Telekomunikasi Indonesia Persero (TLKM IJ) (Buy) - Positive outcome from EGM

Positive outcome from EGM

Tactical buy on weakness; marginal earnings adjustments

TLKM's Extraordinary General Meeting (EGM), held on 8 June 2026, delivered a set of unambiguously positive outcomes for the shareholders, in our view. Notably, shareholders approved an FY25 dividend of IDR21.99tn (IDR222.08/share), implying a payout ratio of 123.5% (vs ~89% in the prior year), and representing a ~4.5% y-y increase in its absolute dividend distribution. The elevated payout ratio reflects management's confidence in cash flow generation and balance sheet resilience. Separately, shareholders ratified a share buyback program of up to IDR4tn, effective 9 June 2026 through 8 June 2027, which should provide incremental technical support and signal management's view that the current share price is below intrinsic value, in our view. Going forward, we expect TLKM to sustain an elevated dividend payout policy.

On corporate governance, the EGM confirmed no changes at the Board of Directors level — dispelling earlier market speculation of potential management reshuffling and preserving operational continuity. At the Board of Commissioners level, two appointments were made: Edwin Hidayat Abdullah joined as Commissioner, while Anthony Leong joined as an Independent Commissioner. Overall, the EGM’s outcome, in our view, reinforces TLKM's ability to deliver superior shareholder returns while sustaining its strategic momentum.

We view these outcomes as meaningful re-rating catalysts following TLKM's ~15% share price correction on 8 June following the start of its EGM, which we attribute primarily to the broader sentiment deterioration. We believe any weakness from current levels offers an attractive opportunity to further accumulate TLKM's stock as sentiment stabilizes. After the dividend payout announcement, we have lowered our earnings forecasts modestly by ~0.3-1.4% for FY26-28F, reflecting the higher payout assumption embedded in our model, while our TP of IDR3,650 remains unchanged.

Valuation and risks

Our TP of IDR3,650 is based on the DCF methodology, in which we assume a risk-free rate of 6.0%, an equity risk premium of 5.1% and a terminal growth rate of 1.5%. At our TP, the stock would trade at 5.8x FY26F EV/EBITDA (compared to 4.3x FY26F EV/EBITDA at the current price). Risks are adverse macroeconomics, lower data traffic growth, irrational competition, lower ARPUs, declining cellular revenue market share from outside Java and difficulties in getting new sites for network expansion.

Year-end 31 Dec	FY25		FY26F		FY27F		FY28F
Currency (IDR)	Actual	Old	New	Old	New	Old	New
Revenue (bn)	146,742	148,794	148,794	152,339	152,339	154,814	154,814
Reported net profit (bn)	17,814	18,099	18,049	18,876	18,719	19,860	19,587
Normalised net profit (bn)	17,814	18,099	18,049	18,876	18,719	19,860	19,587
FD normalised EPS	179.83	182.70	182.19	190.55	188.96	200.48	197.72
FD norm. EPS growth (%)	-20.5	1.6	1.3	4.3	3.7	5.2	4.6
FD normalised P/E (x)	13.1	–	12.9	–	12.4	–	11.9
EV/EBITDA (x)	4.1	–	4.3	–	4.1	–	4.0
Price/book (x)	1.8	–	1.7	–	1.8	–	1.8
Dividend yield (%)	9.0	–	9.5	–	9.6	–	9.9
ROE (%)	13.5	13.3	13.6	13.2	14.2	13.6	15.2
Net debt/equity (%)	16.2	8.6	13.7	net cash	8.6	net cash	4.8

