JAKARTA. Research by PT Ina Sekuritas Indonesia reveals that telecommunication sector in Indonesia collectively experiences Average Revenue Per Unit (ARPU) decline in the third quarter of 2024.

This decline reaches 4% quarter-to-quarter (qoq) or 5% year-on-year (yoy) to IDR 40.9 thousand.

PT XL Axiata Tbk (EXCL) is the one that feels the most pressure, with decline rate of nearly 7% qoq to IDR 41 thousand. The increase of cellular data usage is believed to be the cause of EXCL’s severe dip in its ARPU.

Similar trend occurred in the state-owned company, PT Telekomunikasi Seluler (TSEL), a subsidiary of PT Telkom Indonesia (Persero) Tbk (TLKM), with the drop in ARPU of 4% qoq to IDR 43.1 thousand. In the meantime, its cellular data usage increased 4.4%.

On the other hand, ARPU decrease of PT Indosat Tbk (ISAT) was quite small, only 3% qoq to IDR 37.2 thousand. ISAT’s decrease is the least severe compared to EXCL and TSEL, but it is said to be caused by decreased purchasing power near the government transition.

Amidst ARPU’s weakening trend, big players in the telecommunication sector are still competing for users. ISAT lost 2.2 million users, as did TSEL by 1.5 million users. Only EXCL gained 100 thousand new users.

The competition between the big three is projected to last, although EXCL and ISAT have increased the price, as this rate jump is quite limited due to the common custom of rate increase of only once in a year.

With these considerations on hand, Ina Sekuritas remains neutral for the telecommunication sector. However, EXCL, ISAT, and TLKM’s shares are still listed as recommended to buy at price target of IDR 2,800, IDR 2,900, and IDR 3,300, respectively. These recommendations also consider the potential increase of their Enterprise Values towards EBITDA (EV/EBITDA) in 2025. (KR/ZH)