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

Good morning, good afternoon, everyone, and thank you, all of you for joining this call today. Quarter 2 Results we are presenting today, it's a significant milestone for us. For the first time, we are presenting the consolidated financials for XLSMART post our merger in April, 16th of April, to be exact. So if I quickly move to the first slide, which is talking about the highlights of the second quarter. Given the merger, this quarter reflects a much larger operational scale. We consolidated 2.5 months of Smart'’s legacy performance into the financials of XLSMART. We believe we started off well we hit the ground running on integration, and I'm pleased to report that synergy renovation on track. Network integration was also according to the plan, and we are already seeing significant tangible improvement in customer experience. Obviously, I'll talk about this a bit more later. We are using this integration, as I spoke about earlier, prior to the integration, not just to combine assets, but to modernize the network, and you see that reflected in our CapEx plan. Our goal is to significantly expand both capacity and coverage across Indonesia. And with the merger now completed, we are entering the next phase position of growth strength, backed by 3 powerful brands, XL, AXIS and Smartfren, a much larger, broader distribution network and much better network, we are now better equipped to serve a wide range of customer segments across the market. That's the broad highlights for the second quarter. If I move to the next one, which is about how do we plan to unlock the long-term value post this merger. I'll take a step back and share the broader vision behind the foundation of XLSMART. I think I'll be repeating when I say this, this merger is not about combining 2 businesses. It is more about unlocking long-term value through 3 critical dimensions, which will enable us to realize the purpose which we have, which is committing every Indonesian for a better life. The first one is the scale advantage. And by bringing together the strengths of both XL and Smart, we now operate at a significantly large scale. Our combined footprint allows us to optimize spectrum usage, improve network coverage and improve unit economics. This scale gives us the ability to deploy resources more effectively and respond to the market dynamics with greater agility, which is particularly important in the industry like us, which is very dynamic, things change at a very rapid pace. The second dimension is about the synergy, and we are focused on capturing the synergy potential of the merger. As you know, the largest portion of value will come from structural cost savings, especially on the network side, but it will also come from vendor consolidation, vendor streamlining and leveraging of the shared platforms. We made significant progress already in aligning infrastructure and renegotiating key contracts to unlock values. But this is not just about cost savings. It is about building a leaner, more focused organization ready to compete at the next level. The third dimension is about creating a platform for growth. This merger creates a very powerful platform for long-term growth. We believe that we are now much better position to expand into new growth areas such as fixed broadband at home, enterprise connectivity and the digital ecosystem. These are strategic growth engines that will define the next chapter of our business. If I have to summarize, while the long-term effects of any integration would be there, and those pressures would be there on the financials in the short term. We are confident in our ability to unlock significant value and accelerate growth in the quarters ahead. If I move to the next one, please. As we move forward, I'm pleased to report that XLSMART has made significant strides in capturing early synergies across 3 areas beyond others. Technology, commercial and people. On the technology front, we have expanded network coverage to national roaming and local, improving service reach and efficiency. Our managed service and now -- are now fully integrated, allowing us to operate as one network. We've also started consolidating vendors to improve speed of response and reduce costs. On the commercial front, we continue to operate 3 brands post-merger, XL, AXIS and Smart. We believe this is a unique position we have, where we have 3 very strong brands, each with more than 20 million customers, which will help drive monetization across our entire product portfolio. We've also integrated the field forces and the digital platforms to serve both our customers and the trade and thereby strengthen our commercial execution. On the people side, we spent a significant amount of time because we realized integrating the 2 teams would be a key determinant of our future success. As you would know, the shareholders move very quickly, appointed a new BOD team and the new BOC team prior to [ ND1]. We've also recently appointed a dedicated Director of Integration, who comes with a strong experience on running successful integrations. Employee engagement, as I mentioned, has been a strong focus. We have been actively involving teams across the country, and we believe these initiatives are just the beginning. We're building the foundation for long-term value by executing fast aligning teams and unlocking scale. We are confident that the groundwork laid today will translate into stronger operational and financial performance in the coming quarters. If I may move to the next one. This is some progress on our integration. I would just give some color on that. And again, I'm pleased to report that we are off to a very strong and encouraging start. As we told earlier, the target is to finish full integration within 8 quarters, and we believe this time line is both ambitious and achievable. Thanks to a very strong team and a very strong