PT XLSMART Telecom Sejahtera Tbk

Good morning, ladies and gentlemen. Welcome to Excel AXIATA's earnings call for the first quarter of 2021 financial year, ended March 31st. My name is Revati and I'll be your coordinator today. During the presentation, all participants are in a listen-only 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.

Thank you. Good morning everyone and welcome to the call today. Firstly, I would like to apologize for the audio issues we had with the previous call. So today, we have prepared a backup MS Teams link which was sent out along with the invite to this call should there be any further issues. If you are using both lines, a reminder that please mute the MS Teams link to avoid any audio overlap or audio issues. Now, with me on the call today, I have Ibu Dian, our Chief Executive Officer, Pak Budi, our Chief Financial Officer, Pak David, our Chief Commercial Officer for Consumer, and Pak Abhijit, our Chief Commercial Officer for Enterprise and Home. Now, Ibu Dian will share the highlights of the first quarter of 2021, which we will then follow by the Q&A session. I will now hand the call over to Ibu Dian.

Thank you, Indah, and good morning to everyone. We are happy to report a decent set of numbers in the context of a seasonal weaker quarter and despite still facing challenges from both the COVID-19 pandemic as well as the aggressive price competition in the market. This is due to our consistent focus in executing our operational excellence strategies to be the mobile internet leader in Indonesia. This quarter, we are happy to report sustained profitability with EBITDA margins rising to 50% due to our focus on cost efficiency. Our net profit for the quarter has also increased to Rp321 billion, which is in line with our strategy to deliver improved profitability and returns for our shareholders. Thus, despite our revenue declining slightly by 1.7% versus the previous quarter due to poor seasonality and competition, we were able to record a good performance. However, as we are now one year into the COVID-19 pandemic, many Indonesians have been affected with weaker purchasing power and higher unemployment. With the vaccine rollout ongoing, we expect that the situation should improve in the second half of the year. Nevertheless, this has impacted the industry in the short term, where we have seen operators being aggressive in trying to win with declining share of wallets, with unlimited offerings and smaller subsidy data packets driving data yields down. We at Excel Asiata have been active in trying to give our customers what they want through our customer-centricity strategy where we focus on giving our customers the best product as well as the best customer experience and not just the lowest price of range. Thus, we have launched several new products this year aimed to do that. For our Excel brand, we have launched Paket Akrab as our first offer for families, where you can share quota with your family members. Young families are an important segment in Indonesia, and this is an untapped opportunity to offer a unique product to them. In our Access brand, we have introduced Paket Suka-Suka, which allows customers from the youth segment, which is the target segment, the ability to customize their own offerings with personalized validity and main quotas. Finally, with our post-paid Brand Excel Priority Tasks, we have introduced more handset bundling offers and attractive price points. We also continue to develop our analytics capabilities, which enable us to successfully upsell our customers to better product positions, Proposition, always ensuring we deliver the right product for the right customers. Positively, our investment in XJava continues to do well for us and growth continues to be ahead of the Java growth rate, increasing its contribution to our revenue to 29% in Q1 2021. Our investments that we have made, there are delivering returns and paybacks in line with what we had initially planned. In 2021, we will continue to invest in XJava, guided by our personal excellence principles and strategy, and ensure that we can continue to see growth and deliver returns for our stakeholders. Our network rollout and upgrade continues to be on track, and thus, we continue to grow out our network on schedule, with our BTS count now above 147,000 with 4G present in 458 cities across Indonesia. We also continue to favorize our network to manage the accelerated growth of data tracing and ensure our customers would continue to enjoy good network experience. Our balance sheet remains strong with net debt to EBITDA of below 1x, We have no USD debt and we have also secured committee facilities with the bank that we can tap anytime if we need additional funding. Our results so far this year have been impacted by the situation in the market which reminds us. COVID-19 continues to have an impact in economic activity resulting in weakening pricing power of the community which has prompted aggressive price competition in the industry. Nevertheless, we are seeing some initial positive signs from our new product launches, which have gained traction in the market so far, and a slight easing in competition as we head into Lebaran festive season. Positively, COVID-19 has accelerated our transformation agenda for our long-term goal of becoming a fully digitalized operator. This is through a faster digitization of our business processes from the front end through distribution and our internal processes. This will create long-term benefits in the form of business and cost efficiency. Additionally, we see opportunities in the medium to long-term as demand for data continues to grow with an increased digital way of living and working. Industry consolidation would also be a positive if it happens as it would reduce the competitive intensity and improve the pricing dynamics due to less players in the market. We see a window of opportunity as well as offer the next two years to take market share while the merger processing is ongoing if it happens. The Omnibus law which was passed at the end of last year would also be long-term positive for the market. Finally, we would like to reiterate our guidance for the year. In 2021, we are guiding for revenue growth to be in line with market, EBITDA margin in the low 50s, and CAPEX to be around 7 trillion rupiah for the year. Thank you, and let us proceed to the Q&A session.

