from Sixteenth Street Capital. A follow-up question. This is about the incumbent players, which is being aggressive either in terms of pricing or marketing campaign in 2025. And then also in terms of purchasing power, are we seeing any improvement? I think this question will be addressed by Pak David.

So, 2025 is still 1 month only, right? So 2 things. The incumbent is still aggressive, yes. Definitely, yes. So, I think that's number one. Number 2, purchasing power, are we seeing any improvements? I think it's still early to say. You know that January, usually, it's a month after Christmas and the holidays where it can be -- the purchasing power is not the greatest. We know that soon the Ramadan period will come. So, we hope to see that there's some improvement.

Okay. I would like to invite Eunice, if you have any follow-up question.

Just to clarify, so you said that they're still being aggressive still in terms of pricing, marketing campaigns, like can you provide some color on that?

Pricing? So it's like the SIM cards that you can find currently in the retail outlets or in the market from the incumbents are probably the cheapest from any other competitor and in many areas by margin.

And can you share what's kind of the difference in terms of pricing between XL and incumbents?

Yes. It depends in the different areas. I'm happy to share some examples not here now, but have to do so if needed.

Now, let's move on to the next question from Arvind Vijay. I think the question is that how much room can you lower the OpEx, operating expense, in terms of the tower rental rates and fiber costs? To answer this question, I would like to invite Pak Feiruz to provide some color.

Yes. Thank you, Arvind, for the question. I don't think we'll be able to give an indication, right, in terms of how much room. But let me try to answer this question in a different way. What we have done is not just only trying to reduce, right, the unit cost, but also try to ensure, increase the productivity, right, of each of our sites and as well as the capacity utilization of the sites as well as our fiber. So, that strategy has helped us to maintain, right, almost a flattish cost or reduce, right, year-on-year in the network costs as you've seen in the 2024 results and has also helped the profitability, right, of the company. So, very much sweating the assets and ensuring that we reap the productivity of every of the assets that we have deployed.

I would like to invite Arvind to unmute and ask if you have any follow-up questions.

Pak Feiruz, can you hear me? Yes, it's [ Raymond ] here actually. For some reason, the system shows my colleague, Arvind. The follow-up question I have on this, [ Pak Feiruz ], the thinking behind this question is that on one hand, we know there is this Internet Mura at IDR 100,000. Today, it's still very small. Longer term, it could be big, particularly if this particular company could win the 1,400. I know execution is a question mark. But on one hand, I noticed this, correct me if I'm wrong, your fiber cost at a steady state will come down to roughly around IDR 80,000 per month once you reach a certain threshold. I just thought that the IDR 80,000 is still too high, particularly in anticipation of a new competition. Yes, I just want to have your thoughts on that, Pak.

Thank you, Raymond, for the question, right? Yes, I think 80,000 you're referring to leased rates, right? I think we have published as well, right, [Technical Difficulty]. But certainly, again, we will have to look in terms of the supply, right, as well as of the FiberCo versus the demand, right? And at the same time, when we decide on where to play and how to play and what price points to play, we also have to be very careful and look at the segments that we want to play, right? So, I don't think one size of price you should apply for all segments, right? Clearly, there are various segments in this fixed broadband that is up for grabs, right, in the market. Maybe I'll add.

Yes. I'd just add to Feiruz, right, I think lower price points on the retail side will put pressure on the entire value chain. So it's not just us. Even the fiber lease partners who are actually deploying the fiber will -- are, I'm sure, looking at the CapEx per home pass that they are spending, how to eke out more efficiencies so that they can deploy at a lower cost and then share the benefit with the ServeCo tenants.

Yes. That's something to consider, but thank you for the response because I'm also hearing one of other competitor of yours offering IDR 150,000, although it's not probably offered. I don't know exactly where they offered, but I've been hearing they also offer IDR 150,000. But one thing that I'm worried is that the intense competition in the cellular spill over into the broadband business. This is the last thing that I want to see actually.

Yes. I mean -- you're right, it is being broadly offered, IDR 150, 000. In fact, there was a question earlier in this call about someone offering IDR 100,000 for 100 Mbps. So that is happening. And yes, I mean, price-based competition is not good for the industry period, be it mobile or fixed.

The next question comes from Piyush Choudhary from HSBC. A few questions here. The first one is about the mobile segment that has taken tariff hikes during Q4, whether this is sustained or you have rolled them back? And I think a question on mobile competition, I think, has already been addressed by David. There is another question on the Telkomsel that increased tariff in Q4. Have they gone back or become more aggressive? And what has changed, which is leading to the flat? I think, yes, this has been addressed. But David, feel free to answer.