commitment of the entire set of people whom I have the privilege to lead. From day 1, we have been laser focused on integration, integrating our network, our IT systems, people, commercial operations, all of them. With one goal in mind to build a stronger, more unified XLSMART. And the core of this would be the customer experience. Anything and everything we do, the idea is to ensure that the customer experience is much better than previous, and we are already seeing some initial results of that. We have hit the ground running. We have top-tier network integration vendors already on board to help us move faster and smarter. Commercial rollout is well underway across all regions in the regions where we started with national roaming and subsequently regions where we've done utilization of sites, ensuring that customers from both legacy networks can enjoy our harmonized and a much-improved service. Our people are coming together. We have made strong progress in aligning cultures and building momentum through targeted onboarding and engagement efforts. As I said, we're already seeing some positive signs. Users are getting a much better experience especially Smartfren subscribers, they are enjoying a much wider coverage. Traffic is sizing in the area that we have completed integration. This gives us confidence that we are on the right track, delivering real value as we speak, while also building a stage for future growth. Of course, there's much more work to be done, but the energy alignment backed by the results, which we are having give us every reason to be optimistic about the future. We are building momentum, but we also realize we are just getting started. If I move to the next one, please. This is about the network integration and the improvement in the coverage and the user experience. And these are some initial results, which show how the XLSMART merger is already delivering real benefits. I'm proud to say that we've completed the fastest nationwide roaming activation. 100% of this was done in less than 60 days. This enables seamless access for Smartfren customers to access XL network. We now operate with a much larger and more efficient spectrum portfolio, which is helping us deliver better capacity and speed. Today, our wider network footprint covers 475 cities across the country. And importantly, 156 of these cities are newly accessible to Smartfren subscribers where the Smartfren presence was close to nothing. And that's a major leap for those set of customers in terms of availability and the service quality. And the team has done an incredible job. Over 11,000 sites have already been integrated. You can also see the impact of larger scale in the number of BTSs we have. Our number of BTS account grew 28% year-on-year, reaching nearly 210,000 sites end of Q2, with majority now operating on 4G. This scale-up is just not about infrastructure. It's also about impact because that's what we are really after. We are delivering much better connectivity, more consistent user experience and broader coverage that supports Indonesia's digital transformation goals. The next slide talks about the future investment or the investment for the future, if I may call it. And this is something I really want to stress upon. We believe that we are executing a bold and strategic CapEx plan, one that positions us not just to integrate, but modernize our infrastructure and deliver a high-capacity future-ready network across Indonesia. This is not business as usual. This is not a usual merger CapEx plan. This is more a strategic push to scale up our network performance and unlock long-term value. As I said earlier, we have a much better unified vendor ecosystem with 2 large radio vendors, giving us much better cost control, faster rollout and tighter execution across the board. Through network consolidation, we are eliminating duplication and maximizing utilization of every asset in our portfolio, driving towards smarter, leaner infrastructure. But as all of you know, who are experts in telecom, this is not just about today's traffic. It's about creating opportunities for future. And these investments which we are doing now lay the foundation for us for future growth for capturing future growth across digital services, enterprise solutions and future capabilities, which we'll be developing. We also believe and so do the shareholders that this is the right time to invest. The market is shifting. We are building scale, and we are moving decisively to turn that into a long-term competitive advantage. So this CapEx, I'll want to reiterate, it's not just about today and now. It's not just about integration. It's about positioning XLSMART to be able to capture a long-term value. The next slide, I believe, is my last slide, which is about the digital engagement across these 3 brands. And this highlights the progress we are making in accelerating this digital engagement, an area where we were already strong, we are seeing even more positive momentum. Across the 3 apps we have, myXL AXISNet and mySmartfren, we now serve more than 41 million monthly active users, which is a 29% increase year-on-year. More than 50% of our user base now actively transacts through our own apps. It's a clear sign that customers appreciate simplicity, control and personalized offer, which we deliver through these platforms. Just as importantly, this engagement is translating into results. Revenue contribution from our own apps has grown at an impressive 18% cumulative over the last 2 years, 18% CAGR over the last 2 years. And we believe these digital platforms will be a key engine for our future value creation. With 3 apps now under one roof, we are well positioned to continue scaling engagement, driving ARPU and delivering a brilliant seamless digital experiences for all our customers. I'll take a pause now and hand over to my colleague, Pak Antony, our CFO, to run through the financial numbers.