Thank you, Ibu Deyan. To ask a question, please press star 1. To cancel, please press hash key. Please kindly but restrict 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 one again. We shall end this conference sharp at 12.30 p.m. Jakarta time. Once again, to ask a question, please press star one on your telephone. Once again, can we have the first question, please? We have our first question coming from the line of Arthur Pineda from Citigroup. Please go ahead.

Hi, thanks for the opportunity. For the two questions, firstly on competition, you mentioned there's elevated competition in the market causing stress on the revenues. Can you elaborate what products are coming out from peers which causes the stress that you've mentioned? Second question I had is with regard to the dividends. You paid out nearly 90% of FY20 numbers versus averaging around 30% in the prior years. How should we view your payout levels going forward? Thank you.

Hi, Arthur. So I will take the first one regarding the competition. David here. So as you know, the competition has been quite challenging in both quarter three and quarter four since the incumbent entered also the unlimited product. So they had the unlimited max where they offer high quotas with unlimited applications and then unlimited the rest as well. At the same time, they also entered the low denominations packets with cheap prices. So I think that has been the case in the first quarter, especially in January and February, they have still stress in those products. I have to say, though, that starting in March, we are starting to see some smoothening and some changes in benefit of some of these products that I have said, and in the price in the correct direction, which we also have done some changes as well in our product portfolio, right? So I think that That's what we mean. The first couple of months, a stress competition, especially from the incumbents with those limited and low denominations. Of course, you can imagine that from the rest of the competitors, it's always been quite challenging, right? So they still are playing the low denominations, low prices game, and they keep doing that. But at least the incumbent has started to move in the correct direction at the end of the quarter. Hope that answers your question, and I will give it to you.

Just to clarify, so TelcomSell, which is pushing it up, not Indosat, which is driving competition? So, sorry, if I heard well, you asked about TelcomSell and Indosat. So basically when you said your competitors have been driving these unlimited plans, I take it you're referring to TelcomSell, which has been driving competition, not Indosat, although Indosat is actually the one who's growing faster.

Correct. So I think the competition, the incumbent has been entering the Unlimited game since quarter three last year, and that has been a strong competition. Indosat has always been challenging, has always been low price, more in the lower end, and they also have their Unlimited product, but they have been quite consistent with them in the last couple of quarters.

Got it. Thank you.

Okay, Arthur, I will take your second question regarding the dividend. For 2020, we pay dividend 50% of our normalized net income, whereas, as you know, for our dividend policy, it's minimum 30% of normalized net income. But because of our strong performance in 2020 and also the extra cash that we get from the sale of our non-core assets, So we decided to pay 50% of the normalized profit. And you asked about how is it going to be the new base. Currently, we're still looking at our dividend policy to transition towards potentially higher payout ratio in the future, higher than our current policy. But that one's still in the review. Got it. Thank you. Answering your question, Arthur? Perfect. Thank you very much.

Thank you. The next question comes from the line of Chong Shen Fong from CIMB. Please go ahead.

Hi, thanks for the call. Two questions from me. First question with regards to the drop in prepaid subscribers by nearly 2 million in the quarter. Were these loss of subscribers to competitors and is it a concern for Excel Do you think you need to do a bit more to retain subscribers going forward? That's the first question. And second question, could you give us an update on the discussion with the ministry on the rollout of the 4G coverage to the villages? And do you think that there may be some risk to your capex guidance of $7 trillion pending the outcome from this discussion with the ministry? Those are my two questions. Thank you.

Thank you, Raymond. So, I will take the first one regarding the prepaid jobs. So, as you might be aware, during Q3 last year, starting in September, there was this school program. The school program that was until December, more or less, and then restarted in March. So, during that period, we saw a huge increase in our subscribers. Very clearly, non-natural growth. and not resulting from organic or from more unique users being there. It was clearly dual simmers, which we believe has to happen to everybody else as well. So, we saw a lot of dual simmers taking advantage of this school program, keeping their own sim and using another sim for the school program, etc. So, we grew our subscriber base very significantly, especially in those two to three months. It was very sudden. Since that moment, it was starting to normalize. So, we have been consolidating. It has happened a consolidation in this one, which you can see also, because it's true that we reduced the number of shafts, but the ARPUs increased. So, it has been very clearly that some of the school program dual shimmers has been consolidated, and now the ARPUs are healthier, but the number of shafts reduced a little bit. In any case, if you check our number of subs as of quarter one 2021 versus the quarter two, quarter one last year, we are still in a positive trend. And we are still seeing a positive trend in our subs acquisition and the number of subs that we have. So I hope that answers your question.

