Dialing In: How Indonesia’s Telkom Engineered a Second-Quarter Comeback

JAKARTA, Investortrust.id — For months, investors tracking Southeast Asia’s largest telecommunications provider watched with skepticism as PT Telkom Indonesia Tbk struggled through margin pressure, shifting consumer habits, and a sluggish first quarter.

By early August, however, the state-backed giant offered the market a clear sign of operational resilience. Driven by rising mobile data yields, disciplined capital spending, and a quiet corporate overhaul, Telkom—trading on the Indonesia Stock Exchange under the ticker TLKM—delivered a second-quarter performance that outpaced both management guidance and consensus estimates.

The turnaround matters far beyond the trading desks in Jakarta. As Indonesia’s dominant digital infrastructure provider, Telkom’s financial health serves as a barometer for broader consumer spending, mobile connectivity demand, and capital deployment across Southeast Asia’s largest digital economy. A sustained recovery signals that telecommunications operators in emerging markets can successfully transition away from legacy voice and SMS reliance toward high-margin digital services while streamlining bloated corporate structures.

Market reaction was immediate. In early August trading, TLKM equity surged over 5% to Rp 2,740 ($0.17) per share across a five-day stretch, easily outperforming the broader Jakarta Composite Index (IHSG), which rose just 0.90% over the same period.

Earnings Beat and Margin Expansion

In a comprehensive research note issued on Tuesday, Aug. 4, 2026, BRI Danareksa Sekuritas analysts Kafi Ananta and Erindra Krisnawan reiterated their Buy rating on TLKM shares, setting a target price of Rp 3,750 ($0.23).

For the first half of 2026, Telkom reported a net profit of Rp 10.6 trillion ($652 million), up 1.4% year-over-year. The result accounted for 55% of BRI Danareksa’s full-year forecast and 52% of market consensus. On a normalized basis—excluding one-off divestment gains and non-cash valuation adjustments—first-half net profit reached Rp 11.3 trillion ($695 million), up 6% year-over-year.

The second quarter provided the heaviest lifting. Revenue rose 4% quarter-over-quarter to Rp 38.7 trillion ($2.38 billion), anchored by a 3.8% uptick in mobile data revenue. Net profit for the April–June period alone surged 28% year-over-year and 45% quarter-over-quarter to Rp 6.3 trillion ($387 million), representing Telkom’s strongest quarterly bottom-line performance since the third quarter of 2023.

Operating costs remained virtually flat, rising just 0.1% quarter-over-quarter. That cost discipline expanded second-quarter EBITDA margins by 210 basis points quarter-over-quarter to 50.4%, lifting first-half EBITDA margins to a healthy 49.4% on total EBITDA of ~Rp 37.4 trillion ($2.30 billion).

Operational Shifts Across Mobile and Fixed Broadband

The revenue recovery was underpinned by distinct shifts across Telkom’s main operating arms.

At its mobile subsidiary, Telkomsel, first-half revenue climbed 5.6% year-over-year to ~Rp 42.8 trillion ($2.63 billion). Average revenue per user (ARPU) expanded 11.7% year-over-year to Rp 46,000 ($2.83) in the second quarter, with exit ARPU in June topping Rp 47,000 ($2.89). Telkomsel’s subscriber base stabilized at 153.5 million, reflecting a strategic pivot away from low-value volume hunting toward high-quality, low-churn subscribers.

Conversely, Telkom’s fixed broadband unit, IndiHome, saw first-half revenue decline 3.8% year-over-year to ~Rp 12.8 trillion ($787 million). Subscriber numbers contracted 5.4% year-over-year to 9.5 million.

During an earnings call on Monday, Aug. 3, 2026, Telkom executive management clarified that the subscriber decline resulted from a deliberate housecleaning exercise. The company purged inactive accounts that had contributed zero revenue for over 12 months, recalibrating its user base around active, paying households.

Surprisingly, legacy voice and SMS services staged a brief second-quarter pop, climbing 28.6% quarter-over-quarter, providing a temporary tailwind to top-line figures.

Streamlining, Infrastructure, and Balance Sheet Options

Beyond core operations, Telkom is aggressively restructuring its sprawling corporate footprint under its "Strategic Holding" framework.

By the end of June 2026, the company had completed the streamlining of 10 entities through two divestments, two mergers, and eight business closures. The sale of non-core healthcare assets—AdMedika and Telkomedika—generated ~Rp 429 billion ($26.4 million) in post-tax gains. Management plans to execute six more divestments, two additional mergers, and four unit wind-downs by year-end.

On the infrastructure front, Telkom is preparing for a second-stage asset transfer to its fiber unit, Infranexia, while seeking strategic equity partners for both its fiber network and data center portfolios—with major milestones slated for late 2026.

Capital expenditure remained light during the first six months, totaling Rp 9.4 trillion ($578 million)—a capex-to-revenue intensity of just 12.5%, well below management’s full-year target of 17% to 19%. Analysts attribute the cautious spending to Telkom awaiting the outcome of upcoming national spectrum auctions before committing to large-scale network rollouts.

The lower capex burden lifted free cash flow by 12.8% year-over-year. In a note to clients, analysts at Stockbit Sekuritas highlighted that this cash buildup offers Telkom significant balance-sheet flexibility in the second half of 2026.

"Stronger free cash flow gives Telkom greater latitude either to deleverage its debt profile or to sweeten dividend payouts for shareholders in upcoming periods," Stockbit noted following Monday's earnings call.

While management maintained its full-year revenue growth guidance of 1% to 3%—noting that second-half divestments may temporarily mute top-line expansion—the market appears convinced that Telkom’s operational bottom is firmly in the rear-view mirror.