Okay. Thank you, Pak Rajeev, and good afternoon, everyone. Let me continue the presentation by presenting our financial and operational performance of Q2 2025. Let me start with our operational metrics. As of Q2 2025, our consolidated subscriber base stood at 82.6 million customers. This is comprised from postpaid as well as prepaid customers from the 3 brands that we have, XL, AXIS and Smartfren. The mobile data traffic grew by 43% year-on-year, mostly driven because of the combined subscribers of XL and Smartfren, and also because of the sustained robust demand for data services. We observed the market competition is now entering into a more rational phase. So in March 2025, we have adjusted our starter pack price, and we will continue to focus on acquiring and retaining the high-quality customers. We are confident that our significantly improved type of quality will be one of the key differentiators for XLSMART to capture the market. In terms of the ARPU following to the merger, blended ARPU declined to IDR 36,000, reflecting the inclusion of the Smartfren product brand. We anticipate ARPU will increase in the coming quarter because of the market consolidation in progress and also the impact of our price adjustment in starter pack price already take into place. We remain committed to drive the long-term ARPU sustainability through a deeper digital engagement via our own application through the convergence offerings as well as targeted monetization initiative. Okay. Next slide. Moving on to the financial performance. Let me start with the revenue numbers. In the quarter 2 2025, our revenue grew by 22% Q-on-Q as well as year-on-year to around IDR 10.5 trillion. This is mostly driven from the post-merger consolidation and supported by a stronger mobile customer base. On a first half basis, our revenue reached to IDR 19.1 trillion, an increase by 12% year-on-year, reflecting the -- because of the -- an larger scale as well as a healthy data demand. Moving on to the EBITDA numbers. Our reported EBITDA increased by 4% Q-on-Q. So to provide a better visibility to everyone on the EBITDA, we are also presenting a normalized EBITDA. What does it mean? It means that it excludes the one-off expenses, which is the integration-related costs. On this basis, our normalized EBITDA is actually increased by 15% Q-on-Q, highlighting the underlying strength of our operations despite of the integration expenses ongoing. On the profit after tax, PAT, as we are in the midst of the network under consolidation, quarter 2 2025 profit after tax was also impacted by one-off items such as integration costs, the asset impairment and accelerated depreciation of the potential unused agreement from the old vendors as well as the 900 megahertz assets that are being phased out because the government would like to return -- would like us to return the 900 megahertz in December '26. If we strip out these one-off items, then we will be able to get normalized PAT at IDR 313 billion in the second quarter of 2025. This normalized PAT will provide a clearer picture of our underlying earnings trajectory. And lastly, on the margins. Normalized EBITDA margin came in 47% for the second quarter of 2025. If we compare to last year was 52%. As -- this is the reason because Smartfren came in from the lower base. So as the integration continues and synergy materialize, we remain confident that the margin definitely will improve from time to time. Okay. Next slide. So in this slide, I think we would like to emphasize or presenting both reported and normalized EBITDA and normalized profit after tax to provide a clearer view of underlying performance during the integration period. Normalized figures, again, like I need to emphasize, this is means that exclude one-off items such as integration costs, accelerated -- and then accelerated depreciation as well as the asset impairment related to our investment in Link Net. In the second quarter of 2025, our reported EBITDA was IDR 4.5 trillion, while in the normalization if we are adding back the IDR 500 billion of integration expenses, it will brings to the normalized EBITDA at IDR 5 trillion. The reported PAT stood at a loss at IDR 1.6 trillion. But after adjusting for integration costs, accelerated depreciation and asset impairment, then normalized PAT was positive at IDR 313 million. This approach, I believe, will provide a comparable figures and better to reflect the company core operational performance. Okay. [indiscernible] one. So this slide is about operating expenses. So as you can see from the chart that our total operating expenses in Q2 2025 increased to IDR 6 trillion, an increase of 46% year-on-year. Of course, this is reflecting the expanded scale of our operations following to the merger of XL and Smartfren. This increase is expected and aligns with our strategic investment, where we have made to support integration and future growth. On a half year basis, operating expenses increased by 27% compared to the first half of 2024. This step-up in cost increase is largely driven from the 3 key areas. The first one, of course, interconnection and other direct expenses; number 2 is the network infrastructure; and the third one is the regulatory costs. This is our first quarter post-merger; we have quickly leveraged the momentum on integration to ensure the synergy can be delivered according to the plan. So let me try to explain it in briefly on the operating expenses. So the first one on the interconnection and direct cost item. It has increased by 48% year-on-year. This is primarily due to higher COGS, which associated with the acquisition of fixed broadband subscriber from Link Net and also because of the higher revenue numbers post-merger. Labor costs, it's more than double, increasing 139% year-on-year, this is due to integration of the employees from both companies, XL and Smartfren plus also from the fixed broadband business along with -- there is a one-off integration costs. And the sales marketing costs decreased by 4% year-on-year. This is mainly driven because of the lower sales commission, reflecting our continued focus on the sales channel optimization as well as the digital initiative. Infrastructure costs increased by 28% year-on-year as we ramp up our network integration efforts and expanded our site deployments to support our larger footprints. And the regulatory costs increased 48% year-on-year because of the additional spectrum fees, post-merger and higher BHP, USO charges resulting from the increase of our revenue base. And then the last one on the supplies and overhead expenses increased by 69% year-on-year, driven by the higher professional fees related to the integration and also increase of the G&A expenses and expanded support functions. However, despite of the higher cost base, we remain focused on extracting the synergies over the medium term. Many of the cost increase, I believe, are transitional and it's related to integration and scale up the activities. We expect that these expenses to normalize over time as we execute our synergy capture -- our synergy will be captured in the future. In short, we are laying -- actually, we are laying a stronger foundation for future growth. We remain confident that this one investment will unlock meaningful operation and financial benefits over time. Throughout the integration period, we will further continue to drive our cost excellence, ensuring that all the expenditures are tightly focused, so it will create a long-term value and position XLSMART for sustained success. So that's the end of my presentation. I shall now hand over back to Pak Rajeev to provide the full year 2025 guidance. Thank you.