Yes, it does. If I can just follow up on the prepaid subscribers numbers, right? You mentioned earlier on that you're seeing the incumbents moving in the right direction with some easing of the offers towards the later part of the quarter. But I did notice Excel as well came up with some attractive offers in March and April with regards to the weekly plans. So is there any plans to sort of also go to revise the offers to be heading in the same direction as the incumbent? That's what we've seen.

Yes, actually, that's a good point. If you see, we have already given a couple of steps in that direction. So our unlimited products are no longer there, are all redeemable, which is a bigger step in the correct direction, and we have adjusted the benefits of some of our products. We have reduced the number of gigabytes in some of our popular products, moving in that direction as well. So we hope that this is the start of the recovery of the industry.

I will take the second question. So it is true that now we operators in discussion with the ministry on the rolling out the coverage in the remote villages. So the ministry understand very much that covering those remote villages actually will face a lot of challenges. So that's why the discussion with them now is with the focus on how to help operators in executing this project in the most economical way. So in terms of CAPEX, the requirement for investment in this remote villages will be included in the $7 trillion CAPEX guidance.

Okay, understood. Thank you so much, Ibu Dian and David.

Thanks to you, Raymond. Thanks. Thank you. The next question comes from the line of Raymond Koshashi from Nomura. Please go ahead.

Thank you. I have a couple questions. First one, you mentioned earlier about if there is a merger, you could expect an improvement in the competition landscape. But if If Indosat and Hatch merger were to happen, their total spectrum market share will be give or take comparable with the largest players like Telkomsel. And giving them, say, a year to integrate the network, they could significantly, in our opinion, improve the quality, capacity, and hence they can offer better value propositions to their customer. Yet their average data yield is actually second cheapest. They haven't really the result that I would imagine is actually second cheapest. And certainly from the customer's point of view, they can offer better value propositions. And if I read an article recently, Doha expecting a three percentage point jumped in the market share after the merger. How do you see this risk to Excel in particular because technically Excel will have the least spectrums among the GSM operators. So that's point number one. The second one is actually related to your plan to go into the fixed broadband. Yeah, I don't know whether it's still ongoing or not. Going to fixed broadband organically will likely gonna take a long time, not to mention the major competitors coming from in the home. And Telkomsel with the reason spectrum additions that they get, 20 megahertz, will actually gonna ramp up more on the wireless broadband businesses, which could, to some extent, cannibalize the cellular services, not just for themselves, but also for the other operators. Maybe you can give me your thoughts on this. Thank you.

Okay. Thank you for the question. So as I mentioned in my speech that we are positive on the merger because we believe that it will ease the competition as it will reduce the number of players in the market. So then we believe that the industry structure will be much healthier. We are confident in our company's ability to compete with the merge entity. And we see a short-term opportunity of one to two years if the measure happens, where we can grab market share while the integration process is ongoing. But you are right, the Merge Co. will have a much higher spectrum and will be probably even higher than Telkomsel. And with those spectrum, they can offer more services, a better quality, and so on and so forth. So now we are crafting a long-term strategy on how to compete with the MergeCo in the future after they are stabilizing the integration activities and whatever activities or initiatives they need to take in terms of having a stabilized MergeCo. We understand from our previous exercise in this kind of many activities that there are a lot of things to be done. It's not only on the aligning the organization, but will be also alignment required for the distribution system, brand, network, IT, and so on and so forth.

Raymond, this is Abhijit. I will take your question on the fixed broadband. Actually, our fixed broadband business did very well in 2020. Some of the main drivers were work from home, school from home, and also an increased digital lifestyle. And we see that this trend has continued in Q1 2021. As of today, we have around 550,000 homes passed, and we are witnessing a very good penetration rate on an average around 30% across our footprint. We are also seeing a lot of demand ex-Java, some of the areas over there where the penetration and growth rate has been very strong. The strong performance is a combination of a couple of things, right? So first is ability to offer super-fast broadband, a reliable kind of product, And the second thing is a bit beyond connectivity, having a strong product strategy where we have leveraged our partnerships with different content providers such as Netflix, video.com, and we bundle these content propositions into some innovative packages. You also mentioned about competition and outlook. Well, our plans in 2021 are to continue to build on the momentum that we have achieved. and to continue to increase our footprint. Every option is on the table. We are looking at organic, inorganic partnerships, but currently we are finalizing and getting the buy-in from major shareholders to crystallize the long-term plans for the business. Hope that answered your question, Raymond.