Source: Company data, Verdhana estimates

Key data on Telekomunikasi Indonesia Persero

Income statement (IDRbn)
Year-end 31 Dec	FY24	FY25	FY26F	FY27F	FY28F
Revenue	149,967	146,742	148,794	152,339	154,814
Cost of goods sold	-102,894	-105,550	-107,046	-109,236	-110,465
Gross profit	47,073	41,192	41,749	43,104	44,349
SG&A	-6,225	-6,601	-7,417	-7,559	-7,658
Employee share expense
Operating profit	40,848	34,591	34,332	35,545	36,692
EBITDA	75,029	72,240	69,541	72,087	73,713
Depreciation	-34,181	-37,649	-35,209	-36,542	-37,022
Amortisation	0	0	0	0	0
EBIT	40,848	34,591	34,332	35,545	36,692
Net interest expense	-3,841	-3,545	-1,841	-1,685	-1,312
Associates & JCEs
Other income	608	56	0	0	0
Earnings before tax	37,615	31,102	32,491	33,860	35,380
Income tax	-8,118	-6,644	-7,071	-7,374	-7,700
Net profit after tax	29,497	24,458	25,420	26,486	27,680
Minorities	-7,094	-6,644	-7,371	-7,767	-8,093
Other items
Preferred dividends
Normalised NPAT	22,403	17,814	18,049	18,719	19,587
Extraordinary items
Reported NPAT	22,403	17,814	18,049	18,719	19,587
Dividends	-17,683	-21,047	-22,000	-22,290	-23,117
Transfer to reserves	4,720	-3,233	-3,952	-3,571	-3,530
Valuations and ratios
Reported P/E (x)	10.4	13.1	12.9	12.4	11.9
Normalised P/E (x)	10.4	13.1	12.9	12.4	11.9
FD normalised P/E (x)	10.4	13.1	12.9	12.4	11.9
Dividend yield (%)	7.6	9.0	9.5	9.6	9.9
Price/cashflow (x)	2.9	3.3	3.8	3.4	3.3
Price/book (x)	1.7	1.8	1.7	1.8	1.8
EV/EBITDA (x)	4.0	4.1	4.3	4.1	4.0
EV/EBIT (x)	7.3	8.6	8.7	8.3	8.1
Gross margin (%)	31.4	28.1	28.1	28.3	28.6
EBITDA margin (%)	50.0	49.2	46.7	47.3	47.6
EBIT margin (%)	27.2	23.6	23.1	23.3	23.7
Net margin (%)	14.9	12.1	12.1	12.3	12.7
Effective tax rate (%)	21.6	21.4	21.8	21.8	21.8
Dividend payout (%)	78.9	118.1	121.9	119.1	118.0
ROE (%)	16.6	13.5	13.6	14.2	15.2
ROA (pretax %)	15.9	13.6	13.7	14.5	15.5
Growth (%)
Revenue	0.5	-2.2	1.4	2.4	1.6
EBITDA	-3.3	-3.7	-3.7	3.7	2.3
Normalised EPS	-8.8	-20.5	1.3	3.7	4.6
Normalised FDEPS	-8.8	-20.5	1.3	3.7	4.6
Source: Company data, Verdhana estimates