Thank you, Pak Antony. So I will just take the last bit, which is about the guidance for '25. We believe that we'll be able to maintain a strong momentum in integrating both commercial and network operations with a clear focus on unlocking the merger's full synergy potential. We anticipate that the consolidated revenue to grow broadly in line with the market. On a reported basis, this will translate to 20% to 30% increase compared to legacy XL Axiata's premerger 2024 full year performance. This number is, of course, driven by first year consolidation of Smartfren and the full year contribution from the transfer of the fixed broadband customers from Link Net in September last year. We expect EBITDA margins to remain in the low to mid-40% range impacted by the integration cost, which Pak Antony spoke about. While 2025 will be a transition year in which upfront integration cost will temporarily weigh on profitability. These investments are essential to secure long-term value creation. As we focus on integrating and modernizing the network, we expect capital expenditure to be significantly elevated in the range of IDR 20 trillion to IDR 25 trillion. This reflects the dual agenda, sustaining our BAU investment. And if I may say, more importantly, having the CapEx to modernizing network and becoming future-ready. Throughout this process, we are firmly committed to maintain financial discipline, ensuring that all investments are rigorously evaluated and that our leverage remains at a prudent and manageable level. Most importantly, we expect to start realizing merger synergies this year with our projected gross synergy of between USD 100 million to USD 200 million in 2025, largely from operational expense efficiencies. And post-merger completion, post full integration, we are on track to deliver between USD 300 million to USD 400 million annual synergy. In closing, we would -- we recognize that integration is not a single step. It's a multistep journey. While we are still at the early stages of this integration process, the initial results have been encouraging. And we are confident in our ability to achieve our synergy targets and create long-term value for our shareholders. With this, I conclude my summary of our second quarter 2025 results. Thank you, and I hand it back to the moderator, Christopher.