Thank you. On the first one, if I may follow up on that, I understand that the merge entity is not looking to cut prices. As I expect, they don't have to, actually. But with the expected improvement on the quality post-merger, mind you, I think this is different than, in my opinion, than the previous corporate action that was have taken place because at the time it's an acquisition, this time it's a merger, whereby we expect the balance sheet of the merge entity will be significantly better and the network quality of the merge entity will be significantly better. And as I mentioned, they're looking to increase market share by about 300 basis points, right? I mean, so clearly somebody is going to lose market share here, right? I don't know who, yeah. But from Indosat perspective, they don't really have to cut prices. And in fact, they can actually take up prices, which will still be cheaper than either Excel or TelecomSell. Why we wouldn't expect that competition risk is actually picking up? Thank you.

Uh, yeah, I actually I I believe that any company any company who are going to into a merger. Of course they will. They want to get the benefit or not fit. One is the cost synergy and the other one is in the business upside. So to get the the most uh the uh financial upside uh going into uh still price game probably or will not uh again the optimum uh situation so yeah i'm not saying that they will not do that but but i think the most logical thing is to be more rational in the price game yeah so Instead of lowering the price, increasing the quality is to do a more sensible strategy for the humor school. And I believe also this initiative with the thought that The industry needs to be much healthier for all of us to be more profitable in the future. But actually I do not rule out the possibility of them still playing aggressively in the market. And as I mentioned previously, currently in Excel we are crafting a long strategy on how to play in the market once the Merge Go is already established.

Thank you, Bu.

Thank you. The next question comes from the line of Alex Go from mBank. Please go ahead.

Thank you. I have two questions. The first, I just want to go back on your prepaid subscribers, which For the past four quarters, it has been adding to your subscriber base. Only in this quarter, you have dropped by almost 1.9 million subscribers. Going forward internally, do you expect the trend to go back to an increasing trajectory, or do you think the competition is such that it's very hard to move upwards now? Could you just give us what is your own management expectation of where the trajectory should move for your prepaid segment? The second question is regarding your operating cost. It is down by 6% year-on-year, almost 6%, and that's largely driven by your infra expenses. Going forward, how should we see the trajectory? Should it also be moving downwards or you know do you think that your cost reductions has hit a bottom where we should expect the cost to flatten out over the next three quarters okay thank you alex so i will answer the the first question so let me answer it directly first and then i will give the the explanation so

Yes, we expect the number of subs to keep increasing. So we believe that in quarter two, we will have more subs than in quarter one. So that's the short answer. Now, as you were saying, we were growing, we were in a positive trend until now, and in this one, a decrease in quarter one. But if you see the trend, you can feel that the quarter three and the quarter four increase was, how to say it, abnormally high. So, the number of new shafts that we were acquiring, we were seeing internally, that was very high. And that was coming from a very specific event, that was the school program, and that was bringing very specific shafts that were dual siemers. So, since those consolidated, we saw that that, how to call it, that inflation of shafts that happened during those three months, started to normalize. It started to normalize and came down to the number that you can see now. Now, I can tell you that we are still seeing the positive trend, natural trend that we were seeing. So, answering again to your question, yes, we expect to have more, that the number of SARS will increase in quarter two, and that it will be positive, yeah.

On the second question, Alex, as our guidance, right, in terms of revenue, we're going to grow as per market, and then the margin EBITDA going to be at the level of 50%, low 50%, right, 50%. So if you compare with 2020, they're more about the same. The cost structure that you're seeing, that's going to be the benchmark for us for the rest of the year. We continue having... some opportunities on cost saving, mainly on the tower list renewal because I think we indicated before as well that around 30% of our sites going to be coming up for renewal in the next two years. And we are in the low level of rental. Probably I can give a hint, it's about 10 million per month now. We're coming quite significantly compared to before. So this is one of the sources for us to maintain our cost structure despite some increase on the cost. We also indicated before that we're going to incur higher frequency fees because of that one-time adjustment for the 10 years renewal of our spectrum. So the other saving that we're also looking at is on our P&P. as a result of more digitalization on our NP activities. So those initiatives that we will do to ensure the cost structure that we have in Q1 will be replicated for the rest of the year to ensure we're hitting this low 50% EBITDA margin.

