PT XLSMART Telecom Sejahtera Tbk ($EXCL)

Ladies and gentlemen, good afternoon, and welcome to XLSMART's First Quarter 2026 Earnings Call. My name is Christopher, Head of Investor Relations, and I'll be coordinating today's call. Our presentation and financial results were released this morning and are available on our Investor Relations website. We will begin today's call with prepared remarks from our management team followed by hybrid Q&A session. [Operator Instructions]. As a reminder, this session is being recorded. I would like to introduce our speakers for today's call, Mr. Rajeev Sethi, President Director and CEO; Mr. Antony Susilo, Director and Chief Financial Officer; Mr. David Arcelus Oses, Director and Chief Commercial Officer for Consumer; and Mr. Feiruz Ikhwan, Director and Chief Strategy and Home Business Officer. And with that, I will hand over to Mr. Rajeev to begin the mention highlights. Mr. Rajeev, you may kindly proceed.

Thank you, Christopher. Good afternoon, everyone, and thank you for joining us today. Just to remind you, when we entered 2026, we do a purpose, which was to connect every Indonesia for a better life. This purpose remains the foundation of our strategy, getting us how we invest in our network, enhance our customer experience and drive sustainable growth. In the first quarter, we made solid progress in translating this purpose into execution. If I speak about integration, the execution continues to be ahead of the [indiscernible] over all key milestones for the quarter achieved and majority of the targeted initiatives completed especially. This reduces network overlap improves operational efficiency and accelerate synergy capture. As a result, integration risk continues to decline as we move into the second half of the year. On the financial side, we are seeing improvement both in the top line revenue from [indiscernible]. Revenue growth in this quarter was supported by [ festive ] demand. We know [indiscernible] this quarter and gradual market repair, while we are also making steady progress of optimizing our cost structure. This reflects disciplined execution on both commercial and cost initiatives. On 5G, on the network side, we have accelerated if I do [ roll out ] at the continued expansion has strengthened into quality, delivering a much superior customer experience and faster speeds. This positions XLSMART to handle pricing data demand easily while expanding the coverage across key cities, reinforcing up [indiscernible] leadership in Indonesia. To summarize, we began the year with clear purpose and disciplined execution across integration, growth, cost and network expansion. This gives us confidence that we are on track to deliver strong performance while [indiscernible] I mention to connect the Indian us [ parameterize ]. I move to the next slide. As I said, our execution in the first quarter is completely aligned with our purpose to connect every Indonesian for a better [ line ] and our vision to become the most loved company, the best place to work and the most efficient service provider. For customers, we are strengthening experience to continued network integration and 5G expansion. Our focus on network leadership is delivering better quality, wider coverage and faster speeds. These improvements are increasingly validated by independent benchmarks including the later [indiscernible] we had from Ookla for being the fastest 5G network, reinforcing the experience we provide to our customers. For our employees, we continue to build a stronger, more unified organization. This progress has also been recognized externally with XLSMART being included in Times 2026 Asia Pacific Best Companies List and it's such an honor for us being such a young company, and it reflects our performance in employee satisfaction, financial strength and sustainability. Finally, efficiency remains a core pillar of our execution. We are accelerating integration led synergies, simplifying operations and strengthening cost discipline. These efforts are building structurally a more efficient operating models with impact to be reflected in our margins over time. Overall, this quarter reflects [indiscernible] progress in delivering our purpose enhancing customer experience to network leadership, strengthening our organization and improving efficiency to support sustainable growth. As I mentioned earlier, integration continues to progress ahead of the plan, with strong momentum across network and synergy culture. Specifically on network integration, we've integrated more than 40,000 sites into XLSMART network, while simultaneously deployed additional 4,900 new sites which helps improve our coverage. This reflects simultaneous execution, consolidating overlapping infrastructure while expanding capacity to support future growth. On synergy capture, site consolidation is advancing well, with 77% of targeted tower dismantling already completed. This is the biggest [indiscernible] of cost efficiencies and operational simplification. And we remain on track in fact, I may say [indiscernible] to realize integration synergies. The next step would be IT and platform transformation. IT integration programs are progressing well to enable a unified system and operations. This will be super critical to support product harmonization, further improve our customer experience and correctly enhanced organizational agility. Overall, we expect the entire integration to be completed within this year, providing a strong foundation for both operational efficiency and sustainable growth. I've been speaking about the network leadership, and we are very proud of where we've [indiscernible] so far, and we'll continue to strengthen our network leadership, powered by accelerated [ BTS ] deployment and rapid 5G rollout, enabling better speed, better experience for our customers. On network, our total BTS surpassed [ 233,000 ] in the first quarter, growing 12% quarter-on-quarter and more than 50% year-on-year. This expansion driven by both 5G and 4G, processed depth and resilience of our network. On 5G, our footprint has expanded to 43 cities as of [ 10 ] March with continued rollout across the urban areas. We'll continue to expand 5G coverage further strengthening our position in delivering the fastest 5G experience in the country. Importantly, the stronger network is not just about scale. It's translating into real performance. With improved quality and speed, we were able to handle a 21% surge in data traffic during Ramadan period. Overall, our investments are clearly reinforcing our network leadership, expanding coverage, enhancing experience and supporting Indonesia's accelerating data environment. With that, I'll take a pause and hand over to Par Antony, who walks us through the financial results.

