PT Telekomunikasi Indonesia Tbk. (TLKM) : 9M26 | 3Q26: Earnings and Profitability Under Pressure – Infrastructure Value Unlocking Remains a Key Medium-Term Growth Catalyst

 

by Leonardo Lijuwardi

10 November 2026

 

TLKM recorded 9M26 revenue growth of +3.5% YoY to IDR 113.50T, while net profit declined -3.9% YoY to IDR 14.45T. On a quarterly basis, 3Q26 revenue reached IDR 37.62T (+2.8% YoY; -2.8% QoQ), while net profit fell -39.1% QoQ and -16.1% YoY to IDR 3.82T. The weaker performance was primarily attributable to moderating Telkomsel ARPU, higher operating expenses, and mark-to-market losses on GoTo and other investment portfolios. Nevertheless, 9M26 normalized net income increased +3.9% YoY to IDR 16.53T, highlighting the divergence between underlying profitability and reported earnings. We believe TLKM’s earnings recovery continues to face near-term challenges, although its streamlining initiatives and infrastructure value unlocking, particularly across fiber, towers, and data centers, remain potential medium-term growth catalysts. We maintain our FY26F revenue and net profit forecasts, alongside our “Buy” recommendation, while lowering our target price to IDR 3,100/share to reflect heightened market risks and a more conservative valuation.

 

Business Segments: Mobile ARPU Recovery Moderates, While Digital Infrastructure Offers New Growth Opportunities


Telkomsel’s ARPU Recovery Moderated in 3Q26. Mobile ARPU declined -2.4% QoQ to IDR 44.9k, despite remaining +3.5% higher YoY, alongside softer data yield of IDR 3.03/MB and pressure on consumer spending. Data, Internet & IT Services revenue declined -4.8% QoQ to IDR 23.36T in 3Q26, although it remained +4.7% higher YoY. On a 9M26 basis, the segment generated IDR 71.55T in revenue, remaining TLKM’s largest revenue contributor. We believe the ongoing market repair process remains intact, although more consistent customer monetization is needed to sustain the recovery.


IndiHome Shows Early Signs of Operational Stabilization, While Legacy Services Remain Under Pressure. IndiHome revenue declined -3.1% YoY to IDR 19.13T in 9M26, with quarterly revenue reaching IDR 6.33T (-1.4% QoQ) in 3Q26. Nevertheless, ARPU improved +3.3% QoQ to IDR 218k, while the subscriber base recovered +1.2% QoQ to 9.63 million. Meanwhile, SMS, Fixed & Cellular Voice revenue contracted -20.7% YoY to IDR 5.32T in 9M26, reflecting persistent structural pressure from the ongoing migration toward OTT-based communication services.


B2B Infrastructure and Data Centers Emerging as New Growth Engines. B2B Infrastructure external revenue increased +5.5% YoY to IDR 7.08T in 9M26, while B2B ICT and International revenue grew +3.1% and +5.8% YoY, respectively. NeutraDC delivered +17% YoY standalone revenue growth to IDR 1.39T, with EBITDA rising +35% YoY to IDR 570B and EBITDA margin reaching 40.9%. Capacity expansion across Cikarang, Batam, and Singapore, alongside growing international connectivity demand, strengthens TLKM’s opportunities to monetize its digital infrastructure assets and expand its recurring revenue base.



Operating Performance: Higher Operating Costs and Mark-to-Market Losses Weigh on Profitability


Operating Profit Pressured by Investment Valuation Losses and Higher G&A Expenses. Operating profit declined -29.8% QoQ to IDR 7.87T in 3Q26, with OPM narrowing to 20.9% from 29.0% in 2Q26. The decline was primarily amplified by a reversal in other income (expenses), from a positive IDR 215B in 2Q26 to a negative IDR 1.59T in 3Q26, reflecting investment valuation losses and the absence of the previous quarter’s AdMedika divestment gain. G&A expenses increased +9.0% QoQ to IDR 2.30T, while O&M expenses rose +2.3% QoQ to IDR 10.61T. In 9M26, unrealized investment valuation losses totaled IDR 1.66T, including GoTo and other investment portfolios.


Ongoing Streamlining Initiatives Support Efficiency and Cash Flow Quality. Personnel expenses declined -1.9% YoY to IDR 11.68T in 9M26, supported by a -9.2% YoY reduction in headcount to 17,442 employees. Meanwhile, D&A expenses remained relatively stable at IDR 25.77T (-0.9% YoY). Operating cash flow reached IDR 48.01T (-3.2% YoY), while capex declined -10.4% YoY to IDR 15.70T. We view organizational simplification, non-core business divestments, and disciplined capital allocation as essential initiatives to improve operating efficiency and strengthen free cash flow generation over the medium term.



FY26 Outlook: Maintaining Earnings Forecasts, with Infrastructure Value Unlocking in Focus


We Maintain Our FY26F Revenue and Net Profit Estimates. NHKSI Research maintains its FY26F revenue forecast of IDR 150.24T and net profit estimate of IDR 22.13T, reflecting our previous upward revisions of +1.13% and +1.17%, respectively. As of 9M26, revenue and net profit accounted for 75.5% and 65.3% of our full-year estimates. We acknowledge that achieving our earnings forecast would require a significant recovery in 4Q26. However, given the complexities surrounding accounting adjustments, unrealized investment losses, and restructuring-related impacts, we opt to maintain our current projections pending greater earnings visibility. Management also reiterated its FY26 guidance for normalized revenue growth of 1–3%, normalized EBITDA margin above 50%, and a capex-to-revenue ratio of 17–19%.


Infrastructure Value Unlocking Remains a Strategic Medium-Term Catalyst. TLKM completed its two-phase network infrastructure asset spin-off to InfraNexia in September 2026, with an aggregate transfer value of approximately IDR 85.7T. The restructuring creates opportunities to improve asset utilization, monetize fiber infrastructure through a wholesale business model, and establish strategic partnerships. Furthermore, NeutraDC’s expansion, MTEL’s tower portfolio optimization, and the ongoing transition toward a Strategic Holding Company structure could enhance asset valuation transparency and support a sum-of-the-parts valuation approach. We believe the execution of TLKM30 will be instrumental in unlocking the embedded value of TLKM’s infrastructure assets, which may not yet be fully reflected in its consolidated valuation.

Maintaining “Buy” Recommendation, While Lowering Target Price to IDR 3,100/Share

NHKSI Research Maintains Its “Buy” Recommendation While Lowering the Target Price to IDR 3,100/Share (Previously IDR 3,700), implying FY26F forward EV/EBITDA of 4.5x, equivalent to -1 standard deviation below its three-year historical average. The 16.2% target price reduction reflects a downward adjustment to our valuation multiple to account for a higher country risk premium, uncertainty surrounding MSCI’s proposed reclassification of Indonesia’s equity market, and broader valuation pressure across domestic equities. We maintain our earnings assumptions, with the target price revision primarily driven by a more conservative valuation framework rather than downward revisions to our fundamental forecasts.


We Continue to View Infrastructure Value Unlocking as a Key Medium-Term Re-rating Catalyst for TLKM. Fiber monetization through InfraNexia, NeutraDC’s capacity expansion, tower portfolio optimization, and continued streamlining initiatives could strengthen cash flow quality and capital efficiency. Near-term downside risks include moderating ARPU, intensifying competition across mobile and fixed broadband markets, investment valuation losses, and MSCI-related market uncertainty. Nevertheless, supported by its extensive infrastructure asset base and long-term opportunities in digital infrastructure, we maintain our constructive view on TLKM’s medium-term fundamental outlook.



Download Full Report HERE