Okay, wonderful. Thank you so much.

Answering your question, Alex? Yes.

Thank you. The next question comes from the line of Vidal Cornelius from J.P. Morgan. Please go ahead.

Hi. Thanks for the call. Just two questions from my side. Can I just clarify on the OPEC side? So is there a one-off for this quarter? And also second is can you share on your market growth rate expectation? Thank you.

Sorry, Vida, I couldn't catch the second question. What was the second question?

The second question is, can you share on your market growth rate expectation?

Or market industry growth rate expectation for this year? Yes, that's right. Okay.

The first one on the OPEX, Vida, just to clarify, yeah? So there's a bit of one-off adjustment related to we're releasing some provision on labor, but the rest is business as usual. So like InterConnect cost coming down because the reality people, we have people less traveling. We got this infrastructure cost on the rental that lower that has indicated because of the new rates and marketing and the expense that lower. So the one-off is on the release on the provision for labor.

Are you able to share the amount of the loss?

I'm afraid we cannot go to that detail. But as indicated, it's not material enough to be disclosed on the one-off adjustment. OK.

Yeah. OK. On the second question, regarding the expectation for the industry growth, it's difficult for us to say, and I'm going to explain why. I think there are a couple of topics that are ongoing, as you know, one is the potential merger that is going to happen, the second is the COVID, and the third one is the stiff competition that there has been during the first quarter that is smoothening. we expect that the first half is going to be smooth growth. So that's a little bit the expectation. Nevertheless, if these things clarify for the second half, which should, we expect that the second half will be better than the first one. So again, we cannot give clear guidance because of the uncertainties that I already mentioned, but we expect the first half to be smoother than the second half where we can start to see a bit more higher growth.

All right. Got it. Thank you.

Thank you. As a reminder, ladies and gentlemen, if you wish to ask a question, you may press star 1 on your telephone. The next question comes from the line of Krishna Hutaparat from Mandiri. Please go ahead.

Hi, thanks for the opportunity. Just two questions from me. My first question is on spectrum. We understand that the 2.3 gigahertz auction has been completed, but is there any opportunity for more spectrum acquisition over the next 12 to 18 months? The regulator has mentioned plans to auction out the 700 MHz band potentially before 2022. Do you see any progress on that front? And related to that, would you mind sharing your thoughts on XL's appetite for the spectrum? And how should we view the opportunity for 700 MHz band acquisition in the context of maintaining XL's structural competitiveness in the market, especially in the face of a Indosat entry merger ahead? Thank you.

Thank you for the question. With the spectrum that we are holding right now, actually to cater for the traffic projection of 4G, we will still be able to do it with our spectrum for the next two to three years. However, we will require a spectrum to be able to launch 5G services. And the 5G spectrum will be available at the earliest in the 2022 Core 700, and then for 3.5 probably a little later than that. So of course, for us, we will try to get this additional spectrum for us to be able to launch our 5G service. But again, for 5G service, it actually requires the right spectrum band, because if we just utilize the current spectrum band, the customer will not enjoy the real 5G service. 5G service will require a quite wide band of the spectrum. So we really hope that the government will be able to free up those spectrums and auction the spectrum within one to two years from now.

Okay, thanks, Rudion. So, sorry, maybe if I may follow up on that. So would it be fair to assume that, you know, you can assume 7.0 trillion capex this year, but capex intensity will likely head up 22 onwards, yeah? That should be the outlook, right? At least for the next two to three years.

Yes, that's a valid observation because for building a network for 5G services, it will require new investment, not only for the radio network, but also to build the fiber and transport link that will be required to deliver 5G services.

Got it, got it. Thanks, Budhya and the team. Thank you.

Thank you. The next question comes from the line of Parish Choudhury from HSBC. Please go ahead.

Yeah, hi. Good afternoon, and thanks for the call. Two questions. Firstly, can you please elaborate on how competitive dynamics has improved from March and April? Like you mentioned, there has been some changes by incumbents, so if you can elaborate on that. Secondly, you know, on your fixed broadband, can we understand that your long-term strategy or investments would be contingent upon whether or not this – mobile consolidation or merger goes through or not? How does that change your capital allocation in the fixed broadband segment?

