PT XLSMART Telecom Sejahtera Tbk

Good afternoon, ladies and gentlemen. Welcome to Excel Axiata's earnings call for full year 2022 financial year, ended in 31st December of 2022. My name is Christy. I'm the investor relation for Excel Axiata, and I will be your coordinator today. During the presentation, all participants are in listen-only mode. After the speaker's remarks, there will be a question and answer session. The Q&A session will be hybrid mode to ensure that we can accommodate everyone. To ask questions, please type it in the Q&A box with your full name and company name, or we will not be able... to address you properly. If we have time, we will circle back for follow-up questions. As a reminder, this session is being recorded for replay purposes. With me on the call today are Ibu Dian, our CEO, Pak Budi, our CFO, Pak David, our CCO for consumer, and Pak Abhijit, our CCO for enterprise and home. Now, Ibu Dian will share the highlights for Whole Year 2022, which will then be followed by the Q&A session. I will hand over the call to Ibu Dian. Ibu Dian, the floor is yours.

Thank you, Christy. Good afternoon, everyone. Thank you for attending today's earning call. 2022 was a great year for Excel with our pioneering and consistent strategy execution of digital transformation and conversion. We have outperformed the industry despite the challenges that occur both globally and domestically. Let's see our full year 2022 key highlights. Our revenue grew by 9% due to continued product innovation that are supported by our network excellence Top-line growth positively impacts our EBITDA, which grew by 7% year-on-year, with margin recorded at 49%. Excel Asiata also books stable and path growth. Our network excellence initiatives have been very fruitful as we are closing 2022 with a win in four categories based on December 2022 Open Signals Mobile Network Experience Report. For the second time in a row, we are the winner of the Download Speed Experience Award with overall download speed averaging at 20.8 Mbps or 11% increase compared to July 2022. On top of that, we also obtained first rank on video experience, games experience, and also voice app experience. As our convergence package continues its long uptrend trajectory, with 37% of our FTTH customers subscribed to it, a 5% point increase compared to 32% in third quarter of 2022. This is a result of digital-driven operations through our data analytics that enable us to do effective cross-sell and up-sell. Our digital transformation 2.0 strategy on mobile also evolved the experience on our own apps, which are MyExcel and MyAccessNet. Both apps have delivered a very strong result in 2022, which by end of December 2022, we recorded more than 25 million monthly active subscribers. I would also like to thank our stakeholders for the support and trust on our fundraising initiatives. Last year, we have successfully raised around 8 trillion in funds, 3 trillion rupiah through bonds and sukuk in September and with very competitive pricing, and around 5 trillion through rate issue. The funds obtained strengthen our balance sheet, allowing us to retain the AAA ratings and investment grade we currently have, and of course balancing our debt profile to get up for potential interest rate increases in the future. Now, moving on to the next slide. So this is on 2022 overview and also 2023 outlook. Throughout 2022, Indonesia's telco industry remains rational, with competition tracking slightly higher in the fourth quarter. This is due to seasonal competition that happened in some areas, which we expect to subside in the coming quarters. Data consumption remains strong as we observed higher data package utilization from our subscribers, mainly driven by video streaming, a trend that will continue in 2023. We also observed all MNOs now shifting gears toward convergence following the steps of our convergence proposition whilst adapting for lighter asset business model. As Alf mentioned earlier, our investment in network infrastructure Digitalization and spectrum usage optimization have improved our customer experience immensely. In 2022, our 4G BTS grew by 19%, with 44% of our sites are now fiberized. Our spectrum efficiency initiative continues to be enhanced using N5 technology to remove the disadvantage of relatively narrower spectrum bandwidths. On top of that, our end-to-end digital transformation enhance organizational agility to adapt and cater to market needs and industry evolution. In 2023, opportunities remain promising in telco industry, not only in mobile, but especially in fixed broadband market, both for consumers and enterprise segments due to its relatively lower market penetration. Now we're not only smartphones that are connected to the internet at home, but a wide range of new devices, enabling the revolution of structural digital lifestyle. This is why our conversion offering is the right strategy to address the needs. Going into the new year, same rates continue to persist, such as weaker consumption due to macroeconomic pressures, risk of aggressive competition to return, as well as prolonged geopolitical issue impact on supply chain. Considering both opportunities and risk, we believe that Indonesia's telco industry will grow higher compared to 2022 growth. Now, before