Thank you, Rajeev and Antony for the presentation. [Operator Instructions] Okay. The first question coming from [indiscernible] So the first question, I would like to pass to Pak David to provide some comments.

Yes. So I think regarding the subscribers, you are right. If we take a look to the purchase subscribers now would lose then the subscribers that were reported by XL Axiata and plus the Smartfren one. This is mainly because of how we count the subscribers. As you know, the definition of the subscriber outlook on this it's different for each operator in the moment, but we normalize this.

Yes. So I think regarding the new subscribers [indiscernible] if we take a look to the [indiscernible] subscribers now [indiscernible] them the subscribers that were reported by XL Axiata for [indiscernible] This is mainly because with high [indiscernible] per subscriber as you know that the [indiscernible] the subscriber on [indiscernible] it's different for each operator in the moment that we normalize this, this is the result. So it's not bringing anyone like who is losing subscribers. It's a fact of how we defend subscribers. Actually, if you look to the reported subscribers by all the operators in Indonesia you will see that the number of [indiscernible], it's very high rate. So there is a big high penetration of mobile SIMs. So I think that's the main explanation.

And can we have some hours on the [indiscernible]?

Okay. So Henry, on the integration costs, actually, I think that after the merger is completed in the 15th April, our focus today, of course, on the integration. Integration costs are expected by the management definitely. Integration activities, we will continue, as we explained that it will be within like 6 to 8 quarters, yes, '25 as well '26. So we expect there will be integration costs within this year as well as maybe perhaps some of it in the 2026 as well. So these costs, integration costs are very much important and it's necessary for us to incur because we want to realize long-term synergies across our network, commercial as well as the organization structure. So the source of integration cost, I think, as you know, that is for the network consolidation, dismantling of duplicate towers, we do some commercial alignment and many others employee-related costs and so on and so on. So we -- yes, we expect some integration costs in the future. So in terms of the accelerated depreciation, also this is the same reason that I think in the -- in this quarter 2 of 2025, our accelerated depreciation was around IDR 739 billion. This consists of the equipment related to the 900-megahertz spectrum as well as -- cannot hear? Okay. Okay. Sorry. Now, I'm changing my mic. Okay. So in terms of the accelerated depreciation, I think as reported that in Q2 '25, we reported IDR 739 billion accelerated depreciation. This is because of the equipment related to 900-megahertz spectrum, where we want to return it in December '26 next year. As well as the IDR 739 billion accelerated depreciation was also because of the unused equipment from our old vendors where we want to replace it with the new equipment. So I think as we continue to integrate the network, we expect this accelerated depreciation would be further incurred in this year. Mostly happening, hopefully, in this -- in 2025 and then a small portion in next year 2026. So that's to answer the question on the accelerated depreciation as well as the integration costs. Thank you.

Thank you, pak Antony. [indiscernible].

Perhaps 2 follow-up questions from me, if I may. First on Pak David, sorry, I think your voice is quite breaking up. But would you mind to clarify what would be the definition difference between the XL, Axiata and Smartfren in terms of the subscribers? And what will be our new definition in here for the subscribers? And then the second question to Pak Antony. Would you mind to share some colors in terms of the failures that we should look for in terms of this integration costs? I mean, like, I know that these costs would be very important for the XLS, but perhaps some color on the integration costs in your budget or the accelerated depreciation that you have put it in your budget will be very useful for us.

Okay. Let me take the first question. So the definition that has been used in XL Axiata for the last few years, it's the number of subscribers. It's the subscribers who have had an event with us in the last 75 days. So that's the recognition that has been adopted also by XLSMART. So it has not changed. It's any subscriber that has got an event with the company in our network in the last 75 days. That's again the XLSMART definition, and that's why the number that you see it's different from the one that was reported before by each of the companies.

