PT XLSMART Telecom Sejahtera Tbk

Good afternoon, ladies and gentlemen, and welcome to Excel AXIATA Earnings Conference Call for the 2020 Financial Year, ended 31st December. My name is Rohit, and I'll be your coordinator today. During the presentation, all participants are in a listening mode. Instructions will be given on how to register your questions when we get to the question and answer session. As a reminder, this conference is being recorded for replay purposes. Now, we would like to turn the conference over to our host, Mr. Inder, please proceed, sir. Thank you, Rohit. Apologies, everyone, for a bit of the late time. Good afternoon and welcome to the call today. On behalf of the Excel Management Team, I would like to thank all of you for taking the time to join us today. With us on the call, we have Ibu Dian, our chief executive officer, Pak Budi, our chief financial officer, Pak David, our chief commercial officer for mobile, and Pak Abhijit, our chief commercial officer for enterprise and home. Now, Ibu Dian will share the highlights of 2020, which will then be followed by the Q&A session. I will now hand the call over to Ibu Dian.

Thank you, Inder, and good afternoon, everyone. We are happy to report a good set of results in 2020 despite challenges from both the COVID-19 pandemic as well as the aggressive price competition in the market. This is due to our focus in executing our strategy to position ourselves as the preferred critical care for the individual care. Our service revenue grew 6% year-on-year in 2020. Given by strong demand of data, due to the increasing digitalization of daily life, and as many Malaysians continue to work in this role from home. This was by 31% year-on-year. Over the same period, due to the revenue increase and cost-effectiveness, as well as IFRS system adoption, the EBITDA margin is now about 50%. We continue to be net profit positive, which is in line with our focus on profitability and returns to create value for our stakeholders. However, competition continues to be a major issue for the industry. All players now have some form of unlimited offering in the market, respectively with the market leaders, increasing the ability of these unlimited plans across Indonesia. Progressive pricing is also seen across the smaller social data packets. Operators price the share of customer wallets, driving data yield down. This is compounded by the still weak Indonesian economy, which is expected to continue to see slow growth in the first half of 2021. And this will also have a negative impact on and industry. Mass law and segment continues to see this demand because of the COVID-19 impact with many businesses struggling. So cost and unemployment rising, taking its toll on consumer spending. Despite this tough environment, the growth we have recorded this year is due to the structural demand for data, but also a result of the measures we have put in place to ensure our business continues to perform well in the light of COVID-19 and its impacts to the business environment. These steps will benefit us beyond the short term. These steps are focused on the increased digitalization of our business as well as continued development of our analytics capabilities to ensure that we can meet the challenges that industry faces today. This year, Our distribution has been achieved through digital, with more products being sold online and through our own channel. This comes as both our refund app, which is MyXL and AccessNet, both have seen good reception from our customers with 11 million active users and increased revenue contribution from this channel. This will be key going forward in allowing us to offer customized products and increase customer share interaction as well as such points while further increasing the revenue using rates from this channel. On the analytics side, we have further improved our capabilities in the year 2020 by establishing a cross-functional team to drive analytics decision-making across business functions. This allows us to improve our dynamic pricing model and customer-friendly management in our hiring channel, as well as our online channel offerings, to enhance our interaction with our customers, and remind competitors in a challenging market. Politically, XJava continues to be an extremely well-thought-out. It is growing well ahead of the Java growth age, increasing its contribution to our revenue to around 25% in 2020. Our investments that we have made are delivered in return and stay in line with what we had initially planned. In 2021, we will continue to invest in Ex-Jaffa, guided by our operational experts' principles and strategies, and ensure that we can continue to grow and deliver returns for our stakeholders. Our network rollout and upgrades continue to be on track, and thus, we continue to roll out networks on schedule. Our GDTFs count now above 144,000. For GDTFs in 158 cities across Indonesia, it's more than 44,000 for GDTFs. We also continue to fiberize our networks to manage the actual state growth of data traces. and ensure our customers will continue to enjoy this network experience. Our balance sheet is strong with net debt to a data of below 1x. We have no U.S. dollar debt, and we have also secured committed facilities with the bank that we can test anytime we see additional findings. This is important today deepen the uncertainties in the coming quarters because of the ongoing pandemic. Although our results are positive so far, the situation in the market remains tough with the impact on COVID-19, on rising unemployment and lower income for men in the region. After the impact by competition in the short-term, it is likely to impact the long-term investment growth. As a result, we see opportunities in the medium to long-term and demand for data systems to grow with an increased digital way of living and working. Industry customization will also be of positive if this happens, as it will reduce the competitive intensity and improve the pricing dynamics due to less players in the market. The only backload which was passed at the end of last year will also be long-term positive for the market. As we are seeing a decreasing amount of 3G traffic this year, with 3G traffic already less than 10% of total traffic, we have been reducing 3G capacity in the central area and allocating that capacity to 40. As a result, in this past quarter, we have reduced the useful life of our 3G access, taking a one-off depreciation charge to reflect that. This makes our assets less more reflective of the underlying state, and this will reduce our depreciation charges going forward and further improve our profitability. In line with our professional excellence strategy of monetizing our non-core assets and further strengthening our balance sheet, we have also started doing a sale and lease back of our PicoCell site in past years first. We have both completed the sale of 143 sites in the past year and are looking to sell around 500 T-Costal sites in total in 2021. Finally, we would like to introduce our guidance for the year. In 2021, we are guiding for revenue growth to be in line with market. We become margin in the low 50% and capped to be around 7 trillion for the year. Thank you, and let us proceed to the Q&A session. All right, can we have the Q&A?

Suddenly, sir? Ladies and gentlemen, we will now begin the question and answer session. To ask a question, please press star 1. To cancel, please press the pound or hash key. Please kindly but strictly limit your questions to only two and to allow other participants to raise their questions. Should you need to ask more questions, you can go back to the queue by pressing star 1 again. We shall end the conference call sharp at 3 p.m. Jakarta time. Once again, it is star one to ask a question. Kindly note, as there might be a slight pause as the questions have been correlated. We have the first question coming from the line of Piyush Chaudhary from HSBC. Please go ahead.