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.