Okay. For the integration costs, I think as we reported, Q2 was IDR 480-something billion, right? So we expect there will be an increase and not increase -- there will be integration costs will keep coming in the quarter 3 as well Q4. Maybe there are numbers is around IDR 1 trillion. But of course, we try to make this as efficient as possible, but we do expect that there will be some increase. But I think we need to understand that this integration cost is a one-off expenses. So again, I keep saying to unlock the synergies. The synergies that we are talking about for this year will be around $100 million to $200 million. Yes, so of course, that is only for this year. And then in the coming years, we'll be -- hopefully, once the integration project is completed, then we can enjoy a synergy saving around $300 million to $400 million per annum.

Sorry. Perhaps, Antony, the $1 trillion that you mentioned, is this for quarter or is for the total in the second half?

This is for the second half pak Henry.

We'll move now to the next question from Endo Takashi. One question, labor costs doubled as the most -- the number of employees almost doubled will be -- will there be a number of employees remain, or will there be layoffs? I think would like to pass to Antony to talk.

Yes, I think if I may jump in, Christopher on the [indiscernible]. So what we are doing as of now is deciding our future operating model, how do we want to run this company in the long-term. There are debates about different models, different distribution models, in-sourcing, outsourcing, all those debates are happening now. And once we are done with that, we'll be ready with the future organization structure and that future organization structure will determine the number of resources we need. Obviously, the number of resources we'll need in future will be lesser than what we have as 2 entities put together. How much that delta would be, we won't be in a position to disclose now because we really do not know the exact number there. It's a consequence of the operating model and therefore the organization structure. But the short answer would be there would be some people who would not be required in the future organization structure. How do we deal with that? When you term that as layoff is something, we will -- we'll determine as we move forward. Obviously, as we said, our employees and our customers remain at the forefront of whatever we want to do. So that's the answer to that. But in case you have any follow-up questions, happy to answer that, Endo.

All right. Now let's go to the next question. The next question comes from Andre Andika from [indiscernible]. Do you mind disclosing mobile subscriber growth in 2Q 2025 for EXCL only. If there is any increase or decrease, can you discuss about the reasoning? I would like to invite David to help clarify that.

I think we didn't disclose the numbers per [indiscernible], but since it's the first time, I will just [indiscernible]. If we take a look to the XL Axiata from quarter 1 to quarter 2, there will be a slight increase in the number of subscribers with the same definition of course, that we got for first half.

[indiscernible] how much will be realized through the P&L [indiscernible]. How much of it is CapEx synergies? What is the guidance for integration cost to be incurred for FY '25 earning and, in the P&L [indiscernible] what is the NPV of the net merger synergies. I believe it was 3 questions. I would like to invite Pak Antony to provide the colors.

Okay. Thank you. The first question is about the gross synergies in full year 2025, how much will be realized through the P&L? Okay. I think, like I mentioned, I think also provided in the guidance that the gross synergies of OpEx, we will realize -- hopefully, we were able to realize it in -- reflected in our P&L is around $100 million to $200 million. I think we are still tabulating the numbers. I think in the next quarter of quarter 3, I think we will start sharing with you on the -- how much actual numbers that we are able to generate. So I think for the time being, I think we can just provide you the guidance will be around $100 million to $200 million. In terms of the CapEx synergies, I believe this one is quite substantial. But I actually, I cannot remember the numbers, but it's quite substantial because we're already able to close the winner of the vendors' equipment that what happened in the last quarter that one at the time we announced that 2 vendors' of the winners, and then we already enjoy some -- actually some benefits on the vendor awarding because the cost price, most of the vendors here are contributing also make some investment. So there is a benefit that we enjoy as a company. But I cannot remember on how much is the amount, but we'll get back to you later. Yes. Okay. And number two, I think, like Chris already mentioned, it's already there. It's already -- we echo we explained to you on the previous question by Pak Henry as well. And number three, what is the NPV of net merger synergies or the net merger synergies? Okay. So if, let's say, the expected integration cost is from IDR 1 trillion to IDR 1.5 trillion. And then is, let's say, our target is 100 -- for synergies is IDR 100 million to IDR 200 million by the end of the year then I think we can do our own -- the math that if, let's say, we can enjoy 100, let's say, from the synergies, we can enjoy $200 million. So $200 million is around IDR 3.2 trillion and then the -- while the integration cost is around IDR 1.5 trillion. So the net synergies will be around IDR 1.7 trillion. So I think that's the numbers.