Cashflow statement (IDRbn)
Year-end 31 Dec	FY24	FY25	FY26F	FY27F	FY28F
EBITDA	75,029	72,240	69,541	72,087	73,713
Change in working capital	9,051	1,104	-4,467	171	245
Other operating cashflow	-3,796	-3,796	-3,796	-3,796	-3,795
CF from operations	80,284	69,548	61,277	68,462	70,164
Capital expenditure	-29,663	-25,768	-28,750	-28,750	-31,250
Free cashflow	50,621	43,780	32,527	39,712	38,914
Reduction in investments
Net acquisitions
Dec in other LT assets
Inc in other LT liabilities
Adjustments	52,112	54,414	44,098	60,487	59,286
CF after investing acts	102,733	98,194	76,625	100,199	98,200
Cash dividends	-16,601	-16,600	-16,599	-16,598	-16,597
Equity issue	-142	331	0	0	0
Debt issue
Convertible debt issue
Others	-81,468	-81,467	-81,466	-81,465	-81,464
CF from financial acts	-98,211	-97,736	-98,065	-98,063	-98,061
Net cashflow	4,522	458	-21,440	2,136	139
Beginning cash	30,668	35,190	35,648	14,208	16,344
Ending cash	35,190	35,648	14,208	16,344	16,482
Ending net debt	23,210	21,182	18,356	11,220	6,081
Balance sheet (IDRbn)
As at 31 Dec	FY24	FY25	FY26F	FY27F	FY28F
Cash & equivalents	35,190	35,648	14,208	16,344	16,483
Marketable securities
Accounts receivable	12,193	11,223	12,230	12,521	12,724
Inventories	1,096	901	4,343	4,397	4,444
Other current assets	14,601	13,994	13,994	13,994	13,994
Total current assets	63,080	61,766	44,775	47,256	47,645
LT investments	8,335	7,387	7,387	7,387	7,387
Fixed assets	170,335	165,453	158,994	151,203	145,431
Goodwill	9,442	9,237	8,150	7,191	6,345
Other intangible assets
Other LT assets	40,197	43,916	43,916	43,916	43,916
Total assets	291,389	287,759	263,222	256,953	250,724
Short-term debt	32,882	30,731	5,370	5,370	5,370
Accounts payable	15,336	16,184	14,398	14,688	14,935
Other current liabilities	28,549	27,033	28,800	29,027	29,276
Total current liabilities	76,767	73,948	48,568	49,085	49,580
Long-term debt	25,518	26,099	27,194	22,194	17,194
Convertible debt
Other LT liabilities	34,900	37,175	31,483	31,483	31,483
Total liabilities	137,185	137,222	107,245	102,763	98,258
Minority interest	20,396	19,852	21,907	23,692	25,499
Preferred stock
Common stock	17,161	17,492	17,492	17,492	17,492
Retained earnings	116,647	113,193	116,578	113,007	109,476
Proposed dividends
Other equity and reserves
Total shareholders' equity	133,808	130,685	134,070	130,499	126,968
Total equity & liabilities	291,389	287,759	263,222	256,953	250,724
Liquidity (x)
Current ratio	0.82	0.84	0.92	0.96	0.96
Interest cover	10.6	9.8	18.7	21.1	28.0
Leverage
Net debt/EBITDA (x)	0.31	0.29	0.26	0.16	0.08
Net debt/equity (%)	17.35	16.21	13.69	8.60	4.79
Per share
Reported EPS (IDR)	226.15	179.83	182.19	188.96	197.72
Norm EPS (IDR)	226.15	179.83	182.19	188.96	197.72
FD norm EPS (IDR)	226.15	179.83	182.19	188.96	197.72
BVPS (IDR)	1,350.75	1,319.22	1,353.39	1,317.34	1,281.70
DPS (IDR)	178.50	212.46	222.09	225.01	233.36
Activity (days)
Days receivable	27.9	29.1	28.8	29.7	29.8
Days inventory	3.7	3.5	8.9	14.6	14.6
Days payable	60.4	54.5	52.1	48.6	49.1
Cash cycle	-28.8	-21.9	-14.4	-4.3	-4.6
Source: Company data, Verdhana estimates

Company profilePT Telkom Indonesia (Persero) Tbk, also simply known as Telkom, is an Indonesian multinational telecommunications conglomerate. Telkom has major businesses in fixed-line telephony, internet, and data communications. It operates as the parent company of the Telkom Group, which is engaged in a broad range of businesses including telecommunications, multimedia, property and finance services.

Valuation MethodologyWe derive our TP of IDR3,650 based on DCF methodology, with key parameters rf (risk-free rate) of 6.0%, k (equity risk premium) of 5.1% and terminal growth (TG) of 1.5%. At our TP, the stock would trade at 5.8x FY26F EV/EBITDA. Benchmark index for the stock is JCI.

Risks that may impede the achievement of the target priceDownside risks for TLKM are adverse macroeconomic trends, faster migration from legacy towards data, which could lower revenue growth, asymmetrical regulation, which could be more detrimental to TLKM, irrational competition in data, lower subscriber spending and difficulties in securing new sites, which are necessary for network expansion.