So regarding the tariffs that we did in September, no, we have not rolled them back because once we increase the prices, we try to keep them there. Now things that we can do, localized, adjust the benefits that we give for the price in order to remain competitive in the market. So those type of things, we don't do nationwide, but we go localized to certain areas or to certain customer segments as we see it, right? The mobile competition, I already mentioned, so tough, still tough, especially driven by the market incumbents currently. Telkomsel increased tariffs in fourth quarter. So, we are not very aware of any price increases from their side. Maybe to some of their existing subs, they will try to monetize as it's normal. But the reality is that in terms of acquisition, they are extremely aggressive, which I'm sure also some -- to a certain extent, they will have to cannibalize a little bit themselves, right? We mentioned this with Telkomsel Lite. Now what we are seeing, it's -- yes, it's in the same direction. So, have they gone back and became more aggressive? Well, I mean, they are aggressive like since September, October, we have seen them being very aggressive. Now regarding to the flat mobile ARPU quarter-on-quarter, as mentioned, partly driven by this aggressive competition. One of the things that we have seen is like even if we increase prices and some of -- many of our customer segments have increased their ARPU, there have been certain segments that we have seen traffic decrease from this high ARPU and they decreased their ARPU. So in the end, all in all, it has been like a flattish ARPU quarter-on-quarter. This added to, again, not only to the mobile competition that is with Telkomsel, as I was mentioning before, we have other competitors as well. One is Wi-Fi that keeps spreading through Indonesia and not a competition, but the reality is that the purchasing power is not as high as it was like a few months before.

I'd like to invite Piyush now to open the line and ask any follow-up questions, please.

Can you hear me?

Yes, Piyush.

Just following up on this. So, can you give us some understanding like is it specific regions where they are flooding the market with low-priced acquisition SIMs or this is happening across all the regions? And this is primarily on the acquisition pack or even spilling over to recharge coupons also? Yes, is the competition spilling beyond the starter packs also?

Yes. So number one, regarding the localization, it's nationwide. Now of course, in certain areas, they are more aggressive than in other areas. I guess that's depending on their market trend or where they see that they need to be. But it's nationwide. So even in areas where they are historically strong, we are seeing them playing aggressive. Now, mainly the aggressivity, it's in SIM cards. But you can think that when the SIM card price is so much better than a top-up or than a voucher, you generate the unwilling behavior of use and throw, et cetera, right? So, that should be happening. Does that mean that they are not addressing the vouchers? No, they are also addressing the vouchers, but we see more aggressivity, how to say, especially in that acquisition part or in the SIM card.

Right. So like what -- so the merger announcement between you and Smartfren has also happened, right? So what needs to change for the industry ARPU or pricing structure to improve from here now?

Sorry, I didn't get the -- so what do we believe that the market structure will do moving forward?

No, no, no. I'm saying in mid-December, yours and Smartfren merger has been announced, right? So, now we are moving to a 3-player market. I'm trying to understand what needs to change for this price aggression to stop by the industry for mobile ARPU to start kind of....

Yes. That's a good question, Piyush. So for us, again, 2024, I think we did a lot of efforts from the beginning until the end, right? I think there were different players being very aggressive in different moments. The question why? I guess it's because players follow market share of subscribers. I mean, I cannot think of other things. So, when one player believes that either they are losing subscribers or that they are not gaining subscribers at the speed that they wanted, it's when someone starts going very aggressive in the acquisition, right? And I think it's as simple as that. So again, with a 3-player market, I don't know how these things get fixed, to be honest, but I guess that having the correct expectation from every player, I think it's a starting point and understanding that this type of aggressivity doesn't really support or help anyone, right? Because if we gain market share of subscribers, but the ARPU of those subscribers is very low, then in the end, the only thing that we are doing is destroy industry value. So, I think that's the starting point. But again, I mean, that's what I see at least from our side.

Got it. This is very helpful. And has the other brands also been similarly aggressive like...

So I mean, as I was mentioning before, I think there have been like different timings for different aggressivity. So currently, if you ask me, what is the big aggression in the market or the one who is going aggressive, very clearly the incumbent.

The next question comes from Niko from BRI. There are 2 questions. What is actually the expected revenue growth in 2025 for the mobile and possibly see the growth considering the fixed broadband? I think I would like to -- I think, invite Pak David and also Pak Abhijit to provide some colors on this.

I think as we were mentioning before, for the guidance for 2025, I think we are not going to share anything now given in the corporate action that we are developing.

Look, regards fixed broadband, we have stated that we have around 6 million home passed. So obviously, the intent is going to be to drive up the penetration of this installed home passes for 2025.

Niko, do you have any follow-up question?

No.

The next question comes from [ Narendra Adi ]. You have -- there is -- I think one question is you have an EBITDA improvement in 2024, especially due to the declines in rental and service costs and sales commission. So, do you expect this to continue in 2025 to maintain the EBITDA margin minimum at 2024 level? I would like to invite Pak Feiruz to provide some colors on this.