Okay, thank you. Regarding the competitive dynamics, starting end of March, beginning of April, there have been a few movements. mainly from the incumbent and also ourselves. So the incumbent, Telkomsel, has redefined their unlimited max proposition, where they have put an FUP to their unlimited, so with full speed up to 30 gigabytes, and then they decrease the speed, which is already one step in the correct direction, right? So I think That is one of the things that they have done. The other, in different products, they have also adjusted the prices a little bit up. So, for the same benefit, you need to pay a little bit more, right? So, I think it's two movements. In one, reducing via FUP the unlimited benefits of certain of their products... and number two, increasing the prices in a certain way. At the same time, we have gone in a similar way. We already started last year by taking out YouTube from the Unlimited and making it only redeemable. In November and December we did the same with many of our products and in March we have continued doing so. We have taken some of the unlimited applications out of the product and made them only redeemable. So that's number one. And we have also adjusted some of the benefits, the number of gigabytes in some of our products, being a little bit more stingy. So I think those are the big changes in the value propositions from the incumbent and ourselves. From the rest, I have not seen so many changes, to be honest. I think they still follow more or less the same strategy of low price, low denominations, but more or less consistently. So I think those are the biggest changes in the competitive dynamics. In any case, I would also like to underline, like previously Ibu Dian mentioned in the beginning, that we are also trying to avoid entering in this... price per gigabyte worth and we are truly designing new experiences like our new family packet Acrap that is completely a new direction for a family target segment which we have successfully launched two, three weeks ago and that will be another thing that you will see from us, right, that we will start moving into products that are pretty much giga-oriented to family experiences, products that are more rewarding the family experience moving forward.

Thanks a lot. Can I just check on this? Are these changes nationwide or these are more, again, concentrated in few regions?

Yeah, so as you know, most of the operators will have different areas. The changes that I'm mentioning are mostly nationwide. Although it's true that in specific areas there might be some changes here and there, but the big ones that I mentioned are nationwide.

Thank you.

So, Piyush, your question on fixed broadband, the short answer is no. Our fixed broadband strategy is not predicated upon the merger at all. This is a long-term business, and the groundwork for this business, the plans were laid more than two years ago. And the standalone opportunity in Indonesia is still strong, and we intend to prosecute it as per our strategy.

Thank you.

Thank you. As a reminder, if you wish to ask a question, you may press Star 1 on your telephone. Once again, if you wish to ask a question, you may press Star 1 on your telephone. Thank you. I now would like to pass back the call to our host.

Actually, hang on, Revati. I see we have a question from Prem. Can we just take that as maybe our last question?

Thank you for the opportunity.

A couple of questions from me, please. First of all, do you think all these price adjustments that have taken place over the last couple of months are a function of operators trying to boost profitability, or do you think it's coming from network congestion, forcing them to actually adjust these price points. That's number one. Secondly, with regards to the X Java business, how's the profitability of that? Have we come to that break-even point? Are we close to a point where we can start turning EBITDA and profit positive from those investments? And finally, since we started talking about 5G, would you be able to hazard a guess of maybe between the 2023 to 2025 period, how much incremental capex do you think we will need to spend as we embark on the 5G journey? Thank you.

Thank you, Prem. So I'll take the first question regarding on the on why the operators are increasing the prices now. Is this because our networks are congested and we don't have any other option, or is it because we are aware of the situation and we want to boost profitability? So I can tell you that it's the second one. It's a profitability decision. So our networks are still I can talk about ours, but I'm sure competitors as well, our networks can still bear more traffic. So it's not a congestion issue or a quality of experience of our customers issue. It is a decision made thinking of profitability.

Yeah. On second question, Prem, regarding XJava, as you know, we've been investing to this x java since 2007 and we targeted to have payback two of two three years in line with our operational excellence principle most of area are already profitable or reaching profitability however as a whole x java are not yet profitable we continue building up the scale because the game is on the scale we expect over the next two years can reach a comfortable level of profit. I think that's what are we seeing at Java as of now. On the last question regarding 5G, how much 5G capex incremental that we should look at in the next few years, especially next five years. We are currently, as Budian mentioned, still crafting what are we going to do in the grand plan on this 5G and also the reaction to the merger if it happens. So I think at this point, we can observe more detail beyond that one.

All right. Thank you very much, Papudi.

Okay, as I believe there are no further questions on the queue, I would like to end the call here for today. Thank you, everyone, for your participation in today's call. And as always, do get back to us if you need further information or clarification. Please stay safe, stay healthy, and we will speak to you next quarter. Thank you.

Thank you. But because of today's conference call, you may all disconnect now. Thank you.