Okay. Thank you, Rajeev. And good afternoon, everyone. So let me start the first slide about the operational metrics. This quarter shows that we continue progress in shifting forward to the quality [indiscernible] supported by the ARPU improvement as far as the stabilizing subscriber plans. Our mobile subscribers stood at $69.4 million. The sequential decline from the previous quarter was expected, reflecting our continuous focus of getting up in active as well as the low-value [indiscernible] and also the impact of the pricing discipline following the product simplification. The reduction was primarily coming from the newer subscribers with less than 3 months while the long-standing subscriber base remained stable. Importantly, the pace of the decline has moderated, and we are seeing early signs of stabilization as market preparation progresses. Our priority remains on improving subscribers' quality and monetization, which is reflected in the continued ARPU improvements. Meanwhile, our blended ARPU continued to improve by 6% and Q-on-Q at [ 7,300 ] driven by both prepaid and postpaid segments. This reflects our pricing discipline as a stronger data monetization following through the network position. Data traffic remained healthy at 3,867 megabytes, growing 36% year-on-year, although slightly lower compared to the last quarter because of the less number of days in the Q1 compared to the last quarter Q4. Overall, the demand continues to grow supported by expanding 4G and 5G corporates as well as improving the user experience. Finally, the fixed broadband subscribers were stable at 940,000. We remain focused on quality of subscribers and operational discipline while positioning the business for more sustainable growth. And at the same time, the fixed broadband ARPU remain resilient despite that is a competitive market and [indiscernible]. Overall, these operational metrics reflects the early sites of stabilization, with stronger monetization and shipment subscriber management supporting quality led growth. Then move on to the next slide on the financial performance of the first quarter 2026. We start with the revenues. We recorded 38% year-on-year positive growth in terms of revenue to IDR 11.8 trillion, primarily being driven by the mobile business due to market preparations, which drives higher ARPU. The performance was also contributed by [ Lebara Momentum ], where in this year, focus solely in Q1 2026. And on a quarter-on-quarter basis, the revenue we will look at it declined by 1%, which is we view as a broadly stable considering the fourth quarter had more operating base. At the EBITDA level, normalized EBITDA increased 26% year-on-year to become IDR 5.4 trillion. The performance was supported by a solid revenue improvement of cost efficiencies. So the EBITDA remained resilient with the normalized margin at 46%, roughly stable compared to the last quarter. The bottom line shows a stronger improvement. Our normalized PAT grew by 254% to be IDR 1.4 trillion or an increase around 90% to [indiscernible]. This was supported by lower interest expenses from the loan as well as the ROU assets. And also, there is a proceed from the sale of these [indiscernible] reflecting to the PAT group. Higher normalized PAT indicates the integration [indiscernible] to make a favorable result in terms of revenue growth as well as cost efficiencies. Overall, the first quarter reflects a stable financial performance with solid revenue trajectory resilient EBITDA and disciplined cost management as we continue progressing through the interest base. Okay. This slide provides a reconciliation to give a better understanding between the reported and the non-price EBITDA and PAT. Here, we reflect the underlying performance of the business, including the integration phase. At the EBITDA level, the reported first quarter 2026 was IDR 5.4 trillion. This includes a relatively small integration-related costs around IDR 28 million which is primarily associated with some costs from the ramp-up of this [indiscernible] sites. The EBITDA has begun to show a sign of stabilization and is increasing contracting of our underlying operational performance going forward basis. At the bottom line, we continue to recognize an accelerated depreciation around IDR 2.5 trillion on equipment from old [ finders ] as well as the 900-megawatt spectrum on the -- as the network integration progresses. Adjusting these marks items, the normalized PAP for first quarter of 2026 was IDR 12.4 trillion positive, providing a clearer view of the company's core profitability. Over to the next slide. Turning to our cost performance. The operating expenses moderated in the first quarter following the integration drives in the previous quarter. Operating expenses declined by 18% Q-on-Q, to become IDR 6.4 trillion, mainly reflecting normalization after the heavy integration-related activities happened in the Q4 2025 last year past quarter. The cost base is beginning to stabilize as integration execution progresses. Now on the interconnection and other direct expenses declined by 19% Q-on-Q, reflecting lower enterprise revenue due to a seasonal factor, while the infrastructure costs also shows a decline by 11% quarter-on-quarter due to elevated integration related cost, which is booked in Q4 2025. Importantly, the labor costs declined sequentially as the asset organization structure was established and already the [indiscernible] alignment already progressed. As a result, labor costs as a percentage of revenue improved from the previous quarter. Overall, the first quarter reflects a moderating cost base following the integration agreement [ pipe ] with improving cost discipline and early realization of operating efficiencies as we move closer to the corporation of the integration. I think that's it from my side. I shall now hand over back to [ Pa Rajeev ] to provide the full year 2025 guidance as well as closing remarks. Thank you.