Okay. Thank you, Antony. I'd like now to invite Foong.

A couple of follow-up questions from me. So I just wanted to double confirm on this, right? You mentioned that the integration cost for the full year, including what you have already incurred in the second quarter is approximately about -- maybe about IDR 1.5 trillion. And then you are saying that your gross synergies, which would be around $100 million to $200 million, which is about IDR 1.6 trillion to about IDR 3.2 trillion, which means to say for this year itself, you are expecting a net positive impact on the P&L from the merger?

Yes, definitely, yes.

Yes. And I think just to clarify one bit. As we said, a significant amount of these savings will come from the network consolidation, which has an impact on the tower lease, correct? So that it will come through the ROU reduction, which will come below EBITDA. And obviously, financial experts can explain it better. What will be the exact impact on the profitability of this year of the saving. But in terms of cash share saving, it will be between, as you're rightly pointing out, between IDR 1.6 trillion to IDR 3.2 trillion, while the cash cost will be around IDR 1.5 trillion. At a cash basis, this will -- at the lower end of the synergy savings will still be positive.

Okay. Understood on that. And then on the CapEx guidance, which is pretty high for this year. I noted on your comments on why you're doing this. But can I try and understand here whether most of the CapEx that you are going to be spending, right, to achieve these objectives. Would it be incurred in 2025 itself, or will some of that still be incurred in 2026 and 2027? I just want to understand when will your CapEx come back to more normal levels?

Okay. So at this point of time, we are in a position to provide you what's there for 2025. I think in the subsequent quarter, we can come and share with you how do we anticipate this CapEx numbers going in '26 and beyond. But at this point of time, we are not in a position to share that. We have a robust plan, but I would want to reiterate what we're trying to do now is not just merging the 2 networks or creating a network which is ready for future. And it's not only the radio side, but also the other supporting systems, which is also the core, the transmission and also the IT systems.

Okay. Understood. And just one last quick question from me. What is the leftover net book value for Link Net after the impairment?

You mean the carrying amount?

Correct. Yes, what's the carrying amount left?

I think it's around IDR 1.3 trillion as of June '25.

All right. Let's move on to the next question from Sabrina from [ Trimegah ]. Two questions. First question is about what is causing the normalized debt to come down Q-on-Q? I think this one can be addressed by Antony. And the second one is about XL subs and ARPU, how much in Q2, I think this has already been addressed by David earlier, but maybe you can add some more colors.

Yes. The normalized PAT come down Q-on-Q. I think as we know that Q1 was only for XL stand-alone, while Q2, there is 2.5 months of -- because the merger [ LD1 ] was happened 15th April so 2.5 months, including Smartfren. And I think we know that in the past, Smartfren was incurred loss, but -- so that's the reason why quarter-on-quarter, our normalized PAT was reduced. But if I look at the figures, the numbers at which quarter 1 XL standalone is IDR 388 billion reduced to IDR 313 billion. So reduction -- a small reduction around IDR 75 billion, I think because -- mostly because of the Smartfren PAT.

Regarding the second question, as I was mentioning before, the number of subscribers of XL Axiata would have increased slightly, the ARPU as well was flattish positive. But again, we won't be releasing these numbers in the future just for this time.

Sabrina, do you have any follow-up question to us?

No follow-up questions from me.

All right. Let's now move to the following question from Indra Cahya from Macquarie. I think we have 3 questions. One, can you update the optimal number of subscribers that XLSMART can serve in the medium to long-term? Also, what is the considering potential spectrum return by 2026? Second, number of employees almost double post-merger. Any plan on retirement scheme. I think this has already been addressed earlier. I think that's all the questions. I think let's jump in for maybe a Pak David able to advise that.

Yes. So difficult to estimate the optimal number of subscribers, right? Of course, you can see that our, let's say, market share of spectrum after the merger and our network infrastructure will increase in the next few months. So again, I cannot elaborate on what is the ideal number of subscribers or market share. What I can estimate is like if our spectrum share and infrastructure share is higher, we can believe that it's certain to say we'll be at our number of subscribers should also be higher than [indiscernible].