we discuss numbers, allow me to provide you with more details on our key growth strategy that gives us the win in 2022 and hopefully going forward, as well as what many of our investors have inquired, our confidence strategy and also goals for 2020 to be elaborated in this presentation. Next slide, please. So personalization has been a foundation of our growth. One of the keys to our growth has been personalization, which have pushed to the next level. We have already profiled more than 10,000 persona segments to whom we offer tailored propositions. We have already introduced AI-driven dynamic pricing to all our digital channels. With dynamic pricing, we are able to offer each customer a different price to the portfolio with the objective of maximizing the output. Another big step has been the implementation of close-loop feedback, where we have been able to capture more than 3 million customer feedbacks that help us improve the customer journeys. As a result, we have been able to multiply by four the revenue from personalization in digital channels, and multiply by 4.5 the satisfaction of those customers. Next slide, please. This year, we will double down on our convergence strategy by adding more features and boosting our family proposition to provide an even more comprehensive ecosystem that is relevant to our customers, such as smart devices, Ability to build your own Excel packages to better suit their needs. Flexibility to add any Excel numbers to their convergence package. And eSIM that is soon to be launched by first half 2023. We will leverage on our comfort and omni-channel touchpoints, unifying our distribution, taking advantage of over 130K touchpoints distribution synergies. On top of that, Family ID will make Excel Satu in the best position to capture the opportunity in convergence. Next slide, please. So to seize 2023 opportunity with convergence, our early moves towards convergence have helped generate strong momentum for Excel Satu. This year, we will fuel the growth even larger by scaling up our Excel home. We aim to close 2023 with fourth 150K home connect, and 150K conference subscribers. Next slide. So now we will go with our financial and operational KPI. This slide shows our key metrics for full year 2022, which I will not go through one by one. But the only thing that I want to highlight that we closed the year with 57.5 million happy customers that support us. Thus enabling XL to retain the output of 40,000 rupiah, indicating that our additional subscribers are of value accretive despite impact from fuel price hike and competitions. Next slide. So we've been focusing on customer experience and we will still focusing in customer experience going forward. Our 4G BTS cover is at 91.6 thousand, A 19% growth year-on-year. 3G spectrum refarming is completed, with 98% of our 51,000 3G BTS has been shut down. Our network investment and strategy has led to better network experience, hence higher usage as evidence by the 22% year-on-year increase in total traffic for full year 2022. As mentioned earlier during the presentation, our own apps recorded a 62% year-on-year increase in monthly average users with more than 25 million subs are on the platforms. More users on our own apps will sharpen our prediction on upcoming trends and customers' behaviors, enabling us to provide the right offers to the right customers at the right time. In the end, it will improve the offering acceptance rate and increasing our pool. Our fiber side as of December 22 it is at 54% increase of 15% point, year on year, pairing this with our spectrum reforming and new technology adoption has put excellent network ahead of the curve. Ultimately, the increase investment we have put in the past two years has helped making our network better and optimize our capital intensity. Finally, our guidance for the year. Next slide, please. We aim to grow our revenue by mid to high single digit, or at least better than industry. For EBITDA, margin guidance at approximately 49%. And our CAPEX guidance this year will be at 8 trillion rupiah, with 70% of CAPEX are allocated to strengthen network quality as well as to increase digitalization, and this excludes potential spectrum options from the government. With that, I conclude my opening remarks. Back to you, Christy.

Thank you, Ibu Dian, for the very thorough walkthrough of Excel Axiata performance and strategy. Ladies and gentlemen, we will now proceed to the Q&A session. As a reminder, the Q&A session will be hybrid mode. To ask a question, you can type it in the Q&A box. Please ensure to use your full name and company name. And after your question is answered, if you'd like further clarification, kindly use the raise hand button and we will call your name for you to proceed to unmute your mic. The first question comes from Arthur Pineda of Citi. Were there any one-off bookings in fourth quarter 2022? What accounted for the sudden rise in financing expenses? And are any of these factors still relevant to January? And then the other question will be on the DNA. What accounted for the Q&Q jump in DNA expenses? And will it be possible for us to break out the growth momentum between mobile and fixed services for full year 2022 and fourth quarter 2023? Gudi, would you like to take on this question?