Thank you, Pa Antony. And as Pa Antony mentioned, I will talk about the outlook for the year 2026. We are maintaining our 2026 guidance as previously communicated during the fourth quarter earnings call. It's supported by the solid starts with the year and the continued progress within making and integration. For revenue, we are expecting our growth to be in line with the market, reflecting a disciplined approach focus on value and improving customer experience. At EBITDA level, we continue to target our growth, which will approximately be twice that of the revenue growth, supported by synergy realization, improving cost structure and operating leverage as integration services. Capitalized CapEx is expected to be around IDR 15 trillion, primarily allocated to network expansion, it rollout in 8 cities and integration-related initiatives to strengthen long-term competitiveness. Synergies, finally, we continue to target the gross merger synergies of between USD 250 to 300, with majority expected to be realized as network consolidation and operational integration advance for the year. While the business fundamentals remain solid, we are aware about the external development and we continue to closely monitor this, including the evolving geopolitical situation in the Middle East, which may impact macro conditions and prices. Having said that, at this stage, we remain confident with our full rates. Overall, we believe we are well positioned to deliver our 2026 targets, supported by disciplined execution ongoing integration and continued focus on sustainable value creation. With this, I conclude my remarks and hand it over to [indiscernible].

Thank you, Mr. Rajeev, Mr. Antony for the presentation. [Operator Instructions]. So the first question coming from [ Andre from UOB ]. Let me report the question. There are -- the first question is how much the integration costs, et cetera, the depreciation and asset impairment in this year? And why is it so low this quarter? I think Andrew is referring to the integration costs. And number two, question number 2 is what percentage is currently of cost optimization for network and human resource rationalizations? And number three, for new 5G spectrum, how much do you think it will cost what are the expected upfront fee? Do you think you will need to pay? For the first question, I would like to Mr. Antony to provide the colors and number 2 as well.

