Why Analysts are Doubling Down on Indonesia’s Telecom Giant

JAKARTA, Investortust.id — For the executives at PT Telkom Indonesia (Persero) Tbk, the nation’s largest telecommunications provider, the future of the internet looks slightly more expensive on paper. The state-controlled giant is preparing for a significant restatement of its fiber-optic assets, a move that will shorten the "useful life" of its infrastructure and trigger an uptick in depreciation expenses.

Yet, in a display of confidence that defies the looming accounting charges, two of Indonesia’s premier brokerages are urging investors to ignore the bookkeeping noise and focus on the yield. Both Mandiri Sekuritas and BRI Danareksa Sekuritas have reiterated "Buy" ratings this week, pinning a Rp 4,000 ($0.26) price target on the stock.

The market’s reaction to Telkom’s accounting shift highlights the shifting priorities of investors in Southeast Asia’s largest digital economy. As the rapid expansion of 5G and satellite broadband forces a revaluation of traditional terrestrial fiber, "legacy" infrastructure is being written down faster than ever. However, for a state-owned enterprise (SOE) like Telkom, which serves as a primary source of non-tax revenue for the Indonesian government, the dividend remains sacrosanct—serving as both a floor for the stock price and a barometer for the nation’s fiscal health.

The Dividend Fortress

The cornerstone of the bullish thesis is a projected dividend payout ratio of approximately 91% for the 2025 fiscal year, up from 89% in 2024. At a time when capital expenditures in the tech sector are often scrutinized, Telkom is signaling that its priority is returning cash to shareholders.

Mandiri Sekuritas noted that the company is not merely aiming to maintain its Dividend Per Share (DPS) but is actively exploring ways to increase it. This commitment effectively insulates the stock from the broader volatility of the Jakarta Composite Index, providing a high-yield refuge for institutional investors.

Navigating Accounting Headwinds

The company’s recent "analyst update call" revealed plans for an impairment of its Fiber-to-the-Home (FTTH) assets. By shortening the assumed useful life of these assets, Telkom will see a surge in Depreciation and Amortization (D&A) costs. While this will mathematically depress net profit, analysts are quick to point out that these are non-cash adjustments.

"This policy reflects a reappraisal of fiber business economics amid fierce broadband competition," BRI Danareksa Sekuritas noted. The brokerage added that the move also cleans up the balance sheet ahead of a strategic partner’s anticipated entry into the fiber business in the second half of 2026.

Telkom is currently trading at a valuation of approximately 5.1 times its 2026 EV/EBITDA target. While the accounting restatements may cloud the headline earnings figures in the coming quarters, the underlying cash engine remains robust. With a steady rise in Average Revenue Per User (ARPU) and a government hungry for dividends, the "Blue Chip" status of Indonesia’s telecom leader appears intact.