Yes. Thank you for the question. I think if you've seen in the fourth quarter, some of the key efforts that's been made by the team is cost management and asset productivity. I think that will certainly continue, right, post-2024. For example, we've indicated one of the major initiatives was on sales and marketing, not only optimizing the traditional, but also moving from traditional to digital. So you've seen in the slides that have been shown, right, the contribution from digital has also grown. So, that's also very much in line with the strategy to optimize our distribution channel. So that will further continue. With regards to the guidance on whether margin, I think as we said, we are currently in the midst of a corporate action. So, we will not be able to give any indication, right, just yet in terms of where the margin would be, right, in 2025.

Narendra, we are unmuting your line. Can you just ask if you have any follow-up question?

No. Nothing.

There is another question from the chat window. Let me just read it out. Are there any plans for dividends? So, I would like to invite our management, Pak Feiruz, to provide some guidance and color on this, please?

Thank you, Chris. Thank you for the question. This is, yes, the full-year results. As always, we will be having our Annual General Shareholders' Meeting. I think that's expected to take place towards the end of the first quarter. I think by then, we'll be able to share, right, the plans for dividends. We do have a dividend policy of a minimum of 30% of profit attributable to shareholders. In the past, we've given 50%. I think heading forward, we will table to our shareholders, right, for approval. So, I hope that answers the question.

There is another follow-up question from the chat window. What is actually the update with regards to the merger? Is there any update from the management in regards to the merger progress?

As we've highlighted in the slides, I think we're on good -- on track, right, the time line that was given. Ibu Dian has also mentioned that the submission to OJK is currently in progress. The submission to Ministry of Communication and Digital is currently in progress. So, that milestones are still being on track. And we've given an indication that we hope to complete the transaction within the first half of 2025.

I would like now to go back to Niko. Niko, I think we are now able to get you unmute. Can you, please...

Am I audible?

Yes, Niko.

So basically, what I wanted to ask is about the sector growth. How do you see the mobile growth in 2025? And if you can give a wider picture by including also the fixed broadband, what kind of growth should we see in 2025, considering also the merger? Will the merger bring positive impact on the sector? Or do you see Telkomsel being continuing this path of being aggressive, talking about aggressivity? Yes, that's my first question. And my second question is, I want to measure the impact of the fixed broadband revenue in the fourth quarter. So, you grew by 8% -- sorry, yes, by 8.8% on the data and digital services. How much is that coming from the fixed broadband itself? Yes, that's the second question.

Niko, this is Abhijit. I thought we had answered your question about the revenue growth for '25. So for the fixed, I had said that we have an installed base of around 6 million home passes. So obviously, for 2025, the focus is going to be to drive up the penetration more and more into these home passes. As for mobile, David had answered that we are not issuing 2025 guidance given the impending merger at this stage. And I'll pass on to Feiruz.

I just want to check the sector, how do you see the sector? I mean, obviously, you are -- it's a big impact coming from you. I know -- yes, XL and the merger with Smartfren should be impactful. But overall, how do you see the sector growing?

Yes. Niko, to be honest, I would like to be able to answer that, right? But it's a difficult question. So now if you ask me, will the merger help the sector? Definitely, yes, right? I mean it's like a 3 player. It's better than 4 players. So, I think in that sense, I think we can all agree. Now it's also true that it's very uncertain in this moment how this is going to move. Still only 1 month, but we want to see how each of the players start behaving. So if the aggressivity from the incumbents slows down and we start playing more rationally, all of us and prices go up, ARPUs go up, so it will be a good year. If -- again, the battle continues being for the subscriber market share and the aggressivity continues being there, it will be a more difficult year for everyone, not for -- not only for once, but I think it will be for everyone. That's what I can say. I would like to have a little bit more time in order to be able to give some numbers.

Okay. So if your question was about the sector on the fixed side, yes, in terms of potential, the sector still has a lot of potential to growth. But again, similar to mobile, right, the question is at what price points? I mean, in the previous question from Raymond, we were discussing players offering retail price points at IDR 150 and IDR 100. And this impacts the entire value chain because can you deploy in a way that will allow the industry to earn economic return? So that's the question. But in terms of growth potential, I still think that there's great potential in this industry.

Yes. If I can follow up, I mean, yes, would you consider, I mean, launching maybe another brand for the low-end segment, much like your peers are doing?

On the fixed side, we continuously evaluate our commercial strategy going forward, right? So at this stage, I'm not going to preclude that by -- it's not a yes, it's not a no. We keep on evaluating what is the best way to target the segment right. And what kind of a brand is actually the end point? The starting point is where are you deploying. In which housing areas are you deploying? So, we continuously evaluate the entire chain and take the commercial decision accordingly. I mean, even if you change the name, but you still enter into a price war. It is still the same, right? I mean, changing the brand is not going to impact the economics.

Okay. I think we have come to the end of the call. We have, I think, addressed all the questions from the investors and analysts. With that, we conclude today's conference call, and we would like to thank everyone for the participation. And as always, do get back to us through the Investor Relations should you need further information or clarification. Please stay safe and healthy, and we will see you next quarter. Thank you.

Thank you.