Okay. Thank you, Andrew. So to answer number one and number 2 [indiscernible]. On the number 1, I think regarding the integration costs, I think, yes, the numbers in the 2025, if you look at the [indiscernible] slides that the important integration cost is around IDR 1.8 trillion. However, we said 2026 first 1st quarter. It shows some very low numbers. It's only like IDR 32 billion. Well, I think to answer that the integration costs, most of it comes already is already completed like almost [indiscernible] in 2025 or the competitive all the progress of the same work optimizations. So there in 2026, we are expecting, of course, there is still some integration costs, but [indiscernible] will not be as material as 2025. If 2025 is around IDR 1.8 billion, 2026 would be approximately maybe 25% of that numbers or maybe a remaining below IDR 500 million. So that's on the integration costs. While for the excellent depreciation, this is regarding the spectrum of 900 megahertz as far as the old assets that we need. We don't use it anymore. So this thing is still continue. We are expecting the project to concrete by hopefully, by Q3, by around of Q3, 2026. So in terms of the amount itself, if you record in 2025, we already booked IDR 1.5 trillion of accelerated depreciations. Then in the -- for the 2026, we are estimating approximately maybe a lot almost IDR 5 trillion to IDR 6 trillion that we've made in [indiscernible] in this year. Majorly will be booked in the Q1 until Q3 2026. Hopefully, by Q4 2026 will probably be the numbers [indiscernible]. So I think that's to answer the item #1. I think relates to item #2 on the percentage cut on the repo optimizations and the whole human resource at [indiscernible], I think I would like to say on the number of optimization, like I mentioned earlier, we have done it already most of it -- most of the sites already modernized. I think by [ 8% ] that -- but -- and in terms of human resource [indiscernible], I would like to say that maybe most of the things already completed in Q4 2025 last quarter. There are still some imperatives for the more sources, but will be around [indiscernible] small in this year. So I think [indiscernible] is related to the integration cost as well that I mentioned earlier that we are expecting the [indiscernible] cost from the network so eating is fairly low, relatively low, small, maybe below [indiscernible]. I think that's the answer to number one and 2 and regarding #3, Pa Rajeev maybe [indiscernible].

In terms of how much do we think we need to pay. I think that will be speculating and not get into that. What we know are the initial auction details, which have been published. That's what we know. We know the base prices, which have been set for both these sectors. We know the rules which have been set in press. We continue to evaluate different options we have. And the end result will be determined by finally how the auction is conducted and which all operators are interested in different spectrum. So for me, it will be very difficult to speculate on this. The only thing which I can say is one thing which is different this time, the annual previous onetime has [indiscernible] twice the annual in the previous auctions. So that's different. Obviously, there are different changes which are there, I'm sure all of you have access to that document. And my information is also limited to whatever is publicly available.

Andrew, do you have any follow-up questions? Okay. If no questions, then I think we can move on to the next question. The next question comes from Sabrina from [indiscernible]. There are 2 questions. The first question is data yield continue to improve through Q1 2026, increased by roughly around 3.9% Q-on-Q and 1.5% year-on-year. How do you view the sustainability of the trend going forward? And particularly, given the expectation of a more subdued consumer spending post the [indiscernible], what strategies do you plan to implement to sustain that yield? And the second question is about the depreciation. We observed an increase in depreciation expenses compared to the previous quarter with the depreciation to revenue, ratio also trending higher. Should we treat the first quarter results figure as the run rate for the remaining quarters in 2026 or should we expect further acceleration or deceleration in subsequent quarters? Could you provide more color on the expected package? I'd like to invite David to provide some color, please, for the data [indiscernible].

Okay. So thank you. Regarding the yield, yes, as you mentioned, it has been increasing quarter-on-quarter and year-on-year. As we have been socializing before, I think this is a consequence of many decisions that we have taken in order to move towards good quality subscribers. The first of them was killing many of the freebies that we were already given in our products and services. So many freebies that we [indiscernible] order to avoid [indiscernible]. Second one, as you also know, it's increasing significantly the acquisition quality. So we moved to [ 1 SP ] that is IDR 35,000 when previously, there were like many more SPs with many more gigabytes and lower [indiscernible]. The third decision was to improve the portfolio in general. So there were some products that were low yield that have been eliminated. So we've killed the 3 improving the quality of acquisition or the SP yield and doing certain portfolio movements, we have been able to have this yield consequence or outcome, right? As you mentioned, it's positive, positive this quarter, positive year-on-year and in the past few quarters. Now we believe that we have a competitive portfolio. Our acquisition machine, it's also working properly. So I guess that the yield will come as an outcome of the mix of products that our consumers select, there are lower yield products at higher prices and of course, a higher yield product at lower prices. Depending on that mix of products, we will see how the yield evolves in the following quarters. Is this sustainable? We will see, I think it shouldn't move too much in one direction or another. But again, if the customer material moves towards higher prices, we will see some kind of yield decreases. It's the opposite, we will see yields that can even improve further or maintain. Hope that this answers the question.