ESGAs a leading business in the Indonesian telecommunications industry, Telkom Group also carries out social responsibility towards its stakeholders. With the paradigm of “Telkom exists for Indonesia, grows and develops together with the Indonesian people,” Telkom believes that increasing the welfare of stakeholders, including society, and environmental sustainability will also impact the sustainability of the Company. Therefore, Telkom Group is committed to carrying out social responsibility by applying the principle of “profit-people-planet” (“3P”) or often referred to as “environmental, social, and governance” (“ESG”), as well as contributing to the Sustainable Development Goals (SDGs). Telkom Group’s commitment to social responsibility is based on the principles of good corporate governance or GCG, as well as a Company code of ethics that all Telkom and its subsidiaries’ employees must comply with. This commitment is also stated in various Telkom policies, one of them is the Board of Directors Regulation No.PD.701.00/1.00/PR/000/ COP-A3000000/2014 dated 14 October 2014, regarding Management of Telkom Corporate Social Responsibility (Telkom CSR). Furthermore, Telkom as a state-owned enterprise is also required to carry out the Partnership and Community Development Program (PKBL) following the resolution of the Ministry of State-Owned Enterprises (Ministry of SOE). This is stated in the last revision of the Ministry of State-Owned Enterprises’ Regulation of Indonesia Number PER-02/ MBU/04/2020 regarding the Third Amendment to the Ministry of State-Owned Enterprises’ Regulation Number PER09/MBU/07/2015 regarding Partnership Programs and Community Development Programs of State-Owned Enterprise. Under this regulation, Telkom Group is obliged to carry out various programs to improve socio-economic, community welfare, and nature conservation.

Fig. 1: TLKM FY26-28F estimates

Source: Company data, Verdhana estimates

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general.

GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by PT Verdhana Sekuritas Indonesia (“PTVSI”) a securities company registered in Indonesia, supervised by Indonesia Financial Services Authority (OJK) and a member of the Indonesia Stock Exchange (IDX).

This report is intended for client of PTVSI only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of PTVSI.

The research set out in this report is based on information obtained from sources believed to be reliable, but PTVSI do not make any representation or warranty as to its accuracy, completeness or correctness. The information in this report is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. Any information, valuations, opinions, estimates, forecasts, ratings or targets herein constitutes a judgment as of the date of this report is published, and there is no assurance that future results or events will be consistent.

This report is not to be construed as an offer or a solicitation of an offer to buy or sell any securities or financial products. PTVSI and its associates, its directors, and/or its employees may from time to time have interests in the securities mentioned in this report or it may or will engage in any securities transaction or other capital market services for the company (companies) mentioned herein.

ANALYST CERTIFICATION
The research analyst primarily responsible for the content of this report and certifies that the views about the companies including their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.

RESTRICTIONS ON DISTRIBUTION

By accepting this report, the recipient hereof represents and warrants that you are entitled to receive such report in accordance with the restrictions and agrees to be bound by the limitations contained herein. Neither this report nor any copy hereof may be distributed except in compliance with applicable Indonesian capital market laws and regulations.

Rating Table

Rating Remains	Buy
Target price Remains	IDR 3,650
Closing price 8 June 2026	IDR 2,350
Implied upside	+55.3%
Market Cap (USD mn)	12,812.1
ADT (USD mn)	23.2

Relative performance chart

Source: LSEG, Verdhana

M cap (USDmn)	12,812.1
Free float (%)	52.1
3-mth ADT (USDmn)	23.2

(%)	1M	3M	12M
Absolute (IDR)	-20.6	-26.3	-17.3
Absolute (USD)	-24.1	-31.5	-25.9
Rel to Jakarta Stock Exchange Composite Index	2.7	3.2	7.6

Research Analysts

Erwin Wijaya (erwin.wijaya@verdhana.id)

Tags: TELECOMS, Telekomunikasi Indonesia Persero, TLKM, TLKM JK, TLKM IJ, Erwin Wijaya

Telekomunikasi Indonesia Persero (TLKM IJ) (Buy) - Positive outcome from EGM

Positive outcome from EGM

Key data on Telekomunikasi Indonesia Persero

Fig. 1: TLKM FY26-28F estimates

Rating Table

Relative performance chart

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Telekomunikasi Indonesia Persero (TLKM IJ) (Buy) - Positive outcome from EGM

Fig. 1: TLKM FY26-28F estimates

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