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Telekomunikasi Indonesia (NYSE: TLK), the largest telecommunications company in Indonesia, reported first-quarter results on Tuesday, May 2. Top-line sales rose modestly in the first quarter thanks to higher wireless subscriber counts and a healthy broadband business, but those upsides had to overcome a substantial headwind from a mass exodus of old-school wireline subscribers.
Telkom Indonesia's first-quarter results: The raw numbers
| Metric | Q1 2018 | Q1 2017 | Change (YOY) |
|---|---|---|---|
| Revenue | $2.36 billion | $2.33 billion | 1.2% |
| Net income | $586 million | $705 million | (17%) |
| GAAP earnings per ADS (diluted) | $0.42 | $0.51 | (17%) |
Data source: Telkom Indonesia. YOY = year over year. One American depositary share, or ADS, is the equivalent of 100 series B shares of Telkom Indonesia on the Jakarta stock exchange.
What happened with Telkom Indonesia this quarter?
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The company reports its results in Indonesian rupiah, not U.S. dollars. The rupiah strengthened by 3% against the dollar between the first quarters of 2017 and 2018. Measured in rupiah, revenue rose 4.3% year over year.
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Voice and SMS text-messaging sales saw revenue sliding lower once again while smartphone data plans and high-speed broadband services pulled their weight with respectable growth. The Telkomsel wireless business increased its customer count by 14% year over year, and digital service sales rose by 25%, but the segment's total sales still fell 2% lower due to a rapid outflow of wireline contracts.
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Telkomsel now sports 192.8 million customers, down from 193.6 million at the end of the previous quarter but up from 169 million a year ago. The first quarter is a traditionally slow season for this company.
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The IndiHome landline broadband service nearly doubled on a year-over-year basis. At 3.5 million total accounts, IndiHome's subscriber count increased by 97% over the year-ago quarter and remains an important growth driver for the long term.
What management had to say
In prepared remarks for the company's earnings call, CEO Alex Sinaga noted that his company scored healthy growth in local currencies despite intense competition and stricter regulations in the Indonesian market.
"Telkomsel remains focused on growing its Digital Business to take advantage from the increasing smartphone penetration and in response to the declining legacy businesses," Sinaga said. "Telkomsel also continues its effort to develop a digital ecosystem in digital service, including digital lifestyle, mobile financial service and digital advertising."