Thank you, David. Now let's move on to the next question, maybe Pa Antony, Mr. Antony, you want to provide some color on the depreciation.

Okay. On the depreciation expenses, I think -- if we look at the position expense actually includes the accelerated depreciation that we did in 2025 5 and from also 2026. If you look at the slide that important was 2026, there is a onetime cost of accelerated depreciation is from [indiscernible]. So if you want to treat the first quarter igures as the run rate, I think you should take out this one-off item first. And then for the remaining quarters in 2026 to Q2 and Q3, as I expected earlier that we are expecting the accent depreciation still continue. The amount maybe like [indiscernible] maybe will be -- for this year will be around IDR 5 trillion to IDR 6 trillion. So already IDR 2 trillion this quarter. So the remaining IDR 3 trillion -- IDR 2 trillion to IDR 3 trillion will be hopefully in the Q2 or Q3, Q4, but Q4 will be much, much smaller. So I think that's to give you the understanding about how you want to analyzed and depreciation expenses.

Thank you, Antony. Now I'd like to open the slide for Sabrina. Sabrina if you have any follow-up questions. We have open your line.

I have one follow-up question. So on the data front, I think we have assumed that the likes of [ Axis ] and [ Smartfren ], they have also been increasing the prices as well as the yield. So do you think that the improvement in the data yield for first quarter is much more driven by from [ Axis ] and [ smart Fendt ] that this positive contribution mostly still coming from XL?

So it's from all the 3 brands, to be honest. So each of the brands have like, as you know, different behavior. So some were maybe relying more on [indiscernible]. Some were relying more on the acquisition of the SPs, but the 3 brands have seen positive movement in not only the quarter-on-quarter, as I'm saying, it's like if you take the longer trends, right, the last 4 quarters, you can see a positive trend, and it's been all the brands.

Thank you, David. Sabrina, any follow-up on that? Okay. If not, I think we can move on to the next question. The next question comes from [ Arvin ] from [indiscernible]. Two questions. The first one is about biometrics. Any updates on the biometrics age registration and implementation by the com? And second one is how does the management assess strategic importance of the 700 and megahertz bands in context of XLSMART medium-term positioning, network positioning and capacity requirement. I think for the first one on the biometric David, I would like to give some cuts.

Yes. So the biometer registration, it's already been approved and implemented. So it's already available in the market, that will be a strong implementation of mandatory starting in July. So I think we are ready for it. And we truly believe that it's a very good movement for the industry to move towards this type of security to the industry and to the -- to our customers.

And maybe -- Pa Rajeev, but just thank you, David. And how do you think for the management assessment for the spectrum option? What do you think is the important --

Yes. As I mentioned earlier, the initial guidelines have been published by the regulator a few weeks back. We are evaluating us. Your question specifically speaks about medium term, and we know that spectrum is required over the length of its assignment to us, which is 10 years and in a market which is relying heavily on data consumption growth spectrum would be needed for future. We're evaluating the pricing which has been shared with us, the reserve price and the auction mechanism, and we are putting all these scenarios together. And based on that, we'll take a decision in terms of participating in either one or both of the spectrums. And obviously, we'll share the updates once we get [indiscernible]

Now let's open the line for to [indiscernible] ask any questions. Okay. It seems like no question from [indiscernible]. I think we are still waiting for more questions from the participants. We will wait, let's say you have any follow-up questions with regards to [indiscernible] presentation. Okay. We have one question coming from [indiscernible]. The question is about the churn decline with the biometrics. David, you would like to give some colors on this.

Yes, that's a very good question, right, and difficult to answer. Since we have implemented our new acquisition -- quality acquisition strategy we have seen the acquisition numbers go down. And I'm sure that you have seen also our subscribers' numbers how they have been cleaning up in the last few quarters, right, mainly because of number of subscribers of low tenure or less than 3 months reducing. So we have gone already through that. I don't know whether the [ copay ] or cleaning process. Now it's true that the industry probably maybe not all. So again, difficult to say how much this will stop, but for sure, it's a healthy measure for the security of our subscribers and for the industry itself in the sense that it will reduce the use and [indiscernible] behavior in the market, which we know that it's very -- it's negative in all senses.

Thank you, David. Maybe [indiscernible], do you have any follow-up questions? Second question, but Raymond has typed in the question. I would -- I think I would like to read the questions. The question is about our home business or how do you position the wireless broadband services relative to the upcoming [ FWA ] from [ MyRepublic ] and services [indiscernible]. I think I would like to maybe invite Pa Feiruz to give some color.

Sure. With regards to question, I think as we've always highlighted how we position our home broadband business, right? It will be certainly from a point of view of delivering the best home broadband that we can to the customer. So focusing on reliability and stability and consistency of the experience that's the angle that we will go for, right, irrespective of the technology, whether it's FTTH. I think I would leave it at that. At the same time, we know that we are looking for better, how should I say, better quality customers, more sustainable, growth in this home broadband space rather than being openly price aggressive.

Thank you, Pa Feiruz, for keeping the colors. [ Maria]. Do you have any follow-up questions? Do we have any other questions from the audience? Okay. We have the next question coming from [ Ata Kuta ] from [ Maybank ]. So there are 2 questions. The first one is what do you think about the competition in [indiscernible]? And second is, what is your primary market for expansion in 2026? I think I would like to [indiscernible] put dividend, maybe Pa Rajeev to add some color.

Yes. So I mean, competition as always, it's tough. So we -- honestly, I think new since we don't split like [indiscernible], we focus more on city per city granularity, and we look more into the cities. There are some cities in [ Java ] the competitive, some of the areas that are leaders competitive and same happens in [indiscernible]. Yes, it's true that [indiscernible] stronghold traditionally, right, especially [indiscernible], and that might be a little bit different when Java most of the players are. But I wouldn't make such a big difference now between [indiscernible] every city, like it's a different world with different competitive dynamics, different network stance and that's our focus. Primary market for expansion in 2026. So I think as you have already mentioned before, we have -- we are expanding -- I mean we are expanding in different ways. When it's in coverage with new sites, when it's in quality with 5G and another one is in quality but with [indiscernible] capacity as well, right? So again, we have different type of expansions in different areas with different types of technologies. So again, we select each of those cities or each of those expansions where we need new sites or we where we need new capacity based on each of the cities.

I would like to [indiscernible] the slide, if you have any questions. [indiscernible] doesn't have any questions. So let's move on. I see that [indiscernible] but then, let's open up the line for Sukriti from Bank of America, BofA to ask the question.

Sorry, my chat board function does not work. Just one quick question on how we should generally think about the direction of ARPU growth and quantum of ARPU growth going forward? Are you positive on 5G driving some of that growth on ARPU? And do you think ARPU growth moderates, if it's organic growth and not headline price increases that we are able to take in the current macro environment is ARPU growth likely to moderate from her to low single-digit levels?

There are several ways to look at this. The first one is the consumption-led growth, which will impact ARPU. Should look at our data consumption currently. It's around 20 -- 22, 23 GBs per subscriber and depending on how the user subscribers. Neighboring markets, it has increased much more than that, especially with the launch of 5G, which is less than 3 months old for us in most of the cities, there is not. We are seeing early signs of increased consumption movement, people adopt 5G. So one avenue of growth in the near future would be consumption-led growth. where people consume more data, and therefore, they generate for ARPU. That's one part of it. In the recent past, there has been more rationalized pricing offerings. And I must give it a bit more color. It's not just on the recurring part. It's on the starter parts where most of the action has happened. Where if you know the industry was adding close to 20 million new subscribers a month with a population of 28 million total people in Indonesia roughly the same number of SIM card were being sold in a year at a very low price yield, low ARPU. That has been taken away. So the ARPU increase, which you see some bit of it is coming from that side. The other is more of a price rationalization and very low value recurring packs. Is there a [ retro ] for a further price increase? I would just refer to the ARPU as a percentage of our capital income, that is still 0.6, 0.7 as compared to around 1.1% in similar prepaid markets. So what I believe is customers have the ability to pay a bit more than what they're doing now, and it will come through a combination of both, consumption increase and a bit more of price rationalization as we move forward. And as you would see, 0.6% of somebody's per capita incur is a very small number. But despite those macroeconomic challenges, it may not be a significant factor for us to have an optimistic view over further ARPU growth. Yes, lower -- lowest and lower spectrum of new customers, there may be some challenge there. But apart from that, broadly, we are pretty optimist that ARPU growth will continue. It may not be at the same intensity, the same growth which has happened over the last few months. But definitely, there is still further room for improvement there.

Sukriti, any follow-up question from your side?

Just one quick follow-up. Just wanted to understand, you mentioned [indiscernible] different cities that you now look at it versus Java, ex Java in terms of how you're growing, but any particular cities that you would like to point to where we are seeing better growth on our customer base? Or is it generally very broad-based? And also probably on the same lines, any specific areas where we think that growth would -- we would not focus as much on for certain reasons?

Yes. So I think, again, I'm not going to give names of specific cities, right? I think the 5G where we deploy projected is quite published. So those are like the main cities, and I think is there [indiscernible] I would add that in many cities after our 5G deployment or our new site deployment, our network is it's number one. So we have like the best network in download speed, not only 5G btu also in 4G. And our coverage in those cities is also number 1 or a part with the [indiscernible]. So for sure, those cities will be where we expect our results and our experience to be better. Are there areas where we are not going to focus, well, if we are present, we have to focus that if you have a network, we'll be focusing in the as well.

Now let's move on. We have another question. This comes from Arthur Pineda from Citi. We will unmute your line, Arthur, please ask the question.

Sorry, I couldn't use the chat box as well. Just 2 questions, please. Firstly, on the CapEx. Can you just clarify your 15 trillion CapEx for the year. Does this include your assumptions for 5G deployment? And second question I had is with regard to the spectrum that you have at the moment. Are you at liberty to redeploy some of them or 5G usage? Or are there any specific requirements for you to attach them to older technologies. Because I do see that you have a fair bit of spectrum on the [ 2,300 ] band, it could also be used for 5G.

Yes. I think the first question was on the CapEx -- it includes the entire CapEx. And as we mentioned in our earlier calls also, we can classify the integration CapEx but what we are doing is, given the timing of our merger, we are taking this opportunity to ready our network for 5G also in [indiscernible] where we want to go for 5G. So it's a sum total of the entire CapEx, IT and integration both together. The second question was about? Can you just repeat, the second question was?

Sorry, the second question is with regard to the ability to redeploy some of your existing spectrum bands for 5G. Are there any limitations for that? Or can you actually just reform them for 5G?

All the spectrum is technology neutral. So we can use it as we impart.

All right. Let's move on now. We have the next question comes from [ Angus Makitas ]. This is about the broadband. What is the direction of ARPU for the broadband business and do you have any longer-term targets for the broadband subscribers. I would like Pa Feiruz provide some colors on this, please.

[ Angus ], thank you for the question. I think directionally, if you take a closer look at the industry, what we see as the broadband market is becoming more competitive, right? So that may suggest some pressure over the overall industry ARPU. Having said that, our focus remains on looking at customer lifetime value. We look at better retention as well as very much more disciplined acquisition rather than just competing on price, as I mentioned earlier. I think on the subscriber targets, unfortunately, we do not provide a long-term subscriber targets but we still remain focused to grow this business in a sustainable and profitable manner.

Okay. It seems like there is no question from [ Angus]. So we'll just move on to the next question comes from Sabrina from [indiscernible]. So question is about the BTS. It was mentioned that in the fiscal year 2025 earnings call that XLSMART plans to add 7,000 to 8,000 excise, but BTS has increased by 28,000 Q-on-Q. I didn't see any site dismantling here. Can you please shed some light on this?

Okay. So Sabrina, I think, yes, you're right that if you 2025 we mentioned that there is a plan to add 7,000, 8,000 sites, a number of sites that we want to do for these integrations. Currently, we already deployed approximately around 4,900, almost 1,000 sites in sites that we are adding at this moment from the [indiscernible]. But then in terms of the -- if you look at the BTS count, I think you are exactly correct that the [indiscernible], but I think you should understand that there is a different of recognition between number of sites and [ BPS ] definition. So I think we cannot really correlate the numbers. And secondly, like that, there should be like a formula ratio on the number of stones well. So we talk about the marking side, I think just to reiterate the antiquity measures that we already completed like almost 70% of the tower is [indiscernible].

Yes. I tend to clarify this a bit more. Our physical tower is one thing. And on that physical tower, we put multiple [ BTSs ] to cater to different spectrum, which we have in different technologies we have. So the number of BTSs would continue to increase as we deploy more 5G, but the number of physical towers on which we pay lease will decline from the pre-merger phase. Just to remind you of the numbers. Prior to the merger, we had XL had 45,000 towers and 22,000 [indiscernible] for smartphone towers, total of 67,000. Out of which, roughly 17,000 towers were supposed to be dismounted. As Pa Antony just mentioned, roughly 77% of the 17,000 are already being dismantled. And that's what is flowing into our synergy. In addition, we're deploying close to 7,000 sites this year, out of which more than close to 5,000 sites have been already deployed. So that's the way you should look at it. [indiscernible] 17,000 out of which around 13,000, 14,000 already go down to [ 52 53], and then we added [ 30, 4,000 ] more sites. That's a physical number of towers on which we are in lease and ensuites. I hope that clarifies [indiscernible].

All right. Let's move on Yes, the next question comes from [indiscernible]. This question is about mobile -- what is the exit ARPU for March and also the April. So I like to get some color there for Q1.

I don't think we disclose, right? The exit ARPU or less even the ARPU ongoing in this second quarter. As you can imagine, of course, March was a -- so the ARPU in much a little higher than the average of the quarter. And in April, the [indiscernible] effect. But again, we don't disclose. I can say that, that in March, of course, the ARPUs were higher than the average. And then in briefly come back to an authorization.

[indiscernible], do you have any follow-up question to us? Thank you, all right. Let's move on to the next question from [indiscernible] again. This is about the company AI. Can you outline how the company uses AI in the product business and both operationally to improve efficiencies and for optimizing the subscriber experience. I'd like to [indiscernible] Pa Rajeev to give some color on this.

Sure. I was wondering how [indiscernible] complete without ever AI. So thank you for bringing this topic up. I think this is the buzz. What we believe in XLSMART [indiscernible] technology which has put 2 real [ jewels ] in every single day. And [indiscernible] mentioned, there are multiple ways we are using it. One less to become more efficient in the way we operate. So the tasks, which are repeatedly done by people, we are using to do it better and faster and cheaper. Things like the software the new products we have. The testing of that was earlier maneuver. Most of it has moved to an AI-based tools where it's done faster and with much lesser adverse. Things like route planning of our salespeople. Earlier, it was manual, people decided wishes to go out now with the help of AI based on the needs of the ROs and potentially the potential customers in the phone business. Those route plans are also being designed by using AI tools. So this is just the one area. The other area is making our customer experience better. Significant portion of our network optimization decisions are now being made using AI. As you know, network generates a large amount of data, customers generate billions of records every single day. It's very difficult to process it manually. Most of that is being done now using AI. Have we reached a situation of completely autonomous network operations now, but the ambition is to reserve quickly and we will well on our way in that journey as we move forward. The other thing we also like AI-based CLM offers, we make the best of the customer from a product pricing point of view. So there are multiple ways in which it has been used. And as always, we are never satisfied with the extent to which we are using. We believe there are many more use cases and there are much more things which we can do on the to become even better. We are very excited about this technology. And unlike many other players, we would want to put it to real use rather than just using it for branding purpose.

All right. Any other question from the audience? All right. Since we have no more questions from the audience, I think we can wrap up the call. Thank you once again for joining us today. If you have follow-up questions, please reach out to Investor Relations. Stay safe, stay healthy. We look forward to speaking to you next quarter. Thank you.